Undocumented Workers Contribute Billions of Dollars to Social Security and Medicare

Billions of dollars in Social Security and Medicare tax money is contributed by undocumented immigrants each year and under current law, undocumented workers are prohibited from reaping their share of the benefits. 

Based on the Social Security Chief Actuary's most recent records obtained by NBC 7 Investigates, undocumented workers, paid at least $12 billion into Social Security in 2010 alone. These payroll contributions are collected the same way all employee deductions are paid. 

Undocumented workers though, who don't work for cash, must give their employers a fake Social Security number and while the federal government knows who they are, there is no effort to use that data to deport them.

"I'm not expecting anything,” Maria said. “I know that once I retire, I know that I am not going to get any of this money I am contributing to this country back. As a person who lives in this beautiful country, I need to contribute. I need to do my best to get this done right."

Maria is not her real name but because she is an undocumented Guatemalan immigrant living in the U.S., we are protecting her identity. Seventeen years ago, she said she crossed the border, pregnant, with three small children in tow.

She is part of a don't know, don't tell tax and social security collection process.

"It makes you sick,” Pablo Mora, a tax advisor said. “It's so absurd."

Sixty percent of his clients are undocumented workers, including Maria. He said after 16 years of working housekeeping and kitchen jobs, Maria and her employers contributed over $53,000 to Social Security and Medicare. She also pays state and local taxes and if her immigration status stays the same, upon retirement, she'll be entitled to none of it.

In the mid 90's, the IRS began recognizing the undocumented worker population by issuing them Individual Taxpayer Identification Numbers or ITIN. It doesn't change their immigration status or work authorization, but it does make them tax compliant.

"I believe that we need to follow the law,” Maria said. “The law in this country is we need to report our income and pay taxes.”

Following the law, can pay off when seeking legal status according to retired Immigration Judge, Paul Schmidt of Washington D.C.

In an email, he said, “reasonable tax compliance is usually a requirement in adjustment of status or cancellation of removal cases that result in green cards."

NBC 7 Investigates obtained the most recent IRS data. It shows, in 2016, there were nearly 4.5 million ITIN tax returns filed nationwide. The Institute on Taxation and Economic Policy estimates the state of California collects $3.1 billion in state and local taxes from undocumented immigrant workers.

Under federal law, taxpayer and return information, except in certain circumstances, cannot be shared with other government agencies, including Immigration and Customs Enforcement.

In an email to NBC 7 Investigates, an IRS Spokesman said, "the IRS has a strong process in place to protect the confidentiality of taxpayer information and this includes information related to tax returns filed using ITIN."

“They could get rid of them but if they think they are productive individuals which I think they are, they should solve this issue,” Mora said.

Since ITIN numbers are not the same as Social Security numbers, Mora said they don't address the Social Security and Medicare contributions dilemma.

“There is this vague idea, as if now because I have an ITIN number my contribution has been put aside for me,” he said. “Which is not true."

Undocumented workers receive the same benefits from state and local taxes as all citizens do but they cannot use an ITIN to collect social security or Medicare.

In an email to NBC 7 Investigates Social Security's Regional Communications Director Patricia Raymond said, contributions paid without social security numbers that match their files are kept track of in what's called a suspense file. The actual funds are added to regular social security coffers and used to pay those with legitimate earnings. Suspense file information, she said, is kept for a long time while SSA continues to locate correct numbers and names.

“You can't play with people that way,” Mora said. “You can not exploit people. They're, sorry to say the word, they are stealing.”

Maria said she goes about her work day with the same enthusiasm even without the promise of the retirement she's paid into. She said she's speaking up now so her grown children might have a retirement of their own.

"I just hope this message touches people's hearts,” she said.

Contact Us