Many undocumented immigrants do not pay taxes because they do not know that they can pay taxes. However, undocumented immigrants can pay taxes. In fact, the law requires that every person working in the U.S. and making an income has to file a tax return and pay taxes to the federal government. This is true and mandatory regardless of the person’s immigrant status.
There is also a common fear that some undocumented immigrants have: they believe that, if they file taxes, they will fall under the radar of immigration officials and get deported. However, under current law, there are privacy protections that keep tax information private from immigration officials. This makes it reasonably safe for undocumented immigrants to file taxes with an Individual Tax Identification Number (ITIN) unless the law changes. In 2010, three million unauthorized workers filed taxes.
All You Need to Know About Filing Taxes as an Undocumented Immigrant
What are the benefits of filing taxes for undocumented immigrants?
First of all, filing taxes benefits immigrants because it allows them to comply with the law requiring that all individuals who earn wages file taxes to the federal government.
Next, filing taxes helps undocumented immigrants because it allows them to build a record of their history paying taxes for several years in the U.S., which can be helpful for immigration reasons. If a person ever has to go to immigration court, it could be very helpful to show an immigration judge that they have been paying taxes. This is because, in immigration court, immigrants must defend against deportation. Several types of defenses require the immigration judge to use his or her discretion to determine if the person warrants relief from deportation, which involves looking at all the positive and negative factors in someone’s life to determine if they should be able to stay in the country. Having a record of paying taxes can help show that they are a responsible and contributing member of society with strong equities. This type of evidence can help persuade an immigration judge to exercise his or her discretion favorably to grant someone a defense to deportation in an immigration case.
Filing taxes has many benefits for undocumented immigrants in the U.S.
Paying taxes can also be helpful if a person is applying for a green card to become a lawful permanent resident or to naturalize to become a U.S. citizen in the future. A person can include copies of their tax returns in their green card application or naturalization application.
A history of tax filings will also provide an immigrant an official record that they could use to help show that they qualify for any potential immigration reform that may be passed in the future. We do not know if this kind of immigration reform will ever happen in the future (and it is looking not hopeful at the moment), but it is possible that someday immigration reform could happen in the coming years. In the past, immigration reform has looked into the dates that people have been living in the U.S. and required people to establish that they’ve been living in the country by a certain date and for a certain number of years. Showing copies of tax returns that a person has filed can help a person show a “paper trail” to establish they were living in the country during certain important dates.
Some of the proposed legislation for immigration reform that Congress has considered in recent years has also included provisions that immigrants have paid taxes as a requirement to obtain status.
For these reasons, there are many potential immigration benefits for undocumented immigrants to file taxes.
Can an undocumented immigrant get put on the immigration officials’ radar because they filed taxes with an ITIN and not with an SSN?
Generally, it is currently safe for undocumented immigrants to apply for ITINs.
There are strong privacy protections that prohibit the IRS from disclosing taxpayer information. There is also a clear separation between the federal government’s immigration agency (the U.S. Department of Homeland Security and the Immigration and Customs Enforcement or ICE) and the government’s tax agency, the Internal Revenue Service (IRS).
However, given the unprecedented actions that have occurred under the current Administration, it is important to think through the benefits and risks of filing taxes. There is no guarantee that an undocumented immigrant would never face immigration consequences as a result of filing taxes in the future. For example, if the laws change in the future, there could be potential risks.
It is worth noting that the U.S.’s immigration laws and tax laws have different focuses. The IRS’ purpose is to collect taxes and encourage people to continue filing taxes. From the IRS’ perspective, it does not matter if a tax filer has a legal immigration status or not. While ICE’s mandate is to carry out deportations of undocumented immigrants, the IRS does not share information with ICE under current law. As explained by the Bipartisan Policy Center, “Addressing these conflicting interests would require legislative change and implicate millions of taxpayers, which means the current state of affairs will likely prevail for the foreseeable future.”
According to the Bipartisan Policy Center, tax information of undocumented immigrants who file taxes through an ITIN is “legally protected under privacy laws and cannot be shared with the Department of Homeland Security or Immigration and Customs Enforcement, thus an undocumented worker can obtain one without fear of the information being used to find and deport them. While this disconnect is a source of ongoing tension between the agencies, sharing this information would require legislative action—either a new law or an amendment to the Immigration and Nationality Act.”
Why would an undocumented immigrant consider filing taxes if there is a potential risk?
At the end of the day, if an undocumented immigrant files taxes with an ITIN instead of a Social Security Number, it could be a signal to the government that they do not have immigration status. While that information is not being used to deport immigrants currently, we do not know if that could change in the future. However, we do know that change would require Congress to pass a new and drastic law, which currently seems very improbable.
As described above, there are advantages to filing taxes for undocumented immigrants, such as to support a defense to deportation in immigration court or to help with getting status through potential immigration reform in the future. It is ultimately up to each person to weigh the potential benefits and potential risks of filing taxes. Only each individual can make the right decision for themselves.
For some undocumented immigrants, the benefits of filing taxes don’t outweigh the potential risk. They think that the current law that maintains privacy over people’s IRS tax information and keeps that information separate from immigration officials could negatively change in the future. For others, however, the risk may be too small. They don’t want to give up the chance to develop evidence that could help them in immigration court if a positive immigration reform ever happens in the future.
Many immigrants do pay taxes with the hope that doing so could help them become U.S. citizens. According to the Institute on Taxation and Economic Policy, about half of undocumented workers pay taxes.
How can an undocumented immigrant file taxes with no Social Security Number?
An identification number is needed to pay taxes. The most common type of identification number used to pay taxes is a Social Security Number. The problem is, an undocumented immigrant does not qualify to have an SSN.
Only some groups of immigrants qualify for an SSN, depending on their individual circumstances: lawful permanent residents (“green card holders”), people who have been granted asylum (“asylees”); refugees; people who have a certain kind of visa that allows them to work in the United States; and people who naturalized and become a U.S. citizen.
An undocumented immigrant or another immigrant who is not in one of these groups will likely not be able to get an SSN.
However, an undocumented immigrant can apply for an Individual Taxpayer Identification Number (ITIN) as another way to obtain an identification number to file taxes.
What is an ITIN?
An ITIN is a nine-digits tax processing number that the IRS issues to a person for the purposes of paying federal taxes. The IRS issues ITINs to people who are not eligible to have an SSN. The U.S. government’s tax agency, the IRS, gives ITIN numbers to foreign nationals who are working in the U.S. and pay taxes. This is how many undocumented immigrants pay taxes to the government.
ITIN numbers can also be used for other purposes. For example, with an ITIN an undocumented immigrant will have an identification number that may help them to establish their identity in order to apply for a bank account, credit card, a business loan, or mortgage.
Bear in mind that an ITIN does not authorize a person to legally work in the U.S.
When and how do you file an ITIN?
Undocumented immigrants can apply for an ITIN through the process of filing federal taxes. In other words, filing an application for an ITIN and filing taxes can be done at the same time. Remember federal taxes are generally due April 15th every year.
Here you have two useful resources to help you applying for your ITIN and filing your taxes:
- Learn here the 5 steps to complete an ITIN application
- Learn here how to file taxes for your small business
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