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Undocumented immigrant taxes and the Earnings Suspense File

| Oct 3, 2018

In various news reports, we often hear that undocumented immigrants are a drain on taxpayers. However, there is another side to these stories, and it involves payments that end up in the Earnings Suspense File at the Social Security Administration.

Unknown taxpayers

The Social Security Administration collects billions of dollars annually from unnamed taxpayers. What happens is that employers send in W-2 forms bearing Social Security numbers that have no match to anyone in the SSA records. When this happens, the paperwork goes to the Earnings Suspense File. If someone eventually proves the wages on record belong to them, it takes care of the mystery and that worker is on track to collect retirement benefits.

Those involved

The Social Security tax forms in the Earnings Suspense File date as far back as 1937 and represent taxes paid on almost $1.3 trillion in wages. Who do the W-2 forms belong to? Some belong to people who got married but did not alert the government that they had changed their names. Some W-2s belong to people who filled out the forms incorrectly. The SSA has been able to connect 171 million tax forms with the proper people. However, about 340 million unclaimed tax forms remain in the file, a large portion sent in by employers of undocumented immigrants. As an example of funds received, Stephen Goss, who is chief actuary of the Social Security Administration, estimates that undocumented workers paid $13 billion into the retirement trust fund in 2010. An SSA report released in 2013 indicated that undocumented immigrants paid $13 billion in Social Security taxes that year.

Looking forward

The federal government continues to work through controversy in an effort to someday pass comprehensive immigration reform. While some undocumented immigrants who work in the United States receive payment in cash, others pay taxes. They hope that doing so helps them eventually realize their dream of becoming legal U.S. citizens.