For many Israelis, the term Social Security Number is a meaningless term they have only heard in films, but in recent years more and more Israelis are required to understand the matter in-depth, whether because of the need to submit various tax reports to the U.S. Tax Authority or at the request of the Israeli bank where they manage their accounts.
SSN – Social Security Number
Social Security Number, in short, SSN, is the American equivalent of the Israeli ID number. It is a personal number, a combination of nine digits, used to identify United States citizens by the authorities. The combination is, as stated, personal, and in contrast to a passport number that changes with the issuance of a new number, the social security number accompanies the citizen throughout his life. Although every citizen of the United States is eligible for an SSN, unlike the Israeli identity number automatically granted to every citizen, citizens of the United States must submit a specific application for its issuance.
The uses of the Social Security Number
As mentioned above, the SSN is first and foremost an Identification number before the various authorities. But this is not its only role.
The SSN is used, among other things, for the following purposes:
The issuance of a payslip depends on the existence of the SSN.
Receiving social benefits, unemployment benefits, etc. requires the identification of the citizen before the authorities.
Opening a bank account in the United States
You cannot open a bank account in the United States without the account holders identifying themselves by using an SSN.
Opening a bank account in all countries that are part of the U.S. Data Exchange Treaty
As detailed below, many countries signed financial information exchange agreements with the United States. Due to their obligations, the financial institutions in these countries will refuse to open or allow activity in an account in which the account holder holds U.S. citizenship, without providing an SSN. This is also true in Israel, which is signed on a similar treaty.
Submitting tax reports and receiving credits and tax returns
Submitting annual tax reports, receiving credits and various tax returns requires identification. When it comes to submitting reports, identification numbers can also be identified for tax purposes, but receiving tax returns requires identification using an SSN.
Renewal of a U.S. passport
Renewing a U.S. passport requires identification using an SSN.
Issuing an SSN
As noted, issuing an SSN is not automatic. Unlike in Israel, US citizens do not receive an identification number at the time of birth. The issuance of a social security number requires the parents of the child to go to the Social Security offices and submit an application for its issuance. The procedure may require the submission of identification documents by the parents, a birth certificate, and the like.
In fact, it is possible to distinguish between the two routes of issuing an SSN:
- A citizen under to age of 12
- Citizen over the age of 12
As for citizens is under the age of 12, the process is relatively easy. The child’s parents will come to the U.S. Social Security offices or to the U.S. Consulate near where they live and apply. About two weeks after filling out the application form and transferring the identifying documents, the SSN will be received by mail.
As for a citizen over the age of 12 who is born in the United States and lives there, the procedure is a little more complex. The applicant must go to the National Insurance Institute offices, apply, provide required documents and undergo an interview. The entire process may take up to six months. If the citizen over the citizen over the age of 12 is born and lives outside the United States, the situation is even more complex. In addition to submitting a request, the applicant must produce a considerable amount of documents and translations, as well as undergo an interview. This procedure can take up to a year and a half.
Why should you issue an SSN?
Many Israelis who have dual U.S. citizenship but do not reside in the United States do not issue an SSN because they do not see it as necessary. But, as we have seen, the SSN has many uses, even for those who do not reside in the United States. Today, two main reasons justify (and some would say obligate), the issuance of an SSN: the receipt of tax refunds and FACTA laws and the rules for the exchange of financial information between Israel and the United States.
Child tax returns
American citizens are entitled to receive tax refunds each year for their children who are also American citizens. The amount of the refund can reach up to $1,000 per child (or $1,400 as single parents), given the age of the children and the level of parental income. By the way, the right exists even if the citizen is not required to pay tax in the same year.
However, receiving the refund requires identification using an SSN. Therefore, if you want to receive the refunds (assuming you do not object to receiving $1000 from Uncle Sam), you will have to issue an SSN.
Following the Foreign Accounts Tax Compliance Act (FACTA) legislation, which requires every U.S. citizen to report the existence of foreign financial accounts over a cumulative sum of $10,000, the United States has signed financial exchange agreements with various countries around the world. The agreements allow authorities in the United States to cross-reference the information and ensure full enforcement of the law.
Israel has also signed a similar agreement with the United States. As part of the agreement, the Israeli banking corporations provide the U.S. Tax Authority with information about financial accounts managed and owned by American citizens. Thus, any account for which there is an indication of U.S. citizen owner, partner, or authorized signatory is accompanied by a demand by the bank that the customer signs the W-9 form in which he declares his citizenship.
In the absence of an SSN, the bank may refuse to open an account until it is issued.
If so, issuing an SSN or at least opening a procedure for issuing it is as necessary if you want to open or manage an account in Israel or any other country that has signed a financial exchange agreement with the United States.
To sum up
The SSN is necessary to identify yourself in a variety of proceedings with the U.S. authorities. The number is not issued automatically, and action must be taken to issue it. Due to the enactment of the FACTA laws, if you are a U.S. citizen or a resident of the United States, you probably will not be able to evade issuing the number.
Its issuance may also assist you in obtaining tax returns and allowances to which you are entitled from the U.S. government. The issuing process might be complex and require dealing with bureaucracy, but MasAmerica’s skilled staff will be happy to advise and help with its success.
This should not be seen as legal advice. It is recommended to consult with Masamerica’s team before any action. The service is provided by a professional team, who speak English and Hebrew fluently, and includes lawyers and accountants with American licensees.