HOW TO PAY TAXES AS AN UNDOCUMENTED IMMIGRANT

Contrary to popular belief, many undocumented immigrants in the United States can and do pay taxes. If you’d like to learn how to do this, please read on and reach out to us for your free consultation if you have any questions.

Individual Tax ID Number (ITIN): What It Is

An ITIN is the nine-digit number issued by the IRS to individuals who must have an identifying number but who are not eligible for a Social Security Number or an Employer ID Number. It is for tax-reporting purposes only and cannot be used for identification purposes. The Internal Revenue Service (IRS) does not share ITIN information with immigration authorities.

The following are examples of people who may need an ITIN:  

  • An undocumented immigrant filing a U.S. tax return who is not eligible for a Social Security Number
  • A U.S. resident immigrant (based on days present in the U.S.) filing a U.S. tax return and not eligible for a Social Security Number
  • A dependent or spouse of a U.S. citizen/resident immigrant
  • A dependent or a spouse of a non-resident immigrant visa holder

ITIN: The Benefits

Having an ITIN and paying taxes can help undocumented immigrants to show good moral character when applying for residency. It is also helpful to establish marital status which can be important in for immigration petitions.

Other benefits include having the ability to open an interest-bearing bank account, providing proof of residency, and in some states (including Connecticut if you can show state residency) securing a driver’s license.

ITIN holders are eligible for the Child Tax Credit (CTC) if their child is a U.S. citizen and has a Social Security Number. As of December 2017, the CTC tax credit may be worth as much as $2,000 per qualifying child.

ITIN: What It Does Not Grant

An ITIN holder is not eligible for Social Security benefits or the Earned Income Tax Credit. However, if that person becomes a lawful permanent citizen later and thus eligible for Social Security, the earnings reported with an ITIN can be counted toward the amount he or she is eligible to receive.

ITIN: How to Obtain It

It is easy to apply for an ITIN and you do not have to do it in-person nor go through your employer. Applicants must fill out a W-7 application form and submit it to the IRS along with a completed tax return and original documents verifying identity and “foreign status”; a passport is the most commonly used document to do this.

When the application is approved, the ITIN is mailed to the applicant. Any verification documents that were sent in by the applicant will be returnd to the applicant within 60 days of receipt and processing of the W-7 form.

All ITINs issued after December 31st, 2012 must be revalidated every five years. If you have an ITIN but have not used it for more than three years, it is considered expired and must be revalidated.

If you have questions, please book your free consultation with us at any one of our eight office locations throughout New York, New Jersey, and Connecticut. We are eager to help!