How DACA Students Pay Federal Taxes
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- Students with DACA status and undocumented students do pay taxes.
- They file taxes using the SSN they received when applying for a work permit.
- These students may also qualify for student tax credits.
- The IRS does not share individuals' information with immigration agencies.
A 2020 Presidents' Alliance report estimated that close to 500,000 students in higher education were undocumented learners. At the time, more than 200,000 were eligible for Deferred Action for Childhood Arrival (DACA) status. DACA recipients have temporary amnesty from deportation and can obtain a work permit.
Students with DACA status and undocumented students need to pay taxes if they earned over a certain amount of money working. In 2021, that amount was $12,550 for most students.
This guide answers questions about how students with DACA status pay taxes, including what forms you need and the tax credits you can claim.
What Is DACA?
Established in 2012, the DACA program has been available to certain individuals who came to the U.S. as children with undocumented parents. The program grants recipients protection from deportation for two years.
To apply for DACA, you must have arrived before June 15, 2012, and before your sixteenth birthday. However, a 2021 U.S. District Court ruling prohibited the federal government from granting DACA status to new applicants. DACA renewals are still available, and recipients should be very careful to renew their status before it expires.
DACA is not a path to citizenship. DACA recipients cannot vote. While they can apply to college, they do not qualify for federal financial aid or federal student loans. Only some states offer financial aid for DACA and undocumented students.
DACA recipients can work legally in the U.S. For example, they can find internships and fellowships for undocumented students or apply for work with employers who support DACA students.
Do DACA Recipients Pay Taxes?
DACA recipients are required to pay taxes. In 2021, The Center for American Progress estimated that DACA recipients annually contribute $6.2 billion in federal taxes. They also pay $3.3 billion in state and local taxes.
According to the Institute of Taxation and Economic Policy, DACA-eligible individuals pay about 8.3% of their income in state and local taxes. That's comparable to what the middle 20% of taxpayers pay.
How to File Federal Taxes as a DACA Student
When it comes to filing taxes, DACA students complete many of the same steps as students with citizenship status. The main difference is that DACA students must obtain a social security number (SSN) or use another identifier.
Here's what DACA students should know about filing taxes.
1 Start by Locating Your SSN
When you obtained your work permit, also known as your Employment Authorization Document (EAD), you completed the U.S. Citizenship and Immigration Services' Form I-765. When you completed this form, you may have also requested an SSN.
If you already have an SSN, you must use it to file your tax return. If you didn't request it when filling out your work permit application, you can apply for one now at a social security office. Also, contact a social security office if you requested an SSN card but did not receive one.
2 If You Don't Have an SSN and Cannot Get One, Use an ITIN
Let's say your DACA application wasn't approved, and you do not have an SSN. Then, you must submit a form W-7 when you file taxes. This form helps you create or renew an individual taxpayer identification number (ITIN).
If it's your first time applying for an ITIN, you need to mail in supporting documents, like school records or a state ID. Consider getting free help with this process from an organization specializing in legal services for undocumented students.
3 Complete IRS Tax Forms
Below are the names of relevant tax forms with explanations of who should complete them.
- 1040: This is the basic form people use to report income and pay their federal taxes. Even if you do not have citizenship status, you may qualify as a resident by the substantial presence test, and you should use this form.
- 1098-T and 1098-E: Your school or loan provider will send you these statements to report how much money you paid in tuition and student loan interest, respectively. Include them in your tax return.
- 8863: This form helps determine if you qualify for tax credits for college students.
- W-2: Your employer should provide you with this form. Include it when you file your tax return.
- W-7: Complete this form if you're applying for an ITIN for the first time or if you need to renew your ITIN. You do not need this form if you have an SSN or active ITIN.
4 Submit Your Tax Return Online
There are several free and low-cost ways to file your taxes online, including services provided by H&R Block and Cash App Taxes. Many online providers offer individual help for an additional cost.
5 Find In-Person Help
If you'd feel better speaking with a tax professional in person, you have options.
- IRS Free File offers free, in-person tax preparation help to people earning less than $73,000 annually.
- Several organizations offer free legal services for undocumented students, which can help answer questions about your rights and protections.
- Your school's Dean of Students Office or student money management center may help direct you to tax-filing resources for your situation.
Can DACA Students Get Tax Credits?
DACA students may qualify for student tax breaks, which reduce their amount of taxes. The two types of education credits are:
- The American Opportunity Tax Credit: This credit offers up to $2,500 back. It's available to some students in their first four years of higher education who are enrolled as half-time or full-time students.
- The Lifetime Learning Tax Credit: Worth up to $2,000, this credit is for students in degree or job-training programs at any point in their postsecondary education.
To qualify for these credits:
You must have a valid SSN or ITIN before your tax return is due.
You cannot claim either credit if someone else claims you as a dependent on their taxes. Instead, they get to claim the credit.
You must make less than a certain income to qualify. This threshold changes yearly.
You cannot claim both credits in the same tax return. But you can claim one of these credits with other credits like the earned income tax credit (EITC) or child tax credit (CTC).
Is There Risk to Filing Federal Taxes as a DACA Student?
Filing taxes as a DACA student should not put you at risk. It means you're complying with the law. Plus, you could end up getting a refund if your employer has been withholding taxes from your paycheck.
The IRS does not share your information with any immigration enforcement agency. And it's prohibited for IRS employees to release taxpayers' personal information to any third party, except in the case of criminal investigations.
Frequently Asked Questions About DACA Students and Taxes
Do DACA recipients have to pay taxes?
Yes, DACA recipients must pay federal taxes if they make more than a certain income threshold. For the 2021 tax year, that threshold was $12,550.
How do I file my taxes with an employment authorization card?
When you applied for your employment authorization card, you may have also requested an SSN. You will use this SSN as your identification number to fill out the 1040 tax form to file your taxes.
If you didn't request an SSN while applying for employment authorization, you can visit a social security office to get one. Bring your employment authorization card with you.
Do DACA recipients qualify for the earned income tax credit?
DACA recipients may qualify for the earned income tax credit if they have a valid SSN when their tax return is due. However, you cannot qualify for this credit if you file taxes with an ITIN.
The EITC is a refundable tax credit, meaning you can collect this money even if you don't owe any taxes. If you earned under a certain income, taxpayers without kids can claim up to $1,502. People with qualifying children can claim more -- up to $6,728 for people with three or more children.
Can DACA recipients get the child tax credit?
DACA recipients with children may qualify for the child tax credit as long as their child has a valid SSN. The CTC is a refundable tax credit. If you qualify, you can collect up to $3,600 for each qualifying child.
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