A Social Security number (SSN) is a nine-digit number that the U.S. government issues to all U.S. citizens and eligible U.S. residents who apply for one. The government uses this number to keep track of your lifetime earnings and the number of years worked.
When the time comes to retire, or if you ever need to receive Social Security disability income, the government uses the information about your contributions to Social Security to determine your eligibility and calculate your benefit payments. Most people will use the same Social Security number their entire lives, though some people might need to apply for a replacement number at some point because of identity theft
Keep reading below to find out more about when and why you need a Social Security number as well as when you should avoid using it.
When and Why You Need a Social Security Number
Anytime you get hired for a new job, your employer will ask for your Social Security number. Your employer’s accounting department will use this number to report your income to the Internal Revenue Service (IRS) and to report your Social Security wages to the Social Security Administration. Your employer will also use it for state income tax reporting unless your state doesn’t have an income tax. Employers who participate in E-Verify, a program to make sure employees can legally work in the United States, also must obtain your Social Security number before you can begin work.
Here are some other scenarios where you’ll need to provide your Social Security number.
When opening an account with any U.S. financial institution. Since 1970, the federal government has required banks to obtain customers’ Social Security numbers. Financial institutions use your SSN to check your credit, to report your interest and investment income or losses to the IRS, to report your tax-deductible mortgage interest to the IRS, and to manage your account. As an alternative, some financial institutions will accept a taxpayer identification number (on some forms, also called an Employer Identification Number, or EIN), which you’ll need to apply for through the IRS.
When applying for a federal loan. The government will use your Social Security number to make sure you’re eligible when you apply for a federal loan, such as a federal student loan. For example, to qualify for federal student loans, you must not be in default on another federal loan, you must have eligible citizenship or visitor status, and most male applicants must have registered with the Selective Service.
When applying for certain types of public assistance. Public assistance programs, such as unemployment benefits or Social Security disability income, are usually managed by federal or state government agencies who use Social Security numbers to identify people and make sure they aren’t claiming benefits that they aren’t entitled to.
When enrolling in Medicare. The Social Security Administration works with the Centers for Medicare and Medicaid Services to enroll people in Medicare.
When applying for a passport. Federal law requires you to provide a Social Security number if you have one when you apply for a U.S. passport. If you don’t have an SSN, expect delays in processing your application. If you have been issued one but don’t provide it, you could be fined $500.
On your tax return. The IRS uses this number to match the income you report on your tax return to the income your employer and financial institutions report having paid to you. Also, you’ll need to provide your child’s SSN to claim your child as a dependent on your tax return.
To get a driver’s license. If you have an SSN, you have to provide it when you apply for a driver’s license.
Non-citizens who don’t have Social Security numbers are exempt from providing a Social Security number in many situations that normally require it, including getting a driver’s license, registering for school, getting private health insurance or applying for public assistance such as subsidized housing. The government doesn’t like to give Social Security numbers to non-citizens who aren’t authorized to work in the United States. It says that even banks and credit companies usually can’t require you to provide a Social Security number if you don’t have one.
However, without this number, financial institutions won’t be able to run a credit check on you, which could make it difficult if not impossible to get a credit card or loan.
When to Avoid Using Your Social Security Number
Federal law basically lets anyone ask for your Social Security number, but that doesn’t mean you need to give it out. You should use your Social Security number as infrequently as possible. Just because someone asks for it doesn’t mean they truly need it.
For example, though most medical providers will ask for your SSN, you can leave the line asking for it blank when filling out medical paperwork, and often, no one will question it. Your doctor’s office and other businesses can use other information to identify you and keep track of your records. That said, while you can refuse to provide your SSN, the other party can also refuse to do business with you.
You also shouldn’t carry your Social Security card around with you unless you will be using it for a specific purpose that day, such as when you’re filling out paperwork to start a new job and you have to show it to your employer as proof of citizenship (though if you can show a valid passport, you don’t need to provide your Social Security card). You don’t want to risk losing your card or having it stolen, since thieves can use this number, in combination with your other personal data, to apply for credit, take out loans, get a job or even get health care in your name, creating a potentially massive identity theft problem for you to clean up.
Instead, keep the card in a secure place at home or in a safe deposit box at the bank. If your card is lost or stolen, you’ll want to apply for a new one.
Similarly, you should keep any documents that contain your SSN, such as your tax returns, in a secure place. If someone were to break into your house, it would be better for you if they could only make off with your stuff and not your identity. You also need to carefully safeguard your electronic documents that contain your Social Security number. If you have an unencrypted PDF of your tax return on your laptop, you’re effectively carrying your Social Security card every time you take your computer with you on a trip or to a coffee shop.
The Bottom Line
When the government introduced the Social Security program with its numbers in 1936, it was never meant to be so widely used to identify and track individuals. Today, this number is used for everything from its original purpose – to track your lifetime earnings and calculate your Social Security benefits – to opening a checking account or fill out a new-patient form at the doctor's office.
Many businesses will ask for your Social Security number simply because it’s a convenient way for them to identify customers. Unfortunately, criminals can use your Social Security number to commit identity theft, so you should guard your Social Security number carefully and only give it out when absolutely necessary.