Why should I give my Social Security Number to the brokerage firm in order to open a trading account?

Question

Actually considering the brokerage as your employer, it makes sense to give the SS# to them.

Thanks guys for the answers

Answer 1

Well you don't HAVE to, but if you don't, you can expect a visit from the IRS, since the only reason they need it is they are required to report your trading activity to the tax office, so the IRS can make sure that what they say and what you say (on your tax return) actually match up.  The only reason a person might not want their broker to have their SS# would be if they were committing fraud...

Answer 2

There are trades which result in capital gains and losses. There are dividends and interest as sources of income. These are all reported to the IRS at the end of the year and you are responsible for reporting them on your income tax form. The brokerage firms are mandated to do such reporting.

Answer 3

They are required to report your gains and losses to the IRS.  That's why.

Answer 4

So they can report your dividends and capital gains to the IRS.

Answer 5

The answers so far are mostly correct but some not completely correct.  The brokerage firm is require to report dividends, interest, and the proceeds of stock, bond, and even cd sales to the IRS using your SS number or if you are not an American citizen a tax id number but not gains and losses.  It is up to you to report those and to also keep appropriate documentation to prove them should you be audited.  

Answer 6

It's your choice:  provide the info or you won't get an account.

Answer 7

Required by the brokerage firm for identification purposes. You would not someone to compromise your account. In addition REQUIRED by the IRS for income reporting. (just as wages are reported to the government on your W-2 Form.