Can I use an ITIN for workers?
Beyond only accepts an ITIN (Individual Taxpayer Identification Number) for contractors.
When hiring employees in the United States, you must collect basic details such as their name, address, and a valid tax identification number – typically a Social Security Number (SSN). You are also legally required to confirm their eligibility to work in the U.S.
An ITIN cannot be used to verify employment authorization. However, if a worker doesn’t have an SSN, you can classify them as a 1099 contractor using their ITIN. In this case, the worker must complete an affidavit or an IRS-approved form that explains why a valid SSN or tax identification number could not be obtained.
This guide breaks down the difference between an SSN and an ITIN, and what steps to take if a worker does not provide a Social Security Number.
Need assistance? Paying contractors is just one of the payroll services Beyond offers.
What’s the difference between an ITIN and an SSN?
- SSN (Social Security Number): Used to authorize employment, track taxes, and provide eligibility for government benefits. It is also commonly used for things like opening bank accounts or applying for credit.
- ITIN (Individual Taxpayer Identification Number): Created by the IRS solely for tax purposes. It allows individuals who are not eligible for an SSN to comply with U.S. tax laws and file tax returns.
Key points about ITINs:
- Cannot be used to prove the right to work in the U.S.
- Do not qualify someone for Social Security benefits or the Earned Income Tax Credit.
- Cannot be used to withhold payroll taxes.
- Cannot be used on a Form W-2.
- Can be used for filing Form 1099.
What if a worker doesn’t provide an SSN?
Encourage the worker to apply for a Social Security Number using Form SS-5. For more details, you can direct them to the Social Security Administration (SSA) website, where they can learn:
- The benefits of having an SSN
- How it helps track their future retirement benefits
- How to apply for one
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You can also review official IRS guidance on ITINs for further clarification.
Need Help?
If you still have any questions, please don’t hesitate to reach out. Our team will be happy to provide answers and assist you in any way we can.