Do illegal immigrants pay taxes in the U.S.?
If you are an immigrant, that’s a very valid question.
Illegal Immigrants can pay taxes in the U.S. However, it is necessary to understand the pros and cons of filing taxes as an immigrant.
The Federal Government specified that paying taxes and filing a tax return is necessary for all U.S. people working and having an income. It is of high importance, regardless of the person’s immigration status.
It is common for undocumented immigrants to believe that if they file taxes, they will fall under the radar of immigration officials and get deported.
However, there are privacy protections under current law 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 Number) unless the law changes.
Here, you’ll get all the answers you need about filing taxes for illegal immigrants, and learn if undocumented immigrants pay taxes and how they do it without an SSN.
According to the Tenement Organization, the population of immigrants and their American-born children represent a staggering 86.4 million in the U.S. 49% of them represent naturalized citizens. Another important fact: In 2010, three million unauthorized workers filed taxes.
What Are The Benefits Of Filing Taxes For Undocumented Immigrants?
1. Being compliant
First, 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.
2. It can help in an immigration court
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, showing an immigration judge that they have been paying taxes could be beneficial.
This is because, in immigration court, immigrants must defend against deportation. Undocumented immigrants pay taxes to get different benefits in the future-
Several types of defenses require the immigration judge to use their 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 decide whether they should be able to stay in the country.
For example, having a record of paying income 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 their discretion to grant someone a defense to deportation in an immigration case.
Filing taxes has many benefits for undocumented immigrants in the U.S.
3. For when you change your status
Filing 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.
For example, 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 to help show that they qualify for any potential immigration reform that may be present in the future.
We do not know if this kind of immigration system or reform will ever happen in the future, but it is possible that someday immigration reform could happen in the coming years.
In the past, the immigration system has looked into the time 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 specific 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 non-regulated immigrants to file taxes. Another advantage is to start or continue investing as an immigrant.
Learn here how to file taxes for your small business
How Can An Unauthorized Immigrant File Taxes With No Social Security Number?
A tax identification number is mandatory to pay taxes. The most common identification number used to pay taxes is a Social Security Number. It is important to note that undocumented immigrants do not qualify for an SSN.
Only some groups of immigrants qualify for an SSN, depending on their circumstances:
- lawful permanent residents (“green card holders”)
- people granted asylum (“asylees”)
- refugees; people who have a certain kind of visa that allows them to work in the United States
- people who naturalized and became a U.S. citizen
An undocumented immigrant or another immigrant 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).
What is an ITIN?
An ITIN is a nine-digit tax processing number that the IRS issues to a person to pay federal taxes.
The IRS issues ITINs to people that need a similar document to the SSN. The U.S. government’s tax agency, the IRS, gives ITIN numbers to foreign nationals working in the U.S. and paying taxes.
This is how many undocumented immigrants pay taxes to the government.
You can also use ITIN numbers for other purposes.
For example, with an ITIN, an undocumented immigrant will have an identification number that may help them to establish their identity to apply for a bank account, credit card, business loan, or mortgage.
Bear in mind that an ITIN does not authorize a person to work in the U.S legally. Learn 5 things you could do with an ITIN number.
Among the essential aspects of having or requesting an ITIN is applying for loans!.
When and how do you file an ITIN?
Undocumented immigrants can apply for an ITIN by filing federal taxes. In other words, using for an ITIN and filing taxes is possible to complete at the same time. Remember, federal taxes are generally due April 15th every year.
Can An Undocumented Person Get Immigration Officials’ Attention By Filing Taxes With An ITIN?
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, considering some administrations may change the current processes or systems. , it is essential to think through the benefits and risks of filing taxes.
There is no guarantee that unauthorized immigrants would never face immigration consequences due to 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 and tax laws have different focuses.
