How Illegal Immigrants pay taxes

In April this man visited Casa de Maryland in Rockville, Maryland, which hosts two federally subsidized centers where low-income workers can file their taxes for free. That year, they had helped about 200 undocumented immigrants file their taxes, and many were waiting in line with their paperwork when I stopped by.

 

I watched tax preparer Earvin Gonzalez go through the process of helping undocumented immigrants file their taxes. Maria, whose last name is being withheld because of her immigration status, handed him a folder with tax documents from two jobs. Her W-2 showed that a housecleaning company paid her $17,288 in 2015.

As Gonzalez filled out her information in a computer software program, a green box popped up on the computer screen: “Taxpayer’s Social Security number is not valid.”

That wasn’t a surprise. The 36-year-old from El Salvador is undocumented, and she told me that she made up the Social Security number on the W-2 form because she doesn’t have one. Her employer never asked for identification to verify it, she says. Instead, she has an Individual Taxpayer Identification Number (ITIN), created by the IRS in 1996 so people who aren’t allowed to work in the United States could still file taxes on any income they earned. (The IRS does not share ITIN information with immigration authorities.)

Maria said she applied for an ITIN number shortly after arriving illegally in the United States from El Salvador in 2009. People told her that having a record of paying taxes would help her with her case to gain legal status if immigration reform happened.

Comprehensive immigration reform failed in Congress, but Maria is still paying her taxes every year. “I think it’s important, and all my relatives pay their taxes too,” she said.

Last year, her tax documents also included two 1099 forms, for her second job as a contractor.

“What kind of jobs were these?” Gonzalez asked her in Spanish.

“After cleaning houses, I would go lay concrete in parking lots,” she said.

Those two jobs brought in a total of $24,845 last year, and Maria still needed to pay taxes on that income. Gonzalez entered some deductions, such as the $1,500 she spent on equipment to pour and level concrete and the 12,000 miles she drove between job sites. Maria, who is a single mom, claimed two dependents: her 16-year-old son and 13-year-old daughter. With her ITIN number, she was able to claim child tax credits, but not the earned income tax credit, the major federal tax credit for low-income working families.

In the end, Maria owed $1,131 in income taxes to the state of Maryland and $775 to the federal government. She said she had some money saved up because she knew she would have a tax bill at the end of the year from the contracting jobs. But she said she will probably get on a payment plan with the IRS. If Maria had qualified for the earned income tax credit, her tax bill would probably have been about $500 lower.

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