Aliens in America: Do Undocumented Workers File Tax Returns?

By Alex Oware on 06/24/2015 10:00 PM

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.

Exempt Individual

Do not count days for which you are an exempt individual. The term "exempt individual" does not refer to someone exempt from U.S. tax, but to anyone in the following categories who is exempt from counting days of presence in the U.S.:

 

·         An individual temporarily present in the United States as a foreign government-related individual

·         A teacher or trainee temporarily present in the United States under a "J " or "Q " visa, who substantially complies with the requirements of the visa

·         A student temporarily present in the United States under an "F, " "J, " "M, " or "Q " visa, who substantially complies with the requirements of the visa

·         A professional athlete temporarily in the United States to compete in a charitable sports event

If you exclude days of presence in the United States because you fall into a special category, you must file a fully-completed Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition (PDF).

 

Tax Forms

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.

No Social Security Number (SSN)

If you’re planning on staying in the US, 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!

 

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.

 

***Disclaimer: I am a tax accountant and a CPA , but I am not your accountant or advocate (Unless you have signed up to my services). This communication is not intended as tax advice, and no tax accountant -client relationship results**