Yes, you can hire someone who has an Individual Taxpayer Identification Number (ITIN), but only as an independent contractor unless they can also show separate proof that they are authorized to work in the United States. An ITIN is a tax-processing number issued by the IRS; it is not work authorization. That single distinction drives every other rule below.
What an ITIN Actually Is
The IRS issues ITINs to people who need a taxpayer identification number but are not eligible for a Social Security Number. Federal regulations describe it as a number “issued to an alien individual by the Internal Revenue Service, upon application, for use in connection with filing requirements,” and state plainly that it “does not refer to a social security number or an account number for use in employment for wages.”1eCFR. 26 CFR 301.6109-1 – Identifying Numbers
An ITIN looks like an SSN: nine digits in the XXX-XX-XXXX format. But it always begins with a 9, and specific digits in the fourth and fifth positions distinguish it. Some ITIN holders do have work authorization through a visa or employment authorization document. Many do not. The ITIN itself never tells you which.2Office of the Law Revision Counsel. 26 USC 6109 – Identifying Numbers
Hiring an ITIN Holder as an Independent Contractor
The employment-eligibility verification requirement (Form I-9) applies only to employees. When you engage someone as an independent contractor, you do not complete an I-9 and you are not required to verify their work authorization. Instead, you collect Form W-9, Request for Taxpayer Identification Number and Certification.3Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification
An ITIN is a valid entry on the W-9. The contractor writes their legal name on line 1, enters the ITIN in Part I, and signs the certification. Once you have a signed W-9, you have what you need to pay the contractor and handle year-end reporting.4Internal Revenue Service. Form W-9 (Rev. March 2024)
Get the W-9 signed before you issue any payment. That gives you time to catch a bad or expired ITIN before backup withholding rules kick in.
Why a W-2 Hire Usually Does Not Work
Federal law requires every employer to verify identity and work authorization for each new hire by completing Form I-9 within three business days of the employee’s first day of paid work. That obligation comes from the Immigration Reform and Control Act, which makes it unlawful to hire someone without going through the verification process.5Office of the Law Revision Counsel. 8 USC 1324a – Unlawful Employment of Aliens
The employee must present original documents from an approved list: a U.S. passport, a permanent resident card, or an employment authorization document paired with a photo ID, for example.6U.S. Citizenship and Immigration Services. I-9, Employment Eligibility Verification An ITIN is not on that list. It cannot substitute for an SSN on the I-9, on a Form W-4, or on W-2 wage reports. If the person in front of you has only an ITIN and no work-authorization documents, you cannot lawfully bring them on as a W-2 employee.
The “SSN Applied For” Exception
Some workers hold an ITIN temporarily while their SSN application is still being processed. If that worker can present valid I-9 documents proving both identity and work authorization, the missing SSN alone does not block the hire. You may note “Applied For” in the SSN field on payroll records and update it once the SSN arrives. The controlling question is whether the person can complete Form I-9 with acceptable documents, not whether they currently hold an SSN.
Nonresident Alien Contractors Use a Different Form
Not every ITIN holder fills out a W-9. If your contractor is a nonresident alien (someone who is neither a U.S. citizen nor a resident alien for tax purposes), the correct form is Form W-8BEN.7Internal Revenue Service. Instructions for Form W-8BEN
The distinction changes your withholding. Payments to a nonresident alien contractor for services performed in the United States are generally subject to 30 percent federal withholding, unless a tax treaty reduces or eliminates the rate.8Internal Revenue Service. Pay for Personal Services Performed You report these payments on Form 1042-S rather than Form 1099-NEC, and you also file Form 1042, the annual withholding tax return.9Internal Revenue Service. Reporting Payments to Independent Contractors
If a contractor who initially submitted a W-8BEN later becomes a U.S. resident alien, they must notify you within 30 days. At that point you switch them to a W-9 and shift to standard 1099-NEC reporting going forward.7Internal Revenue Service. Instructions for Form W-8BEN
Backup Withholding at 24 Percent
Even for contractors who give you a W-9, a backup withholding obligation can arise. If the contractor fails to supply a valid TIN, or if the IRS notifies you that the TIN provided does not match its records, you must withhold 24 percent of each payment and remit it to the IRS.10Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Backup withholding amounts are reported on Form 945, the annual return for federal income tax withheld from nonpayroll payments.11Internal Revenue Service. Instructions for Form 945
ITIN holders sometimes encounter processing delays with the IRS, or provide a number that has expired without their knowing. Collecting the W-9 up front, and confirming the ITIN before the first check, prevents most of these situations.
Year-End Reporting for Contractors
For payments made in 2026, you must file Form 1099-NEC for each contractor paid $2,000 or more during the calendar year for services in your trade or business. That threshold increased from $600 for payments made in prior years.12Internal Revenue Service. Form 1099 NEC and Independent Contractors The form is due to both the IRS and the contractor by January 31 of the following year. You can file electronically through the IRS FIRE system or the newer IRIS online portal.13Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) Businesses filing 10 or more information returns in a year must file electronically.
Do Not Call an Employee a Contractor to Avoid the I-9
Reclassifying a worker as a contractor purely to sidestep the I-9 is illegal and easy for regulators to spot. Federal agencies look past the label and examine the actual working relationship. The IRS weighs behavioral control, financial control, and the type of relationship to decide who is an employee.14Internal Revenue Service. Employee (Common-Law Employee) The Department of Labor applies a six-factor economic reality test under the Fair Labor Standards Act, looking at opportunity for profit or loss, investment, permanence, control, whether the work is integral to your business, and skill and initiative.15eCFR. 29 CFR Part 795 – Employee or Independent Contractor Classification Under the Fair Labor Standards Act
No single factor decides the question. If you control when, where, and how the person works, and they are economically dependent on your business, they are likely an employee regardless of what your contract says.
Penalties If You Get It Wrong
Knowingly hiring someone without work authorization triggers civil fines under 8 U.S.C. ยง 1324a. Base penalty ranges are adjusted for inflation each year. After the July 3, 2025 adjustment, the per-worker fines are:16eCFR. 28 CFR Part 85 – Civil Monetary Penalties Inflation Adjustment
- First offense: $716 to $5,724 per unauthorized worker.
- Second offense: $5,724 to $14,308 per unauthorized worker.
- Subsequent offenses: $8,586 to $28,619 per unauthorized worker.
Separate paperwork penalties apply for failing to complete or retain Form I-9, even when the workers involved were actually authorized. The statute sets a base range of $100 to $1,000 per individual, also inflation-adjusted.17Office of the Law Revision Counsel. 8 USC 1324a – Unlawful Employment of Aliens A pattern of violations can carry criminal exposure: fines of up to $3,000 per unauthorized worker and up to six months of imprisonment for the pattern of conduct.5Office of the Law Revision Counsel. 8 USC 1324a – Unlawful Employment of Aliens
The IRS also penalizes late or incorrect information returns. For 2026, per-return amounts are $60 (filed up to 30 days late), $130 (filed 31 days late through August 1), $340 (filed after August 1 or not at all), and $680 for intentional disregard, with no cap in the last case.18Internal Revenue Service. Information Return Penalties These apply to each return and each payee statement, so a single transposed digit repeated across a batch of ITIN contractors adds up fast.