Aliens in America: Do Undocumented Workers File Tax Returns?
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
The mention of undocumented workers always generates an emotional reaction. However, the IRS has a pretty cool, straightforward attitude toward the subject. As far as the IRS is concerned, there are only two kinds of aliens: resident aliens and nonresident aliens.
Either way, if you earn income in the United States, you are expected to pay taxes on that income.
Let’s talk about how to file a tax return if you are working in the United States illegally—and what benefits you’re entitled to claim.
A person who has spent at least 31 days in this country this year and 183 days in the United States during the last three years is called “resident by substantial presence.” The IRS outlines the details and exclusions, visas and treaties in its substantial presence test.
If you have not lived here long enough to meet the substantial presence test, you should file Form 1040-NR (nonresident) as your first tax return. During your second year in the States, you may file a regular Form 1040.
Looking at the Form 1040-NR, notice the space for an “identifying number” instead of a Social Security number. Exploring the form further, you can claim the dependents you support and all the usual adjustments to income. When it comes to credits, you are entitled to the child tax credit—and the additional child tax credit. But you are not entitled to the earned income credit. Since you don’t live in the States (as a nonresident), you are not entitled to the homebuyer credit or the residential energy credit.
Once you’ve lived here long enough to be a “resident alien,” you can claim the homebuyer credit and the residential energy credit. But you cannot claim the earned income credit without a valid Social Security number.
No Social Security Number (SSN)
If you’re planning on staying here, get an ITIN (individual taxpayer identification number) by filing Form W-7. Since this form requires submitting original documents to the IRS to prove your identity, get the help of a certified acceptance agent (CAA). The CAA can review your original documents for authenticity and send copies to the IRS, instead of the originals. You can even find CAAs outside the United States! [Note: To find CAAs in your state, just scroll to the bottom of that IRS page.]
While an ITIN doesn’t give you the legal right to work in this country, it does make it possible to keep consistent track of your income. It can provide proof that you have filed all your tax returns—for when you do apply for your green card.
Using Someone Else’s SSN
If you worked under someone else’s SSN, file your tax return using your own ITIN. Include a copy of the W-2 and a statement explaining that the SSN is incorrect.
Be aware that the person whose SSN you’re using will be getting notices that he has not included the income on his tax return. You will be causing him problems. You may need to get a tax professional to help get this straightened out for both of you.
Incidentally, if this article doesn’t apply to you, it’s likely to apply to someone you know. Please, give them this article and help them file their tax returns properly.
Tax Schemes and Tax Turkeys: Stay Away from Too-Good-to-Be-True Tax Advice
Winner! Winner! Winner!: Tax Implications of Winning Lotteries and Game Show Prizes
New Tax Laws for 2011
Open-Enrollment and FSAs: A Bonanza of Tax Advantages
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.