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Thinking that illegal immigrants pay taxes? In this post, I’ll learn what taxes undocumented immigrants pay into the US economy, how they contribute to US GDP, and how it all works. Find out the truth about immigrants and taxes.
Do Illegal Immigrants Pay Taxes?
Misconceptions over whether illegal immigrants pay taxes in the United States abound when the topic is illegal immigrants. If you’ve ever wondered “do illegal immigrants pay taxes?”, you’re not alone. Most people are astonished to hear that a large number of undocumented immigrants pay U.S. taxes in a number of different ways. But how do they do this? Let’s take a closer look.
Understanding Illegal Immigrants and Taxes
On this Isthmus of the Americas, the term ‘illegal immigrant’ has been used to label an entire swath of its former inhabitants — and subsequently, the descendants of those former inhabitants.
First, though, let’s get clear about what that phrase “illegal immigrants” means. An illegal immigrant is an immigrant in a country without the legal right to be there. They could be here without the proper authorization, they could be over staying their visa, or they could be here and not in accordance with immigration laws. Yet even though these folks were forced into the shadows, many of these folks still generate income for the U.S. economy, including through taxes.
Do Illegal Immigrants Pay Taxes in the U.S.?
Sure, illegal immigrants are paying taxes — and it’s not a small amount. Undocumented immigrants are ineligible for most government benefits, but participate with some types of taxes. Here’s a breakdown of how this works:
Types of Taxes Paid by Illegal Immigrants
Income Taxes
Like U.S. citizens, undocumented workers who work in the U.S. must pay federal income taxes. While they may not be able to qualify for some tax credits, they need to file taxes and often do so through their employer’s withholding system.
Social Security and Medicare Taxes
Illegal immigrants contribute to the Social Security and Medicare systems through payroll taxes, even if they won’t get benefits. Estimates show how undocumented workers contribute millions of dollars annually to these programs.
Sales Taxes
Illegal immigrants pay sales taxes every time they buy goods and services. And these taxes, on a loaf of bread, a car, or a restaurant meal, are part and parcel of the U.S. economy.
How Do Illegal Immigrants Pay Taxes?
With an ITIN (Individual Taxpayer Identification Number)
Undocumented immigrants do not have Social Security numbers, but they most definitely pay taxes. Instead, they can request an ITIN from the IRS to enable them to file income tax returns. Although this number doesn’t give them legal status, it allows them to participate in the system.
How Do Illegal Immigrants Pay Taxes Through Employers?
Undocumented immigrants work in the U.S. in jobs, many of them requiring them to file taxes (construction, cleaning, food services, etc.). Employers often withhold taxes from their wages even if they don’t have a valid SSN. In fact, the law may force some employers to use fake or borrowed SSNs.
How Does the U.S. Tax Illegal Immigrants Without a Social Security Number?
Yes! I mentioned before that illegal immigrants can use an ITIN to pay taxes. That’s a very critical part of the process. Immigrants can file returns, pay federal and state taxes, and even claim dependents in some cases, thanks to ITINs. They can’t access government benefits such as Social Security and Medicare but they pay into them anyway through taxes.
Do Undocumented Immigrants Pay Taxes on Property?
Undocumented immigrants can pay property taxes if they own property in the U.S., yes. This is another example of how illegal immigrants bolster the economy. Property taxes are paid by property owners, usually to local state governments, which then fund public services like schools, emergency services, and basic infrastructure.
Do Migrants Pay Taxes Differently from U.S. Citizens?
The few differences are that migrants, whether legal or illegal, pay taxes in the same way as U.S. citizens do. Illegal immigrants have no access to tax credits like the Earned Income Tax Credit (EITC), but legal immigrants do. Although unable to collect Social Security and Medicare benefits, both groups contribute to those programs anyway.
How Do Illegal Immigrants Pay for State and Local Government Services?
Undocumented immigrants also pay federal taxes, but they also pay state and local taxes. These contributions benefit many states, particularly those with large immigrant populations. Illegal immigrants pay sales taxes, property taxes, and even income taxes that help pay for local services and infrastructure, such as schools, hospitals, and roads.
Undocumented Workers and Taxes: A Hidden Contribution
While undocumented immigrants may not catch the eye whenever taxes are talked about, they represent a significant share of the tax collection in the U.S. Illegal immigrants paid over $11 billion in state and local taxes in recent years, according to estimates. That also means providing charity for the common good, even if the immigrants themselves don’t consume this charity.
The Debate: Should Illegal Immigrants Pay Taxes?
Many argue back and forth whether illegal immigrants should pay taxes. They are contributing a major part of the economy. However, critics say they should not be entitled to the same responsibilities because they don’t have legal status. Whether it’s true or not, there’s no denying that illegal immigrants do pay taxes and help support the United States economy in ways that many people don’t know about.
Why Should Illegal Immigrants Be Obligated to Pay Taxes?
Illegal immigrants pay taxes, and therefore the money helps fund public services that everyone benefits from. They pay taxes that go toward the very roads, schools, healthcare, etc. that they have here. These people, while often overlooked, contribute to local and state economies.
What Happens if Illegal Immigrants Don’t Pay Taxes?
Regardless of immigration status, the IRS requires everyone to file taxes whose income is at or above the required thresholds. Failing to do so can result in penalties and legal trouble. Many undocumented immigrants cannot file taxes as they do not work or do not have an ITIN, however.
Conclusion: Do Illegal Immigrants Pay Taxes?
I believe we can all agree that illegal immigrants do pay taxes just as any other citizen does. Undocumented workers, despite not having legal status to be in the country, are an untold part of the U.S. tax system and contribute greatly to the U.S. economy. Whether through their purchases or their jobs, these immigrants are compounding and supporting the systems that keep the country alive.
FAQs
Do undocumented immigrants pay income tax?
In fact, many undocumented immigrants pay income taxes (if they’re employed and file their returns using an ITIN).
Can illegal immigrants take tax credits?
Illegal immigrants are not eligible for tax credits such as the Earned Income Tax Credit (EITC).
How do illegal immigrants pay taxes if they don’t have an SSN?
An ITIN (Individual Taxpayer Identification Number) can be used by illegal immigrants who can pay taxes.
Are illegal immigrants paying into Social Security?
Illegal immigrants pay in with payroll taxes and Social Security even without being able to claim benefits.
What taxes do illegal immigrants pay?
Among other taxes, illegal immigrants pay income taxes, sales taxes, and property taxes.