Economic impact of illegal immigrants in the United States - Wikipedia
The Institute on
Taxation and Economic Policy released a report in February 2016, stating that 11 million
illegal immigrants in the United States are
paying annually an estimated amount of $11.64 billion in state and local
taxes, "on average an estimated 8 percent of their incomes."
How do Undocumented Workers File Tax Returns Without a Valid Social Security Number?
Though certain non-citizens are eligible for to receive Social Security numbers to pay taxes, unauthorized immigrants are ineligible to receive one. However, it is still law that individuals who reside in the United States, whether legally or not, and earn income here must pay taxes on that income, and file a tax return, regardless of whether the income was earned as an undocumented worker—a complicated legal conundrum.
Further, the IRS will not allow a tax return to be filed with a fake or stolen Social Security number. Therefore, unauthorized workers who wish to file their taxes–and potentially get future credit for it— must find another way. Thus, many use the Individual Taxpayer Identification Number, or ITIN, which allows immigrants without Social Security numbers to legally file tax returns and claim the income reported on their W-2’s to the IRS.
What is an Individual Taxpayer Identification Number (ITIN)?
In 1996, the Internal Revenue Service created the
ITIN to provide a way for noncitizens who earn income in the United States, including legally-present noncitizens who do not have Social Security numbers, to pay taxes on money earned in the United States while not being technically employed by a U.S employer. For example, ITINs allow foreign nationals to pay taxes on the interest earned in a U.S. bank or investment account. They also allow spouses of work-authorized visa-holders to pay taxes on self-employment income, among other uses.
Most experts believe that the vast majority of tax returns filed with ITINs today are filed by undocumented immigrants rather than the intended recipient groups—a few categories of noncitizens who do not have a Social Security number and are not authorized to work but who are still earning income and legally residing in the United States. In 2010, ITINs were
used to file over 3 million federal tax returns.
How do Undocumented Immigrants Pay Federal Taxes? An Explainer