Can I Employ a Nanny who has an ITIN?

What happens if your employee provides an Individual Taxpayer Identification Number instead of a Social Security Number? While an ITIN and an SSN may seem similar, they are vastly different. In fact, employing a nanny who has an ITIN and not an SSN, can get you in some trouble.

After hiring a nanny and getting ready to handle the payroll and taxes, your employee may provide an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN).

While an ITIN and an SSN may seem similar – both are nine-digit numbers formatted like NNN-NN-NNNN – they are vastly different.

In fact, employing a nanny who has an ITIN and not an SSN, can get you in some trouble.

What is an ITIN?

An ITIN is a tax processing number issued by the Internal Revenue Service (IRS) to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, an SSN.

An ITIN will always start with the number 9.

How is an ITIN used?

Having an ITIN helps individuals comply with U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for SSNs.

For example, a non-resident alien who is a college student or researcher may receive taxable payments like fellowships, scholarships, awards, and/or honorariums. They need a way to report those payments to the IRS even though they can’t obtain an SSN.

An immigrant in the U.S. who has applied for legal status to work in the country would need an ITIN to file a tax return while waiting for an employment authorization decision.

ITINs are issued regardless of immigration status, because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.

ITINs do not serve any purpose other than federal tax reporting.

Most importantly, an ITIN does not authorize work in the U.S., provide legal immigration status, or prove an individual’s legal presence in the country.

How is an SSN different from an ITIN?

An SSN is issued by the Social Security Administration (SSA) to those who were either born in the U.S. or are authorized to work in the country. To obtain an SSN, you also must submit evidence of your identity, age, and U.S. citizenship or lawful alien status.

SSNs are allotted to citizens and certain non-citizen residents while ITINs are distributed to both resident and non-resident aliens.

What can happen if I employ a nanny who has an ITIN?

When paying a nanny who has an ITIN, Social Security contributions (both employer and employee) may not be credited to your employee as they don’t have an SSN.

In January, when filing Form W-2 with the SSA, you may receive notices and fines for filing a W-2 that didn’t have an SSN.

Also, the U.S. Citizenship and Immigration Services says employing an undocumented worker can mean civil fines and criminal penalties. The USCIS could also initiate removal proceedings against your employee if they were determined to be engaging in unauthorized employment. If found guilty, they could be deported.

What should I do if my nanny has an ITIN?

If your nanny is authorized to work in the U.S., they should obtain an SSN as soon as possible. They can apply for one online. Then use the SSN on all tax documents going forward.

Again, if your nanny is not authorized to work in the U.S. and cannot get an SSN, you could face fines and criminal penalties by continuing to employ them.

Hiring a nanny?

Download Your Guide to Hiring a Nanny. In this guide, we lay out the steps on how to hire a nanny the right way and maintain a strong relationship with your employee.