Financial integration for undocumented immigrants


The myth

Opponents of immigration reform have long believed that undocumented immigrants drain U.S. resources and do not contribute to the country’s economy as a whole. This belief, upon further investigation, turns out to be little more than a myth. In 2013, the Institute for Taxation and Economic Policy published a report finding that in 2010, undocumented immigrants living in California paid $2.2 billion in taxes and, nationally, $10.6 billion. The Congressional Budget Office published a related report on the budgetary effects of a 2013 bill that would have resulted in an increase of 10.4 million immigrants to the United States. Such an increase, the report concluded, would have led to $459 billion in additional federal revenue. The source of this income? More people pay income and payroll taxes.

But how can undocumented immigrants pay taxes? And if they can pay taxes, can they open a bank account? The short answer to both of these questions is yes. Below we will briefly explain how and why this is the case.

The path to paying taxes

To become a taxpaying resident, undocumented immigrants can first apply for an ITIN (Individual Taxpayer Identification Number), which can be used in place of a Social Security number. To obtain such a number, the resident can (since 2013) provide original (or certified) documents proving their identity and foreigner status. Acceptable documents include:

  • Passport (this can be used as a stand-alone document)
  • United States Citizenship and Immigration Services (USCIS) Photo ID
  • Foreign military ID card
  • Civil birth certificate

Note that notarized photocopies of documents are not permitted, but copies certified by the originating agency are acceptable.

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The benefits of paying taxes

Having an ITIN and paying taxes can result in a number of benefits, such as:

  • Be able to prove income when applying for financial aid or government assistance for dependents born in the United States
  • Building a credit history
  • Illustrating “good character” in the eyes of USCIS
  • Obtain loans to start a business or buy property

Becoming a tax-paying resident of the United States can go a long way toward accumulating assets and building savings.

The possibility of opening a bank account

One of the ultimate benefits of having an ITIN is being able to open a bank account. Although not all banks accept an ITIN, some large institutions, such as Chase and Bank of America, do. They may also require other forms of identification. These financial institutions may require the following types of documents:

  • An official form of identification (such as a passport, Driving licenseor Matricula Consular card)
  • Proof of address (such as payslips or letters with the applicant’s address)
  • An initial deposit (either in the form of cash, debit or wire transfer)

With a bank account, undocumented immigrants can enjoy the benefits of writing checks, shopping online, building credit, and paying taxes more easily. In short, being more financially integrated in the United States The banking system can make life easier and lay the foundation for obtaining immigration status.

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