How Undocumented Immigrants Pay Taxes
There are two main ways taxes are paid:
Through Withholding (Every Paycheck)
When an employer pays wages, federal and state income taxes, Social Security taxes, and Medicare taxes are withheld automatically from each paycheck — regardless of the worker's immigration status. An employee doesn't need an SSN for taxes to be withheld. At year end, the employer issues a W-2, which the worker uses to file a tax return.
By Filing a Tax Return with an ITIN
The IRS created the Individual Taxpayer Identification Number (ITIN) specifically for people who have a U.S. tax obligation but are not eligible for a Social Security Number. Undocumented immigrants file the same Form 1040 as any other taxpayer — they just use their ITIN where an SSN would appear. The IRS has issued approximately 26 million ITINs since the program started. See: How to Apply for an ITIN.
What Types of Taxes Are Paid
| Tax Type | How It's Paid |
|---|---|
| Federal income tax | Withheld from paycheck or paid when filing Form 1040 with ITIN |
| Social Security & Medicare (FICA) | Withheld from every paycheck; no immigration check at payroll |
| State income tax | Withheld or paid on state return; most states accept ITIN |
| Sales tax | Paid automatically on every purchase, no ID required |
| Property tax | Directly (homeowners) or indirectly (folded into rent by landlord) |
The Social Security Situation
Social Security and Medicare taxes (FICA) are withheld from paychecks regardless of immigration status. However, undocumented immigrants generally cannot collect Social Security retirement or disability benefits — so they contribute to the system without being able to draw from it. This is one reason the Social Security Administration has historically maintained a large "earnings suspense file" of contributions that cannot be matched to a valid SSN.
Tax Credits: What ITIN Holders Can and Cannot Claim
Cannot claim:
- Earned Income Tax Credit (EITC): Requires a valid SSN for the filer. ITIN holders are excluded — even if their children have SSNs.
- Child Tax Credit / ACTC (for children without SSNs): The qualifying child must have a valid SSN. A child born in the U.S. gets an SSN automatically — so U.S.-born children typically qualify their ITIN-filing parents for the CTC. Foreign-born children without SSNs do not.
Can claim:
- Standard deduction: All ITIN filers can take the standard deduction (approximately $16,100 single / $32,200 MFJ for 2026 — check IRS.gov for final figures).
- Child Tax Credit: Available when the qualifying child has a valid SSN. See: Child Tax Credit With an ITIN.
- Refund of withheld taxes: If more was withheld than owed, ITIN filers receive a refund by filing. See: Can You Get a Tax Refund With an ITIN?
Why Some People Don't File — and Why Filing Is Worth It
Many undocumented immigrants do not file a tax return out of fear. This concern is understandable, but not filing has real costs: unclaimed refunds (taxes were withheld but never returned), missed credits for U.S.-born children, and a weaker record of tax compliance for future immigration proceedings. The IRS does not share ITIN return information with immigration enforcement as a matter of standard policy — filing is separate from immigration status.
For how to actually file, see: How to File Taxes With an ITIN.
Frequently Asked Questions
Do undocumented immigrants pay taxes?
Yes. Undocumented immigrants pay federal income taxes, payroll taxes (Social Security and Medicare), state income taxes, sales taxes, and property taxes (directly or through rent). They file using an Individual Taxpayer Identification Number (ITIN) issued by the IRS.
Do undocumented immigrants pay Social Security taxes?
Yes. If wages are paid, Social Security and Medicare taxes are withheld from every paycheck regardless of immigration status. However, undocumented immigrants generally cannot collect Social Security benefits later.
Can undocumented immigrants get a tax refund?
Yes — if more was withheld from their paycheck than they owe, they can receive a refund by filing with an ITIN. However, they cannot claim the Earned Income Tax Credit (EITC), which requires an SSN.
What tax credits can ITIN holders claim?
ITIN holders cannot claim the Earned Income Tax Credit (EITC). They may claim the Child Tax Credit (CTC) only if the qualifying child has a valid SSN. They can claim the standard deduction and other deductions available to all taxpayers.