The IRS’s purpose is to collect taxes and encourage people to continue filing taxes. Therefore, 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, the tax information of undocumented immigrants who file taxes through an ITIN is:
Legally protected under privacy laws and it is not allowed to share with the Department of Homeland Security or Immigration and Customs Enforcement.
Thus, an undocumented worker can obtain one without fear and knowing the information is not shared and is not 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.
3 steps to build wealth even if you don’t have legal immigration status
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 the government doesn’t use that information to deport immigrants currently, we don’t know if that could change in the future.
However, we know that change would require Congress to pass a new and drastic law, which currently looks pretty improbable.
As described above, there are advantages to filing taxes for unauthorized immigrants, such as supporting a defense to deportation in immigration court. Also, it can help with getting status through potential immigration reform in the future.
However, it is ultimately up to each person to weigh the potential benefits and potential risks of filing taxes. Therefore, only each individual can make the right decision for themselves.
The benefits of having an ITIN number and paying taxes are more significant than the risks. For example, getting a small business loan would be impossible to receive in a bank.
What Happens If An Undocumented Immigrant Uses A Fake Or Someone Else’s Social Security Number?
Employers are legally responsible for hiring individuals authorized to work in the U.S. However, according to the IRS, employers can face stiff monetary penalties when they fail to follow immigration and taxation guidelines.
At the time of employment, an employer verifies a person’s eligibility to work in the U.S. by filing Form I-9 and getting a copy of the employee’s social security card.
Employers that hire undocumented immigrants pay them wages and deduct federal and payroll taxes, which they deposit and report to the Social Security Administration and the Internal Revenue Service.
If the social security number doesn’t match the employee’s name on a W-2, one or both agencies notify the employer. The employer can either correct the error or be subject to civil penalties.
Undocumented immigrants should not use a fake number or someone else’s social security number. If convicted of identity theft, they could face jail time, deportation, or jeopardize their future legal status.
Do Undocumented Immigrants Collect Benefits?
Foreign-born individuals who do not have valid immigration documentation and undocumented immigrants may be eligible for benefits in 26 states.
For example, they may receive healthcare assistance through New York’s Safety Net Assistance or California’s food and cash assistance programs.
The 1996 welfare law categorized immigrants into two groups: qualified and not qualified. The not qualified group, undocumented immigrants, has limited access to federal programs such as:
- The Children’s Health Insurance Program (CHIP)
- Temporary Assistance for Needy Families (TANF)
- Supplemental Nutrition Assistance Program (SNAP)
- Supplemental Security Income Income (SSI)
Undocumented immigrants may be eligible for benefits that protect their lives, such as:
- emergency Medicaid
- services at emergency care facilities
- access to nutrition programs that benefit women, infants, and children
Undocumented immigrants may also be eligible for
- child and protective services
- homeless shelters
- soup kitchens
- public health services
Non-profit charitable organizations are not required to verify the immigration status of individuals they serve.
What Federal Benefits Undocumented Immigrants Are Eligible For?
|Emergency Medicaid||Eligible to public health programs such as immunizations and communicable disease treatments.|
|CHIP||Not eligible for Federal programs, but some states cover OBGYN care to include labor, delivery, prenatal, and postpartum services|
|SNAP||A person’s immigration status doesn’t restrict school food programs which are available to all children|
|Emergency disaster assistance||Short-term, non-cash assistance and in-kind services available to protect life or safety in emergencies and weather-related disasters|
|Medicaid||Only available in emergency situations|
|Tax credits||Only immigrant parents with an ITIN are eligible for the Child Tax Credit|
For some undocumented workers, the benefits and the importance of filing taxes are of low significance compared to the potential risks.
In addition, illegal immigrants assume that the current law that maintains privacy over people’s IRS tax information and keeps that information separate from immigration officials could 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.
The vast majority of immigrants pay taxes hoping that doing so could help them become U.S. citizens. Also, it is important to note that illegal immigrants pay social security payroll taxes but are not eligible for benefits.
