Undocumented immigrants are legally obligated to file U.S. tax returns and pay taxes, even when they’re paid “under the table” in cash. Many do so because they intend to apply for U.S. citizenship at some point. A history of making tax payments could be helpful, but complying with the legal obligation to pay taxes can be a challenge. Here’s what you need to know about paying taxes if you're an undocumented immigrant.
- Undocumented immigrants are required to file tax returns and pay taxes on income earned in the U.S.
- They can apply for Social Security numbers in some cases, allowing them to file U.S. tax returns.
- Undocumented workers can also apply for Individual Taxpayer Identification Numbers (ITINs) by filling out and sending IRS Form W-7 with their tax returns if they can’t qualify for Social Security numbers.
- Form W-7 should be submitted with your tax return.
Who Is an Undocumented Immigrant?
“Alien” is the IRS's term for a non-U.S. citizen or undocumented immigrant. A few categories of people are identified as aliens.
A resident alien is someone with a green card or a “substantial presence in the U.S.,” according to the IRS. One must be physically present in the United States for at least 31 days out of the tax year to qualify, and for at least 183 days during the current year and the preceding two tax years. Resident aliens are taxed like U.S. citizens.
A non-resident alien is someone who hasn’t yet passed their green card test or the substantial presence test. Non-resident aliens file IRS Form 1040-NR when they earn income from engaging in a business or a trade in the U.S. and in some other cases as well.
The IRS considers that an undocumented alien is someone who has entered the U.S. without the proper authorization and documents, or someone who has violated the terms of their visa. Undocumented aliens are also called “undocumented workers.” They're only required to report income derived from U.S. sources.
Filing Taxes Without a Social Security Number
Form 1040 requires that a taxpayer enter their Social Security number (SSN) at the top of the tax return. This rule poses a problem for undocumented workers who are required to file returns but would seem to be prohibited from doing so because they aren’t eligible for SSNs. Some non-citizens can apply for and receive Social Security numbers, though. Non-citizens might be temporarily authorized to work through Deferred Action for Childhood Arrivals (DACA) or through temporary protected status (TPS), or they might have access to work visas.
These SSNs are only valid for a limited time. But they technically mean that the non-citizens are not “undocumented.”
What Are Individual Taxpayer Identification Numbers?
Undocumented workers have another option: the Individual Taxpayer Identification Number or ITIN. An ITIN can be used in place of an SSN. The IRS created the ITIN back in 1996 to encourage those who are ineligible for an SSN to file tax returns and pay taxes.
But an ITIN is not an authorization to work in the U.S. Receiving one doesn’t mean that you’re a documented alien or resident. It simply allows you to file a tax return and pay taxes.
How Can I Get an ITIN?
Fill out the ITIN application, IRS Form W-7. It's pretty basic, compared to other tax forms. You don’t have to reapply every year after you’re assigned an ITIN, but you can no longer use the number if you eventually do receive an SSN. You must use your ITIN on a federal tax return at least once in three years.
Here’s how to get an ITIN:
- Fill out the form with your name and addresses, both in the United States and elsewhere.
- Include information about your place and date of birth.
- Explain why you’re applying, using the checkboxes that are available. They include indicating whether you’re a non-resident alien or U.S. resident alien.
Undocumented workers would generally use the U.S. resident alien box if they’ve passed the substantial presence test.
- Submit proof of your identity. Acceptable documents include original or certified copies of your passport, foreign military ID, birth certificate, or medical records. The form asks for your date of entry into the country.
- Submit Form W-7 along with your completed tax return. Don’t send it ahead of time, before you file your return.
The IRS indicates that processing the W-7 form will take anywhere from seven to eleven weeks.
The IRS provides a list of certified acceptance agents in each state if you’re feeling challenged by the requirements. They can help you complete your Form W-7.
How to Fill Out IRS Form I-9
Your U.S. employer might ask you to complete Form I-9. This is a required form for employees who are on the payroll. The form requests your SSN and documentation that proves that you’re authorized to work in the U.S.
You need only provide your SSN if your employer participates in E-Verify, a voluntary program. The employer isn’t permitted to ask you for specific documents. It’s your choice as to which among the approved documents you want to provide.
It’s illegal to write in a random SSN. You’d then have to file a tax return under that number, which would alert the IRS to fraud if the number belonged to someone else, and that individual also filed a return. The instructions on Form I-9 state that “falsely attesting to U.S. citizenship may subject employees to penalties, removal proceedings and may adversely affect an employee’s ability to seek future immigration benefits.”
Can Undocumented Workers Claim Tax Credits?
Undocumented workers aren’t eligible for tax breaks except in very limited cases.
You’re not eligible for the Earned Income Tax Credit (EITC) if you worked with an ITIN and are undocumented. But undocumented workers and ITIN workers can claim the Child Tax Credit and Additional Child Tax Credit for their children under age 17 if the children are documented and have valid SSNs.
Undocumented workers are eligible for the American Opportunity Tax Credit (AOTC) if they’ve applied for or were issued an ITIN before the due date of the tax return.
The Bottom Line
Filing a tax return is required by law for many reasons. It can help workers become citizens. Paying taxes demonstrates a good faith effort toward “good moral character." It can help undocumented workers make a case for citizenship when the time comes.
Frequently Asked Questions (FAQs)
How do I file taxes if my spouse is an undocumented immigrant?
Your spouse will need a Social Security number or Individual Taxpayer Identification Number (ITIN) to complete the filing process, whether you're filing a separate or joint married return. An undocumented immigrant can file for an ITIN with Form W-7.
How much do undocumented workers pay in taxes?
According to New American Economy, a bipartisan immigration policy research and advocacy organization, undocumented immigrants pay over $30 billion in federal, state, and local taxes.