Immigrants and taxes

Someone here is claiming they saw on a TV show recently that immigrants don’t have to pay taxes for seven years when they come to America. Aside from the obvious taxes like sales tax that are somewhat inescapable, has anyone else ever heard this or know where it comes from? I found nothing at the IRS site, and it seems a bit suspect to me.

Dunno where it came from, but as a former US immigration paralegal, I can confirm it’s absolute bollocks.

>> Someone here is claiming …

Then it is up to someone there to prove it. It is false.

Non-resident aliens often (but not always) have some portion of their income exempted from federal and state income tax. This depends on the specifics of the tax-treaty between the U.S. and that alien’s nation. Your 1042-S tax form (similar to a W-2) will list the amount, if your employer is doing the math correctly (better double-check).

Resident aliens most definitely have to pay income taxes.

As for other taxes (sales, property, excise), aliens are not exempt from these any more than U.S. nationals.

This is one of the most common urban myths there is in the industrialized world. The very same thing is often said in Canada, Australia, France, Germany, Sweden, and the UK, and probably other countries as well. Every nation in the world that has any significant amount of immigration has this rumour. It is often accompanied by the urban myth that immigrants get free/subsidized cars, furniture, and homes.

It is, of course, complete baloney. It’s also xenophobia. If you think the government, which taxes everything that can possibly be taxed, would let someone live here for SEVEN YEARS and not pay income tax, I’ve got a bridge in Brooklyn to sell you.

The Snopes refutation of this silly legend for your edification.

This does raise a question, though. First, why can’t immigrants vote, then? Taxation without representation and all that. Secondly, what would a person gain from citizenship (besides the right to vote)? My boss is still a citizen of Denmark… he’s been living here for 16 years, and has zero intent of ever leaving.

Fun fact, bet you didn’t know that anyone with a green card is liable for US taxes on income earned anywhere in the world, even they do not reside in the US?

A person gains the US passport, which may be a more useful travel document than their original nationality.

“Taxation without representation” is a nice political slogan, but you’ll notice it doesn’t actually appear anywhere in the U.S. constitution, and isn’t strictly adhered to IRL anyway (as any D.C. resident can tell you). If it were, we would be faced with a choice of either giving the vote to any foreigner who ever picks up a paycheck in the States, or of not taxing even people like your boss who’ve been (I assume) green card holders for years. Obviously, neither alternative is practical, or sensible for that matter.

It works the same in other countries, anyway. I’ve been a taxpayer in Ireland for almost two years, and am still eligible to vote only in local elections. I have no say on the amount of income taxes I’m paying.

Another benefit to becoming a citizen is, it’s permanent and irrevocable (unless you do something really, really bad). Your boss, as his situation stands, still needs to obtain a Re-Entry Permit if he plans to spend more than a year outside the U.S., and still risks losing his residency if he spends too much time abroad. That won’t be the case if he obtains U.S. citizenship.

I seem to recall a change in US law a few years ago meant that a resident alien could live and work here for years, paying into Social Security, but would not be able to draw on SS unless s/he became a citizen. Is this true? What about, for example, unemployment bennies?

chique, I remember that being discussed but I am not sure if it was ever enacted. It was a way of screwing those who cannot vote and, therefore, have no say. I find it appalling and immoral that an alien can have contributed in taxes as much as a US citizen and later would be left out in the cold.

Generally speaking, NO, you’ve heard wrong. U.S. social security is paid out regardless of citizenship, based on the person’s “covered calendar quarters” and amount of contribution.

A resident alien (that is, a green-card holder) is treated exactly like a U.S. citizen, period, in this area.

However, there are complications. Simplification, a person needs to have contributed to U.S. Social Security for 40 covered calendar quarters – thus, about ten years – in order to receive retirement benefits. Thus, an immigrant (or an employee transferred into the U.S., say) who works in the U.S. for fewer than ten years will have contributed into U.S. social security but will not receive any benefits.

