Taxes for Undocumented Immigrants

Dear Asian Youth,

Immigrants have always been labeled as “other.” In a court of law, they are still called “aliens,” a dehumanizing term that once again separates immigrants from the rest of society. For far too long, immigrants — especially undocumented immigrants — have been considered dangerous, lazy individuals exploiting hardworking Americans to get by. This stereotype may be partially because of the belief that undocumented immigrants do not pay taxes, but this could not be further from the truth.

According to the Institute on Taxation & Economic Policy, a non-partisan non-profit, undocumented immigrants paid around $11.74 billion in taxes in the 2014 fiscal year alone. The Congressional Budget Office claims that researchers estimate between 50% and 75% of undocumented immigrants pay their federal, state, and local taxes. Evidently, these workers do make monetary contributions to the government. In fact, the Internal Revenue Service (IRS) does not care about immigration status. Undocumented residents are still legally required to report all of the income they make. Furthermore, most immigrants are required to pay taxes to maintain a positive tax history before applying for naturalization and/or immigration benefits (Citizen Path).

Unfortunately, undocumented immigrants’ path to filing taxes is significantly more difficult, because they do not have social security numbers. In the US, a social security number is a nine-digit number used to identify and record an individual’s wages and benefits (SSA). Most are required to obtain an Individual Taxpayer Identification Number (ITIN) in place of a social security number. For people in the US who are born citizens, a social security number is a birthright, so many, including myself have never really considered its privileges. But you need a social security number to open a bank account, apply for a loan, seek unemployment benefits, enroll in medicare, obtain a license, and to file your tax returns (Investopedia). So, obtaining an ITIN is a necessity for most undocumented immigrants.

But the process for obtaining an ITIN is long, and most people seeking an ITIN require help from outside organizations due to the complexity of the law, especially when simultaneously applying for immigration benefits. While helping non-English speakers try and obtain an ITIN, I have read the 15 page instruction pdf that the IRS has posted to guide people through the process. The contradicting laws and loopholes confuse me no matter how many times I read them. I can’t even imagine how anyone who does not speak English is expected to manage this process. Furthermore, the income that is reported on tax returns with ITINS cannot be made from a job with a W-2 form because undocumented immigrants are technically not allowed to be hired. For reference, a W-2 form is given by an employer to any and all employees in order to report wages (IRS). So, undocumented immigrants need to make money on their own or start a business to file their taxes, as opposed to being able to obtain a regular job. This makes the entire situation worse, because those who file Schedule Cs (self-employed income) without a social security number end up paying a social security tax. For those with social security numbers, this tax is meant to help the individual who paid it later on in life. Most notably it provides taxpayers with retirement benefits. But this is not the case for undocumented immigrants who are essentially throwing this money away.

Furthermore, it is ridiculous to assume that undocumented immigrants are exploiting the system when laws are so unfair towards them. Just last year, mixed-status households were ineligible for a stimulus check (CNBC). This means that when a couple filed married jointly, and just one person in the family had an ITIN instead of a social security number, the entire family (including children with social security numbers) was ineligible to receive any government compensation. Though rectified in the 2020 tax year, I have encountered many families who were unaware of this law and missed out on much needed government compensation in the face of the pandemic. The law was clearly attacking immigrant families, since ITINs are most commonly used by immigrants without social security numbers. The worst part is that nobody talked about it. It was slyly written into the stipulations for receiving a stimulus check and affected too many families to count, but very few were even aware that illegal immigrants were being held to a different standard.

All in all, stigma against immigrants is unfair and unwarranted. These valuable members of society are forced to jump through more legal hoops than everyone else, and are then criticized for not contributing to society. I hope to see less of this inequity both in terms of public opinion and in the law itself.

-Lora Kwon

Cover Photo Source: KQED