According to the Institute on Taxation and Economic Policy, about half of undocumented workers pay taxes. When it comes to state and local taxes, unauthorized immigrants pay more than $11 billion a year, according to a report from the Institute on Taxation and Economic Policy in 2017.
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Can a deported person file their taxes?
Many lawyers will state that it won’t matter if the government deported a person; the individual still needs to comply with their obligation to pay taxes.
But you should know that all situations are different. Therefore, we recommend that you contact a professional lawyer to advise you on proceeding.
If you’re worried that you might get deported for filing your taxes, don’t worry. The IRS can’t legally disclose your status to anyone.
Do non-permanent residents pay taxes?
Green card holders and non-immigrant visa holders must report their income on a U.S. tax return and pay any tax due based on guidelines.
Green card holders are permanent residents and subject to the same taxation laws as U.S. citizens.
To pay taxes, non-immigrant visa holders must be in the U.S. physically for at least 31 days in the current year or 183 days within 3 years based on specific guidelines.
Can an illegal immigrant get a tax identification number?
According to the IRS, “unauthorized immigrants, lawfully present individuals, and U.S. resident aliens/nonresident aliens” are eligible to apply for an ITIN.
Can I claim an undocumented person on my taxes?
IRS guidelines for a qualifying child or relative include a son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, adopted child, or a descendant of one of these, such as a grandchild.
Age restrictions: 19 years old or younger, age 24 if a full-time student, or permanently disabled.
To qualify, a child must live with the taxpayer for half of the year and receive 50% or more financial support from them.
Qualifying children must be U.S. resident aliens, U.S. nationals, or residents of Canada or Mexico.
Can you file taxes without a Social Security Number?
Undocumented immigrants legally working and receiving wages must pay taxes on the income they receive the same as a U.S. citizen.
Because their immigration status prevents them from qualifying for a social security number, applying and receiving an ITIN allows non-U.S. citizens to submit a tax return and pay any tax they owe to the federal government.
Does the IRS care about my immigration status?
The Internal Revenue Service is interested in enforcing Internal Revenue Code and tax laws. There are confidentiality rules to protect a taxpayer’s information and immigration status.
Can I hire an illegal immigrant with an ITIN number?
Legally, anyone that doesn’t have legal status is not permitted to work as an employee for an employer. However, there are a few exceptions.
Individuals with Deferred Action, Temporary Protected Status, or an immigration case that’s pending a work authorization. Examples include a person applying for a green card and waiting for a decision, or someone applying for asylum can work temporarily.
How do I file my taxes without an SSN or ITIN?
If you owe taxes to the Internal Revenue Service, you must use a tax processing number. The IRS accepts either an SSN or ITIN to file a tax return. If you have neither, the IRS has no way to identify you as the taxpayer.
Can you file taxes with ITIN on Turbotax?
When you complete your tax return online using TurboTax software, you enter your ITIN in place of an SSN. TurboTax accepts both 9-digit numbers.
How do immigrants file taxes?
Immigrants must have an SSN or ITIN to file taxes in the U.S legally. The IRS requires a tax processing number for every person that legally earns income and pays taxes to file a tax return.
Who is eligible to apply for ITIN?
According to the IRS, this 9-digit tax processing number is available for “certain nonresident and resident aliens, their spouses, and dependents who cannot get a social security number.”
Can I get an ITIN online?
Yes, you can apply using the IRS online website or have a certified acceptance agent submit the application for you for a fee.
How much does it cost to get an ITIN number?
It depends on where you apply. There is no charge if you fill out and submit form W-7 through the IRS website. However, third-party certified acceptance agents set their fees and charge amounts ranging from $125 to $1,000 or more.
How long does it take to get an ITIN?
On average, applicants receive an ITIN from the IRS within seven weeks as long as the applicant qualifies for the number and provides the requested information on the application.
After seven weeks, you can call the IRS at 1-800-829-1040 to check your application status.