Can Undocumented Immigrants Pay Taxes in the US?
Undocumented immigrants are often seen as a burden on U.S. resources, with many believing they don’t contribute to the economy. However, this is far from the truth. A long-held belief among critics of immigration reform is that undocumented immigrants fail to pay taxes. But the reality is that they do, in fact, pay a significant amount in taxes.
In 2022, undocumented immigrants paid about $96.7 billion in federal, state, and local taxes, averaging $8,889 per person. The Institute on Taxation and Economic Policy (ITEP) found that they contributed $59.4 billion at the federal level, with an additional $37.3 billion paid in state and local taxes. These tax contributions are especially noteworthy, considering that undocumented immigrants make up around 4.5% of the U.S. workforce.
So, when we ask, can undocumented immigrants pay taxes? The answer is clear, they absolutely do, and their contributions are vital to the U.S. economy.
Who Are Undocumented Immigrants in the U.S.?
Undocumented immigrants in the U.S. are individuals who live in the country without legal authorization. This could mean they entered the country without proper documentation, stayed after their visa expired, or didn’t meet the requirements to stay legally.
In simple terms, they’re people who don't have official permission from the government to be in the U.S., but they still live and work here. Despite their legal status, many undocumented immigrants contribute significantly to the U.S. economy by working in various sectors, including agriculture, construction, and service industries.
The exact number of undocumented immigrants is difficult to determine, but it's estimated that there are over 10 million living in the U.S. today. While they may not have legal status, many of them live here for years, building lives, paying taxes, and supporting their families.
How Do Undocumented Immigrants Pay Taxes?
Undocumented immigrants pay taxes just like U.S. citizens, even though they don't have a Social Security number (SSN). Instead, they use an Individual Taxpayer Identification Number (ITIN) issued by the IRS. This number allows them to file tax returns and pay taxes legally.
Most undocumented immigrants who work in the U.S. have taxes automatically deducted from their paychecks, similar to citizens and legal residents. These include federal income taxes, state and local taxes, and Social Security and Medicare taxes. However, unlike legal residents, they can't collect benefits like Social Security when they retire, even though they contribute to the system.
Some undocumented immigrants are also self-employed. In these cases, they file their taxes independently using an ITIN, paying self-employment taxes along with income taxes.
By using an ITIN and paying taxes, undocumented immigrants play a significant role in supporting the U.S. economy.
Types of Taxes Paid by Undocumented Immigrants
Undocumented immigrants contribute to the U.S. economy in several ways, including paying taxes. Despite not having legal status, they still pay a variety of taxes that support federal, state, and local programs. These tax contributions are vital, even though undocumented immigrants do not have access to many of the benefits funded by these taxes.
Let's explore the main types of taxes they pay:
Federal Income Taxes
Undocumented immigrants contribute a significant portion of federal tax revenue. They pay federal income taxes through their jobs, just like any other worker in the U.S. These taxes are automatically withheld from their paychecks by employers, based on their income. Although they don’t receive direct benefits from these taxes, such as Social Security or Medicare, their contributions help fund government programs and public services.
State and Local Taxes
In addition to federal taxes, undocumented immigrants also pay state and local taxes. These taxes can include sales taxes, property taxes, and income taxes at the state or local level. Even if they’re not eligible for certain government services, they still contribute to local schools, infrastructure, and other public services. It’s important to note that in some states, undocumented immigrants are required to file state income taxes if they earn above a certain threshold.
Social Security and Medicare
Undocumented immigrants contribute to Social Security and Medicare through payroll taxes, which are automatically deducted from their earnings. While they pay into these systems, they do not have access to these benefits. This is because they are not eligible for Social Security payments or Medicare when they retire. However, their contributions help fund these programs for U.S. citizens and legal residents. Some estimates suggest that undocumented immigrants have paid billions of dollars into Social Security without ever being able to access the benefits.
How Undocumented Immigrants Can Become Legal and Continue Paying Taxes:
Undocumented immigrants may be able to change their legal status and continue paying taxes through various legal pathways, and psychological evaluations can play a critical role in some of these processes. For instance, one option is applying for hardship relief (I-601A), which requires proof of emotional and family separation hardship. Psychological evaluations can document the emotional toll this separation has caused, which can strengthen the application. VAWA (Violence Against Women Act) allows undocumented immigrants who have experienced abuse to apply for legal status. In these cases, abuse and trauma evaluations are essential to provide evidence of the psychological impact of the abuse, helping to support their case.
For individuals who fear returning to their home country due to persecution, applying for asylum may be an option. PTSD and persecution assessments can document the mental health effects of the persecution, bolstering their claim for asylum. Another legal option is the U-Visa, available to victims of crime who cooperate with law enforcement. A crime victim psychological report can highlight the trauma experienced, helping to strengthen the visa application and provide proof of the psychological impact of the crime.
Through these legal processes, psychological evaluations are not only helpful but often necessary to document the mental and emotional challenges immigrants face. At Clarity Mental Health, we provide these essential evaluations, offering support for individuals navigating the complexities of immigration law. These evaluations are crucial in establishing the emotional toll of hardships such as family separation, trauma, and persecution. By providing thorough assessments, we help immigrants build stronger cases for legal status, allowing them to continue contributing to U.S. taxes and the economy.