Immigration and Taxes: Who Must Pay Taxes in the U.S.?

Living and working in the United States means dealing with taxes. The tax system is confusing, even for U.S. citizens. New immigrants are expected to figure out how to pay taxes as soon as they earn any money in the U.S. Paying taxes includes state tax, federal tax, sales tax, and even property tax.

Taxation changes depending on the state where you are living or working, and sometimes even varies by city. This page provides an overview of taxes for immigrants. For specific answers to your individual tax questions, talk to a local immigration lawyer or talk to a tax attorney in your area for legal advice.

Paying Taxes for Workers and Immigrants

The Internal Revenue Service (IRS) does not refer to individuals as U.S. citizens, immigrants, nonimmigrants, or undocumented. For the IRS, it only matters whether someone is a tax resident or a non-tax resident. How do you determine whether you are a tax resident or a non-tax resident?

For U.S. citizens, the rules are simple. Citizens must pay taxes on their income. Citizens even must pay taxes on foreign income if it comes up to a certain threshold. Even if a U.S. citizen has lived in another country for years, they still must file their taxes in the U.S.

Tax Residency for Non-Citizens

The test for non-citizens is more complicated. Generally, someone who is not a U.S. national or U.S. citizen can take the green card test and the substantial presence test to see if they must pay taxes in the U.S. This applies to immigrants who are legally in the U.S. and those that are undocumented.

Green Card Test for Taxes

According to the IRS, you are considered a resident for federal tax purposes if you are a lawful permanent resident (L.P.R.) at any time during the calendar year. This means you are considered a resident who must pay taxes. For example, if you got your green card on December 31, 2022, then you will have to file your 2022 taxes because you are considered a tax resident for the year 2022.

Once you get your green card, you are considered a taxable resident until you renounce your L.P.R. status, or your immigration status is terminated by a federal court or by the U.S. Citizenship and Immigration Services (U.S.C.I.S.).

Substantial Presence Test for Taxes

Even if you do not have a green card, you may be a tax resident if you meet the substantial presence test. This applies to undocumented immigrants and nonresident visa holders. A nonresident visa is for people who are legally present in the U.S. for a limited purpose or temporarily. This includes business visitors, students, and temporary workers.

For federal tax purposes, you are considered substantially present in the U.S. if you are physically present in the country for at least:

1. 31 days of the current year; AND
2. 183 days over the last three years (including the current year) by counting:
   • All the days present in the U.S. in the current year, and
   • 1/3rd of the days present in the prior year, and
   • 1/6th of the days present two years back.

This test seems complicated, but a couple of examples can help you determine your residency for the tax year.

For example, Worker A is present in the U.S. for the following number of days:

• 2022: 90 days
• 2021: 90 days (⅓ of 90 =30)
• 2020: 90 days (⅙ of 90 =15)

Worker A adds 90 + 30 + 15 to get a total of 135 days, which is not enough to meet the substantial presence test. Worker A does not have to file taxes under this situation for 2022.

For example, Worker B is present in the U.S. for the following number of days:

• 2022: 150 days
• 2021: 120 days (⅓ of 120=40)
• 2020: 30 days (⅙ of 30=5)

Worker B adds 150 + 40 + 5 to get a total of 195 days, which is more than enough for the substantial presence test. Worker B will have to file taxes for the tax year 2022.

There are some exceptions and exemptions. You can find more information from the IRS.gov website for the substantial presence test.

Do I Have to Report My Income If I’m Undocumented?

It may not seem fair that you must pay federal taxes if you are undocumented. Undocumented people already pay plenty of other taxes in the U.S., including sales tax on the products they buy. In addition to sales tax, individuals may also have to pay state and local taxes. If someone is using a false Social Security number (SSN), the employer will withhold federal taxes and payroll taxes, even if the undocumented worker is not eligible to receive Social Security and other federal benefits.

Under the Internal Revenue Code (IRC), the government does not care if you are a U.S. citizen, green card holder, or undocumented immigrant. Even if you do not get any government benefits, if you are considered a resident, you are required to report your income and file taxes. However, depending on your tax situation, you may be able to get a tax refund or tax credit, even if you are not in the U.S. legally. For example, if you are undocumented but have a child who is a citizen, you may be able to claim the Child Tax Credit.

In order to file federal taxes, you need a Social Security n or an Individual Taxpayer Identification Number (ITIN). You can get your ITIN by mailing in Form W-7, along with your tax return, proof of identity, and foreign status documents. If you don’t want to put your ID in the mail, you can make an appointment with an IRS Taxpayer Assistance Center (T.A.C.). A T.A.C. will help you get an I.T.I.N. without charge. Be careful of anyone asking for money to get your identifying information.

Will ICE Find Out If I File My Taxes?

Many undocumented immigrants are worried that if they file their taxes, the government will get their information and send Immigration and Customs Enforcement (ICE) to their home. However, the IRS will not share your tax return information with immigration. Under IRC § 6103, tax returns and tax return information is confidential. This means the taxpayer’s identity, source of income, and other return information will not be shared with ICE.

Immigration and Taxes: Get an Attorney to Answer Your Questions

The U.S. immigration system and the tax code can be confusing, and the laws are changing all the time. To get more information about whether you have to file taxes as an immigrant in the U.S., talk to an immigration attorney who can guide you through the complicated tax system and explain your immigration options.