IRS 2025: Are undocumented immigrants required to pay taxes in the U.S.?
Immigrants in this situation can obtain an ITIN, which allows them to file their tax returns even without a Social Security Number.
In the United States, the Internal Revenue Service (IRS) regulates the tax system, setting guidelines for anyone earning income within the country to fulfill their tax obligations. Although it is commonly believed that only citizens and legal residents must pay taxes, undocumented immigrants are also required to comply with these regulations. Even if their immigration status does not grant them legal residency, these immigrants must report the income they earn in the U.S. and pay taxes on it.
The IRS mandates that all individuals, regardless of their immigration status, file their taxes if they are earning income in the U.S.. Undocumented immigrants can apply for an Individual Taxpayer Identification Number (ITIN) to meet these requirements, even if they do not have a Social Security Number (SSN).
ALSO SEE: IRS issues $1,400 stimulus checks in early 2025: Check out the eligibility and distribution details
Do undocumented immigrants have to pay taxes in the U.S.?
Yes, undocumented immigrants must pay taxes, according to the IRS. Although they are not entitled to the many tax benefits that legal residents or citizens receive, they are still obligated to report and pay taxes on any income earned within the U.S. To do so, they need an ITIN (Individual Taxpayer Identification Number) if they don’t have an SSN. This number allows undocumented immigrants to file their taxes and fulfill their fiscal responsibilities.
The IRS treats undocumented immigrants as “non-resident aliens” for tax purposes, meaning they must pay taxes only on income earned within the U.S. Tax obligations do not discriminate based on immigration status, so these immigrants must follow the same procedures as any other taxpayer when it comes to filing their taxes.
The IRS is the principal organization to collect the taxes in the US. Photo: Tax Foundation
How to get an ITIN to pay taxes without legal residency in the U.S.?
Undocumented immigrants can obtain an ITIN to meet their tax obligations. The ITIN is used solely for tax purposes and can be requested by individuals who are not eligible for an SSN, such as undocumented immigrants. This number allows them to report income and pay taxes just like other taxpayers. To apply for an ITIN, they must submit Form W-7 along with documents that verify their identity and U.S. status.
The ITIN does not grant authorization to work in the U.S. nor provide any immigration benefits. It is simply a tool that enables undocumented immigrants to comply with U.S. tax laws. Having an ITIN makes it easier for these immigrants to pay taxes and avoid legal consequences for failing to comply with the country’s tax regulations.
What income do undocumented immigrants need to report in the U.S.?
Undocumented immigrants in the U.S. must report the following types of income:
- Salaries and Wages: Any pay received for salaried work, whether full-time or part-time, must be reported.
- Self-Employment Income: Income earned from working as an independent contractor or freelancer must also be reported.
- Business or Commercial Earnings: If the immigrant owns a business or is engaged in commercial activities in the U.S., profits must be declared.
- Rental Income: Income from renting properties located in the U.S. should be reported.
- Dividends and Interest: Payments from dividends on stocks or interest from U.S. bank accounts must also be reported.
- Investment Earnings: Income from investments, such as capital gains, should be reported.
- Royalties or Licensing Fees: Earnings from intellectual property rights or licenses must be reported.
- Other U.S. Income: Any other income earned in the U.S., such as prizes, scholarships, or pensions, should be declared.
Can undocumented immigrants access tax benefits in the U.S.?
While undocumented immigrants must pay taxes, they are not eligible for certain tax benefits reserved for citizens and legal residents. For example, they are not eligible for the Earned Income Tax Credit (EITC), the Child Tax Credit, or the Income Tax Credit. However, they may be eligible for some limited benefits depending on their individual situation and whether they have paid taxes on their income.
Additionally, some undocumented immigrants may qualify for certain deductions, like the standard deduction, as long as they meet the filing requirements. The primary benefit of fulfilling tax obligations is to avoid penalties and maintain a clean record with the IRS, which could be useful in the future if they seek to regularize their immigration status.
