Immigration & Naturalization Law

Do Undocumented Immigrants Have To Pay Taxes in the US?

Yes. Income taxes do apply to immigrants in the United States, even immigrants who are not in the country legally. Here we answer answers to common questions from undocumented immigrants who work and earn money in the U.S.

Workers in the U.S. are required to pay federal income tax and payroll taxes but most states also have state income tax or sales tax requirements and some cities have local taxes. To get specific answers to your questions, talk to an experienced tax attorney or immigration lawyer in your area to understand the tax laws and immigration laws for unauthorized immigrants.

What Happens If You Don’t File or Pay Your Taxes?

Not paying taxes can jeopardize your chances of adjusting your U.S. immigration status in the future. That is why it is important to declare and pay your taxes every year that you have received income in the United States, regardless of your legal status.

How To Pay Taxes While Undocumented

Immigrants who are not eligible for a Social Security number (SSN) can pay taxes using an Individual Taxpayer Identification Number (ITIN). This number is for taxpayers who cannot get an SSN, including noncitizens and people who are in the United States without authorization.

This number does not regularize immigration eligibility for undocumented workers or authorize you to work, but is only used to pay taxes. Those who have a Social Security Administration number and those who have an ITIN are generally subject to the same tax rules, deductions, and credits when filing and paying their taxes. However, ITIN holders are not eligible for some of the benefits, like Social Security income.

An ITIN can also allow immigrants to open a bank account. In some states, the ITIN can also help undocumented immigrants get a state driver’s license or identification card.

Even those who use the ITIN may be eligible for a tax refund from the Internal Revenue Service (IRS) if they have paid more than they owe. Filing taxes and getting tax contributions taken out of your paychecks means you may be able to get money back if you file a return. However, one exception that applies is that ITIN holders cannot receive the earned income tax credit (EITC).

In addition, in order to receive the child tax credit, the child dependents must have SSNs. To obtain an ITIN, it is necessary to fill out and send the W-7 application form and certain documents that prove your identity and “foreign status.” The following documents are supported:

  • Passport.
  • National identification card.
  • State driver’s license.
  • Birth certificate (for dependents under 18 years of age).
  • Foreign driver’s license.
  • State identification card.
  • Foreign voter registration card.
  • United States military identification.
  • Foreign military identification.
  • Visa.
  • Photo ID from the U.S. Citizenship and Immigration Services (USCIS).
  • Medical records (for dependents under the age of 6).
  • School records (for dependents under the age of 14 or under 18 if a student).

For some dependents, proof of residency may also be required.

It is recommended to send the form and documents in advance since the process can take between eight and ten weeks. At the end of the process, the IRS will return the submitted document to you. The IRS has Taxpayer Assistance Centers to help people with their applications.

Why Should I File Taxes if I Am Working Illegally?

Undocumented immigrants end up paying a lot of money in taxes, even if they do not file a tax return. Immigrants may end up paying state sales taxes, payroll taxes for Social Security and Medicare, property taxes, and have a portion of their paychecks withheld for the IRS. Filing taxes is not only required but it may be the only way you will get some of your taxes back as a refund. There may also be tax credits and deductions available to increase your tax refund amount.

Can the Government Use Your Tax Return To Deport You?

No. Section 6103 of the Tax Code prohibits the IRS from disclosing information about taxpayers to other federal government agencies, except to provide information to the Department of the Treasury for investigations related to the tax administration or under a court order related to the investigation of a crime. Being able to give information to an immigration agency would require Congress to change the law. You should not fear that your income tax returns will be used for deportation.

Do I Have To Pay Tax on COVID Relief Money?

In states like California, unauthorized workers were eligible for disaster relief assistance for those impacted by COVID-19. New York offered similar assistance aid. For California tax purposes, those payments are not subject to tax. Check your local state tax laws to understand what taxes have to be paid and what income is not subject to taxation for immigrants without work authorization.

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