What are SSN and ITIN?
What are SSN and ITIN?
A Social Security Number or SSN is a 9-digit unique identification number. The Social Security Administration assigns it to US citizens, Permanent Residents, and eligible non-immigrant workers, including International Students.
Individual Taxpayer Identification Number or ITIN (pronounced: i-tin) is a tax processing number the Internal Revenue Service (IRS) issues to individuals who need to report income but are ineligible to file for an SSN.
Now that you understand the SSN and ITIN, let’s review which one you may qualify for!
Moving to the USA has challenges. One of the most critical steps you should take as soon as 10 days after arrival in the United States is to apply for a Social Security Number, commonly referred to as SSN. You should apply for ITIN if you don’t qualify for an SSN. Understanding the differences between the two, determining which one to get, and the application process can be perplexing and frustrating.
We will go over SSN and ITIN, why it is essential to apply early, and how to determine which one you should get. However, before we get into the details, it’s vital to understand why getting one should be one of your top priorities as soon as you arrive in the US.
Why should you apply for SSN or ITIN early?
The US Financial System has a concept called a Credit Report. Credit reports contain information about one’s US financial history, credit activity, and current credit situation. They include information such as how many loans and credit cards one has, how long they’ve had them, their outstanding debt, whether they paid their bills on time, and much more.
Companies and lenders use credit reports to offer products and services such as credit cards, loans, and auto insurance. The higher your creditworthiness, the more favorable your terms will be. Excellent credit can save you tens of thousands of dollars, if not more. It may even affect whether you get a job or not. We will cover this topic in depth in a different video soon, but it’s important to note that one’s credit report is tied to their SSN.
The age of your credit report is one of the vital factors in determining your creditworthiness. It is in your best interest to start building your credit report immediately. To do this, you need an SSN on an ITIN.
Now that you understand the urgency let’s dive into the details of the SSN and ITIN.
What is an SSN?
A Social Security Number or SSN is a 9-digit unique identification number. The Social Security Administration assigns it to US citizens, Permanent Residents, and eligible non-immigrant workers, including International Students, to track income and determine benefits. You will need it to open bank accounts, file taxes, get a credit card, buy a car or home, and much more.
What is an ITIN?
Individual Taxpayer Identification Number, or ITIN for short, is a 9-digit tax processing number. Internal Revenue Service (IRS) issues it to individuals who need to report income but are ineligible to file for an SSN. In simpler terms, individuals who don’t qualify for an SSN need to use their ITIN to file their US tax returns.
Which one should you apply for – SSN or ITIN?
Now that you understand SSN and ITIN let’s review which one you may qualify for.
Anyone who moves to the US for work or finds work qualifies to apply for an SSN. This includes H1-B and other work visa holders. International Students on an F1 Visa with a job offer are also eligible. It includes students with on-campus, qualified off-campus, and CPT and OPT jobs.
F1 Visa holders who don’t have a job will typically only qualify for an SSN once they land a job. If you’re in this category, you qualify for ITIN if you’ve never had an SSN.
Benefit of ITIN
One of the top benefits of having an ITIN is that it can be used to establish your credit report without an SSN. You can use it to open bank accounts and apply for credit cards and other financial products. When you get your SSN down the road, you can ask the credit bureaus to update your file with your SSN. That way, you still maintain the length of your credit history – an essential factor in your creditworthiness.
Disclaimer: greencardEZ is not a law or accounting firm. This information is not a substitute for tax or legal advice from a professional. Consult with a designated official, tax professional, or attorney on personal tax or legal matters.
Frequently Asked Questions (FAQs)
The Department of Homeland Security asks individuals to wait ten days after arriving in the United States before applying for an SSN to allow enough time for their arrival information to update in all government systems.
No! If you have an SSN, you should not apply for an ITIN.
Wrap-Up and Next Steps
We hope that helps you understand SSN and ITIN and why you should get one immediately. Our next article discusses the steps to apply for an SSN, an ITIN, and the process to convert an ITIN to an SSN.