What ITIN Filers Should Know Before Filing Their Taxes

About half of undocumented immigrants use ITIN numbers to file taxes.

Published on Mar 28, 2017 in Tax and Budget

One of the biggest myths about undocumented immigrants is that they do not pay taxes. In reality, they do – and quite a lot. In New Jersey, undocumented immigrants pay about $587 million a year in state and local taxes, mostly through sales and property taxes – but also through income taxes.

While our undocumented neighbors pay sales or property taxes much in the same way we do – when they purchase a product or pay their rent or mortgage – for income taxes, it’s a bit different. Since they lack the required Social Security number, all undocumented residents who are filing income taxes use what’s called an Individual Taxpayer Identification Number (ITIN), which is provided by the Internal Revenue Service (IRS).

Starting this tax season, some taxpayers will be required to renew their ITIN number before the IRS can mail them their refund. Here’s why, and what ITIN taxpayers need to know.

Under legislation passed in 2015, ITIN taxpayers who either haven’t filed a tax return for the last three years or who received their ITIN before 2013, are required to renew their numbers. (The latter category is required to renew their ITINs on a rolling schedule – for more details, see the IRS’s explanation.)

It’s estimated that about half of undocumented immigrants use ITIN numbers to file taxes. While precise numbers of total ITIN filer in New Jersey are not available, we do know that there are nearly 4,000 New Jerseyans who have ITIN numbers expiring this tax season; the city and county of Passaic are both home to the highest numbers (368 and 621, respectively).

To renew an ITIN, an undocumented worker must complete and submit the W-7 form and check the “renew an existing ITIN” box. The most important part is to include the documents that prove your identity. The documents must be verified by either presenting them to the IRS national office, having an IRS-certified agent approve them or via an appointment at one of New Jersey’s eight Taxpayer Assistance Centers.

Remember: ITINs can’t be used in place of a Social Security number to work legally in the United States, and can’t be used to apply for public benefits or the Earned Income Tax Credit. What’s more, undocumented immigrants aren’t the only people who use ITINs. Nonresidents who receive taxable income in the U.S., foreign students and dependents of U.S. citizens who don’t have Social Security numbers are among the other types of people who use ITINs.

In today’s hostile climate toward immigrants, there are distinct pros and cons to using an ITIN to file taxes. There are very real and growing concerns that current protections of ITIN holders’ private information could be erased by Congress or the administration. However, filing taxes proves one’s economic presence, establishes a record of one’s work history and demonstrates good moral character by complying with American tax law.