DESPITE ANY MISCONCEPTIONS to the contrary, immigrants pay taxes just as everyone else does — and this includes immigrants without authorization to be in the U.S. Why? They are required to do so by law. Also, immigrants want to file their taxes because they see it as an opportunity to contribute, to prove their economic contribution to the U.S., and to document their residence here.
Consumer Alert: Obamacare Tax Penalty
You are NOT required to pay the tax penalty for being uninsured if your immigration status makes you ineligible to buy health insurance through the Obamacare marketplaces.
If you have Deferred Action for Childhood Arrivals (DACA) or are undocumented, you are not eligible to buy insurance through health-care marketplaces like Covered California and Healthcare.gov. You are also EXEMPT from the requirement to pay the tax penalty for being uninsured, even if you have a Social Security number. Click here for more information in English and here for Spanish.
See also the information below about Taxes and the Affordable Care Act.
Tips for Filing Tax Returns
NILC and the National Women's Law Center have teamed up to create guides for immigrants filing a tax return. Download the PDFs by clicking on the links below:
Child Tax Credit (CTC) & Additional Child Tax Credit (ACTC)
Nearly every year, members of Congress attempt to end the refundable Child Tax Credit (CTC) for workers who pay their taxes using an Individual Tax Identification Number (ITIN) instead of a Social Security number (SSN). Such a cut would affect workers who are ineligible for an SSN and therefore pay taxes to the federal government using the only means legally permitted—the ITIN.
The CTC, as well as the refundable portion (the Additional Child Tax Credit, or ACTC) were enacted to help struggling families financially care for their children. The CTC has proven successful in preventing millions of children from sinking further into poverty.
Read more about the CTC in these resources:
Read this action alert to learn more about the Child Tax Credit (CTC) and what you can do to counter politically motivated attempts to severely limit eligibility for this vital means of boosting low-income families' subsistence income.
Read more about the CTC in these issue briefs:
Individual Taxpayer Identification Number (ITIN)
Answers these questions: What is an ITIN? Why does the Internal Revenue Service (IRS) issue ITINs? Who uses an ITIN? Why do undocumented immigrants need an ITIN? What is an ITIN not used for? Do ITIN-filers pay taxes? Is it safe to use an ITIN? What documents must a person present when applying for an ITIN? How does an applicant file for an ITIN? How long does it take to receive an ITIN? How do you apply for an ITIN by mail? How long is an ITIN valid? What are the barriers to getting an ITIN? What problems are created by the barriers to getting an ITIN?
- Versión en español (no se ha actualizado): Número de identificación personal del contribuyente (ITIN): Una herramienta poderosa para contribuyentes inmigrantes (PDF)
Briefly answers these questions: What is an ITIN? Why does the federal government issue ITINs? What is an ITIN used for? Do ITIN filers pay taxes? Why do undocumented immigrants pay taxes? What are the recent changes to the ITIN?
This publication, available from the website of the Annie E. Casey Foundation, discusses issues involving individual taxpayer identification numbers (ITINs) and provides a guide to the current ITIN application process.
Taxes and the Affordable Care Act
FREQUENTLY ASKED QUESTIONS
The Affordable Care Act, the law that created Obamacare, requires most people in the United States to have health insurance, or claim an exemption from the requirement to have health insurance, or pay a penalty when they file their taxes. The Internal Revenue Service (the U.S.’s tax agency, which most people know as “the IRS”) calls this rule the “individual shared responsibility provision.” It is also sometimes called the “individual mandate.”
This FAQ answers questions about what DACAmented and undocumented immigrants should know about the Obamacare tax penalty rule when they file their taxes.
- Versión en español (no se ha actualizado): Inmigrantes con DACA e inmigrantes indocumentados y la multa de Obamacare
FREQUENTLY ASKED QUESTIONS
The Patient Protection and Affordable Care Act generally requires people living in the United States to obtain health insurance or pay a tax penalty called a “shared responsibility payment.” The penalty increases each year and is assessed for every uninsured member of a person’s tax household who is not exempt from the so-called “individual mandate.” This FAQ provides answers to questions about the exemptions that are most commonly available to low-income immigrants and their families.
FREQUENTLY ASKED QUESTIONS
Several aspects of ACA implementation relate to the filing of taxes. Federal tax returns are used to verify income and determine eligibility for subsidies, which are provided in the form of tax credits applied to monthly premium costs. Income-eligibility for this premium tax credit is calculated based on the tax household’s income from the most recent tax year. Any under- or over-payment of subsidies is reconciled on the following year’s tax return. Federal tax returns are also used to report health insurance coverage or to claim an exemption from the individual mandate, and to assess a tax penalty if the person does not have health insurance and does not qualify for an exemption from the mandate. This FAQ explores tax-related ACA issues that are of particular concern to immigrants and their families.