The same situation would occur for a U.S. citizen who goes to work in another country for some period of time, but not long enough to be eligible for social security benefits in that country. Thus, the U.S. has signed social security treaties (called “totalization agreements”) with many countries that mutually alleviate this problem in both directions.

However, if you are an employee from a country where the U.S. does NOT have a social security treaty (say, Australia), and you work in the U.S. for only eight years, then your payments (and your employer’s payments) to U.S. social security are lost.

I’m not sure how unemployment insurance works; perhaps someone else can enlighten us. I can try to find out next week.

But the change was discussed some years ago. It might have been the Republicans trying to gain votes during the last presidential election. I remember it well because I was appalled by how many Americans supported it.

A Canadian friend, living and working in the US for the past 12 years (Green card and married to a US citizen) was recently layed off and doesn’t get unemployment. This is in MA, don’t know if it is different in other states.

The question of whether anybody (citizen or not) is eligible for unemployment payments varies a lot by state and by situation. About 97% of the U.S. workforce is covered by federal or state unemployment inusrance, however each unemployed worker must:
(a) be available and able to work, and be actively seeking work;
(b) not have refused suitable employment;
© not be unemployed because of a labor dispute (this is different in some states)
(d) not have left a job voluntarily;
(e) not have been terminated for gross misconduct; and
(f) have been employed in a covered industryr or occupation, earning minimum amount for a specified time.

Failure to meet any one of these criteria can disallow a claim.

The tax that a company pays for unemployment insurance is based on that company’s record of layoffs. Thus, if a company has lots of layoffs, their unemployment insurance cost goes skyrocketing. Consequently, many companies offer employees some extra “goodies” if they resign rather than be laid off.

This can be a good deal for both employee and employer – the employee can get more than he/she would have got from unemployment insurance plus the company’s termination package, and the company saves money in future hikes in their unemployment insurance charges. However, it can be a very sour deal for the unaware employee, who might settle for less than the combination of unemployment insurance plus the company’s termination package. In short, it’s a complex area.

Still trying to find out the question of citizenship and whether it has an impact on unemployment insurance.

Don’t you mean “unless you do something really, really bad BEFORE you became a citizen and you didn’t tell the US about it?”

If you answer “no” to this question, please provide the LAW which supports your assertion.

US citizens who have not worked for 10 years in the US are not eligible for SS either.

Quoted from Pleonast

As has been stated by Pleonast, some of your income tax may be exempted if your are non-resident alien (aka “undocumented” or “illegal”). BUT as a matter fact a non-resident alien MUST pay income taxes. Check out the IRS web page for this info:

Now there are exemptions, but you must meet the following:

But you say, “I ain’t got a SS# to declare to the IRS!!!”. No proble, the IRS states that "You must furnish a taxpayer identification number on returns, statements, and other tax related documents. You can get a taxpayer identification number by filing Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. "

So o o oo o o o, yes, we immigrants PAY income tax, property tax, and sales tax.

XicanoreX :slight_smile:

Quoted from xicanorex:

Many non-resident aliens are neither undocumented nor illegal. Anyone in the US on a visa, such as H-1B or L-1, is non-resident, but is in the US perfectly legally.

I was reading through this thread and got to chique’s question about resident aliens and Social Security. Since I work for the Social Security Administration, I began mentally formulating a reply as I continued reading; then I got to C K Dexter Haven’s post. I’m so used to seeing outdated and/or wrong info about benefits and eligibility being disseminated that I was pleasantly surprised to find that he said everything I was going to say (and probably more concisely than I would have said it).
The only thing I can add is that there is a relatively recent law requiring that Social Security benefits can only be paid to people who are “legally resident” in the US; anyone born in the US is presumed to be legally resident and non-citizens must provide INS documentation verifying their status. This may be the change that chique had heard about.


Thanks for the kind words, Lurk. I assume this new law is open to pretty broad interpretation – at a minimum, the social security treaties require benefits be paid to people who were not “legally resident” at the time of payment. (I retired from this business six months ago, so I’m not fully up to speed anymore.)