Questions about undocumented immigrants and taxes often stir up strong emotions and volatile political opinions. But underneath all of it is a practical question that can be addressed with an explanation of how the U.S. tax system works and where it does (and doesn’t) work with immigration.
If you find yourself wondering, “How do undocumented immigrants pay taxes?” or “How much do undocumented immigrants pay in taxes?”, keep reading to learn more about how taxes work, what immigrants do and do not pay into, and what that means for those seeking legal status.
Looking for more personalized guidance on your immigration concerns? The team at Albizu Law Firm is here to help. Call us at 512-883-9534 to schedule a consultation right away.
Do Undocumented Immigrants Pay Taxes?
Yes, many undocumented immigrants do pay taxes in the United States.
U.S. tax law does not exempt people based on immigration status. Its sole focus is whether an individual earns income in the United States. As a result, undocumented immigrants who work as employees or independent contractors often pay federal, state, and local taxes.
How Do Undocumented Immigrants Pay Taxes?
Tax payments occur in the same way any other taxpayer would make payments, either through payroll withholding or individual tax filings.
Can Undocumented Immigrants Pay Taxes Without an SSN?
Undocumented immigrants do not qualify for Social Security numbers, and many American taxpayers believe that you cannot pay taxes without an SSN. However, undocumented immigrants can apply for an Individual Taxpayer Identification Number, often shortened to ITIN. The IRS issues ITINs for tax administration purposes.
With an ITIN, an individual can file a tax return, have their income and taxes reported to the IRS, and pay into federal taxes. An ITIN does not provide work authorization and does not grant legal immigration status.
The IRS grants ITINs to undocumented immigrants because the source of a person’s income and their legal status in the country are irrelevant to the agency’s goal: to collect taxes for all income earned in the country. It’s similar to the fact that income gained through illegal activity should, technically, still be reported on taxes.
Undocumented immigrants can still have taxes withheld from their paychecks if they use an SSN that isn’t theirs. An ITIN is not proof of authorization to work and so is not typically accepted by employers. However, undocumented immigrants who use other parties’ SSNs may still get taxes taken from each check.
What Taxes Are They Typically Paying?
People wondering, “How much do undocumented immigrants pay in taxes?” are often surprised to find out just how many different taxes immigrants pay. Undocumented immigrants typically pay:
- Federal income taxes
- State income taxes in some areas and depending on whether they are using an ITIN or an SSN that is not theirs
- Payroll taxes, such as those that fund Social Security and Medicare
- Sales taxes on everyday purchases
- Property taxes, either directly by owning property or indirectly by renting
There’s no single answer to “How much do undocumented immigrants pay in taxes?” because it depends entirely on how much they earn, how they report and pay taxes, and how much they participate in the local economy.
Are Undocumented Immigrants Legally Required to Pay Taxes?
Yes. U.S. tax law requires people to pay taxes based on income earned, not their immigration status. To enforce this and to encourage undocumented immigrants to pay taxes, the IRS and Department of Homeland Security were historically kept entirely separate. People who paid taxes with ITINs knew that paying taxes would not result in being targeted by DHS or ICE.
However, in recent times, this agreement has been called into question. The IRS came to an agreement with ICE and DHS to share taxpayer data, including data for those with ITINs. While this decision was struck down in court, the IRS can still share data if strict guidelines and privacy laws are followed.
Should Undocumented Immigrants Pay Taxes? Understanding the Legal vs. Political Question
Legally, working individuals have to pay taxes in the United States, regardless of their immigration status. Morally, people often point out that undocumented immigrants pay into systems and benefits they can never reap the advantages of, such as Medicaid, Social Security, disability, and unemployment.
But paying taxes regularly could even be used as evidence of good moral character in certain immigration proceedings. Demonstrating consistent tax compliance may support applications for relief, cancellation of removal, or future lawful status, depending on the circumstances. While paying taxes does not automatically protect someone from deportation or create legal status, it can help show responsibility, community ties, and a history of complying with U.S. laws.
Because immigration law is complex and highly case-specific, individuals should speak with an experienced immigration attorney about how tax filings may impact their particular situation.
If you’re concerned about how your tax payments may affect your immigration status, it’s time to reach out to our team of immigration attorneys. Call Albizu Law Firm at 512-883-9534 or send us a message online.
