How to Invest in Stocks Without a Social Security Number

A Social Security Number (SSN) serves as a primary identifier for individuals within the U.S. financial framework, particularly for investment activities. This nine-digit number is important for tax reporting to the Internal Revenue Service (IRS) and for verifying identity across various financial transactions. While an SSN simplifies many financial processes, investing in the United States is still possible for individuals who do not possess one.

Understanding US Taxpayer Identification Numbers for Investment

A Taxpayer Identification Number (TIN) is required for investing in the U.S. financial markets due to federal regulations. These regulations cover IRS tax reporting, Foreign Account Tax Compliance Act (FATCA) compliance, and anti-money laundering (AML) laws. TINs ensure that financial activities are transparent and properly reported to the authorities.

The most common types of TINs relevant to investors are the Social Security Number (SSN), issued to U.S. citizens and permanent residents, and the Individual Taxpayer Identification Number (ITIN). The IRS issues an ITIN to non-resident aliens and other individuals who require a U.S. TIN for tax purposes but are not eligible for an SSN. An Employer Identification Number (EIN) is another type of TIN, used by businesses and certain entities.

Obtaining an Individual Taxpayer Identification Number (ITIN)

An Individual Taxpayer Identification Number (ITIN) is a nine-digit tax processing number issued by the IRS for individuals who must file U.S. tax returns or engage in tax-related transactions but are ineligible for an SSN. This number is used for purposes such as filing federal tax returns, reporting income, and opening financial accounts. An ITIN does not authorize employment in the U.S. or provide eligibility for Social Security benefits.

To apply for an ITIN, individuals must complete Form W-7. The form requires personal details such as name, address, date of birth, citizenship, and U.S. visa information. Applicants must also select a reason for applying, such as needing to file a U.S. tax return or claiming treaty benefits.

The application package for an ITIN must include Form W-7, a valid federal income tax return, and original identification documents or certified copies. A valid passport is the only stand-alone document that proves both identity and foreign status. If a passport is not used, a combination of at least two documents may be required, such as:
A national identification card
A foreign driver’s license
A U.S. visa
A civil birth certificate
These supporting documents must be current and unexpired.

Applicants can submit their ITIN application package through several methods. One option is to mail the completed Form W-7, the tax return, and original supporting documents to the IRS ITIN Operation in Austin, Texas. Alternatively, individuals can apply in person at designated IRS Taxpayer Assistance Centers (TACs), where staff can authenticate documents. A third method involves using an IRS-authorized Certified Acceptance Agent (CAA), who can verify original documents, eliminating the need to mail them to the IRS. Processing times range from 6 to 11 weeks.

Investing with an ITIN or as a Non-Resident

With an ITIN, individuals can open investment accounts in the United States. Many major brokerage firms and financial institutions accept ITINs for opening taxable brokerage accounts, allowing investors to trade stocks, bonds, and exchange-traded funds. While some smaller or niche platforms might not support ITINs, prominent firms often do.

The account opening process involves submitting the ITIN along with other required identification documents, similar to the process for SSN holders. This includes providing proof of address, and sometimes additional financial information or employment status details. The specific requirements may vary between brokerage firms, but the ITIN serves as the primary tax identification for reporting purposes.

Non-resident aliens investing in the U.S. often need to complete Form W-8BEN. This form is important for establishing foreign status and claiming eligibility for reduced U.S. tax withholding rates or exemptions under an income tax treaty. The W-8BEN is provided to the brokerage firm or withholding agent, not the IRS, and helps ensure proper tax treatment of investment income.

Tax Implications for Non-SSN Investors

Investors without a Social Security Number (SSN) who use an ITIN or are non-resident aliens face specific tax implications on their U.S.-sourced investment income. The U.S. imposes a 30% withholding tax on certain types of income, such as dividends and some interest income, paid to non-resident aliens. This rate can be reduced or eliminated if the investor’s country of residence has an income tax treaty.

To claim treaty benefits and reduce the withholding tax, non-resident aliens provide a completed Form W-8BEN to their brokerage firm. This form certifies their foreign status and identifies their country of residence, allowing the withholding agent to apply the appropriate treaty rate. The tax treaty may specify a lower withholding rate, often 15% or even 0%, depending on the type of income and the specific treaty provisions.

Non-resident aliens may also have U.S. tax filing requirements, even without an SSN. If they have U.S.-sourced income that is effectively connected with a U.S. trade or business, or if they claim a refund of over-withheld tax, they may need to file a U.S. income tax return using Form 1040-NR. Brokerage firms issue Form 1042-S to report U.S. source income paid to non-resident aliens and any tax withheld.