Do Immigrants Pay Taxes?

Tax return forms and wage statements with a note saying Taxes Due. Concept of "do immigrants pay taxes"

Like other residents and citizens, immigrants living in the U.S. must generally pay state and federal taxes. Due to the varying legal statuses, many will wonder, “Do immigrants pay taxes in the U.S.?” U.S. Citizenship and Immigration Services (USCIS) put specific requirements in place for immigrants to follow and comply with the country’s laws and regulations. 

How Immigrants Contribute to the American Economy Through Taxes

Immigration affects the U.S. economy in numerous ways, one of which is through the millions in taxes that immigrants pay every year. According to the American Civil Liberties Union, immigrants pay over $90 billion in taxes each year while receiving a mere $5 billion in welfare. 

Undocumented immigrants also pay a lot in taxes, with the Institute on Taxation and Economic Policy finding that undocumented immigrants spend around $10.6 billion every year in local and state taxes alone. 

Other reports have found that immigrants work many hours in crucial jobs that help contribute to the economy and American communities. As a result of holding these jobs, immigrants are important contributors to the American economy and their respective communities by providing vital services.

While many also debate the impact of immigration on wages, the fact is that immigrants often take jobs that are different from most native citizens. Many scholars and experts argue that the reason for this is because of the specific comparative advantages between immigrant and native workers. Generally, with more immigrants entering the country and paying taxes, the average wage isn’t likely to change as long as immigrants and natives aren’t competing for the same jobs. 

Ultimately, if immigrants didn’t pay taxes in the U.S. or contribute to the economy in other ways, America’s economy would suffer in the long term. Immigrants help the economy flourish through the payment of different taxes in accordance with USCIS requirements.

What Are the USCIS Tax Return Requirements for Immigrants?

In most cases, under USCIS requirements, immigrants must pay a combination of state and federal taxes annually. In addition to current relevant tax forms, immigrants may need to obtain and complete other types of forms if they need to meet certain additional requirements.

Generally, you must file taxes in the U.S. if you’re a lawful permanent resident (LPR), an immigrant living in the country with a valid green card, or an immigrant with undocumented status.

Individuals who want to file taxes can easily obtain all necessary forms through the Internal Revenue Services (IRS) website and other relevant sources, including the USCIS website and their state government’s website. You can then print out the necessary forms and complete them. Immigrants can also complete them online and retain digital copies. In addition to tax forms, USCIS may require you to complete and submit other supporting documentation, including bank statements and proof of purchases and previous tax payments. 

If you need help determining how to file your taxes with the appropriate documents, you may benefit from speaking with a tax professional or immigration legal services attorney for additional assistance. A professional will be able to guide you in the right direction to help you maintain compliance with USCIS requirements and avoid potential issues that could result from failing to file taxes sufficiently and on time. 

If you fail to meet USCIS tax requirements, you could face certain consequences, such as fines, the inability to renew your immigration status, or disqualification from becoming a U.S. citizen.

Non-immigrant Statuses That Aren’t Required to Pay Taxes

While immigrants will need to pay taxes according to the current USCIS requirements. But, do migrant workers pay taxes? Do other non-immigrants pay taxes when not living in the U.S. as residents or citizens?

USCIS doesn’t require individuals in certain non-immigrant categories to pay taxes each year. These exceptions include the following:

  • Foreign nationals or diplomats with Category A visas 
  • Treaty investors or traders with Category E visas
  • Members of the North Atlantic Treaty Organization (NATO) or international organizations with Category G visas
  • Crew members on foreign aircraft or ships while under the employment of a foreign organization

In addition to these exceptions, some individuals may be exempt from paying Medicare and Social Security taxes while in the country completing USCIS-approved work. These particular exempt individuals include people in the country on J-1, F-1, M-1, and Q-1 visas, which may include scholars and students, along with trainees, researchers, and teachers. Non-immigrants will also be exempt from these taxes if they either currently live in the Philippines while conducting business in Guam on H-2 visas, or if they’re on an H-2A visa to enter the country temporarily for the purpose of performing agricultural work.

On the other hand, you may need to complete taxes under certain circumstances as a non-immigrant. Specifically, if you want to become an LPR or otherwise change your non-immigrant status, you may need to complete Form I-508, the Request for Waiver of Certain Rights, Privileges, Exemptions, and Immunities. 

If you don’t fall under any of these exempt categories, you will likely need to file annual income taxes and others with the federal, state, or local government. 

Which Tax Forms Are Immigrants Required to File?

If you are an immigrant in the country as a resident of any kind, you may need to complete various forms to file your taxes. These include the following:

Form 1040

One important form to file as an immigrant is Form 1040, the U.S. Individual Income Tax Return. This is the standard form that all U.S. residents and citizens must file with the IRS every year in the country. If you’re in the country on a green card, you must file this form.

This form requires you to provide information such as your name, social security number, filing status, income, digital assets, dependents, tax and credits, and payments, among other details.

Form 1040-NR

An alternative form to file with the government may be Form 1040-NR, the Nonresident Alien Income Tax Return. This form is a requirement for individuals who are nonresident aliens conducting business or trade within the U.S., those who represent a trust or estate that must file this form, or those who represent deceased individuals who would have needed to file this form while alive.

This form requests much of the same information as Form 1040, including filing status and contact information, digital assets, and dependents. Additionally, this form asks about any income earned in connection with U.S. trade or business. 

Students and scholars in the country will also need to file this particular form if they earn any taxable income while in the U.S.

Form 8843

If you are in the country on either an F or J visa, you will need to file Form 8843, the Statement for Exempt Individuals and Individuals With a Medical Condition. In other words, if you’re a scholar or student living in the U.S., you will need to submit this form even if you aren’t working under a domestic or foreign employer. 

Form 8843 is a specific type of document that USCIS requires you to file to obtain personal information about you and the nature of your stay in the U.S. Some items you’ll need to fill out in this form include general information such as your visa type and your country of origin, along with details about your stay as a teacher, trainee, student, professional athlete, or somebody with a medical condition or medical problem. 

How Do Undocumented Immigrants Pay Taxes?

In addition to immigrants and certain non-immigrants, undocumented immigrants must pay taxes while living in the U.S. if they collect any income. These individuals can file taxes in a few different ways, depending on their preferred method and circumstances. 

One way undocumented immigrants can file and pay taxes is to report all earnings via an Individual Taxpayer Identification Number (ITIN). Using this number, you can report all taxable income to the IRS confidentially. 

One of the main advantages of regularly filing taxes as an undocumented immigrant is that it may help your case if you want to become an LPR or citizen, as it helps show how you’ve intended to make an honest living in the U.S. and contribute to its economy.

Determining When to Pay Taxes

If you’re an immigrant in the U.S., you will need to pay taxes in most cases. However, if you’re a non-immigrant worker, student, or another individual on a different type of visa, you may be exempt from paying income taxes while still needing to complete other types of forms.

By adhering to USCIS tax requirements, you can remain compliant in the U.S. as an LPR, an immigrant in the country with a green card, or an undocumented immigrant. In turn, you can continue contributing to the American economy while earning an honest living in the U.S., whether you want to maintain the same status or seek to change it in the future.