Non-Citizens and Taxation in the United States: Obligations, Types, and Where the Money Goes
The United States taxation system is complex and mandates that individuals, regardless of citizenship status, pay various taxes. This article aims to clarify the obligations and specifics of taxation for non-citizens, focusing on income tax, sales tax, and property tax.
Income Tax Obligations for Non-Citizens
Non-citizens working in the USA are required to pay income taxes if they meet certain income thresholds. Even without a Social Security Number, many non-citizens can still pay taxes. Typically, they need to fill out a W-4 federal tax form and declare dependents if applicable. If they have earnings from employment or investments, taxes are involved.
Companies are legally required to withhold taxes from non-citizens' wages, typically using an Individual Taxpayer Identification Number (ITIN) if a Social Security Number is not available. These withheld taxes go to the IRS and are included in the individual's federal income tax filing using a 1040 form. Many non-citizens, such as those with H1B visas, may find that their employers automatically withhold federal income tax, state income tax, and FICA (Social Security and Medicare) taxes on their behalf.
For non-citizens who are not permanent residents or do not have a Green Card, the process can be more complex. They should ensure that they have an ITIN before starting employment to avoid any legal issues.
Types of Taxes Paid by Non-Citizens
Non-citizens pay more than just income tax. Most states in the USA have sales taxes that apply to retail purchases. Likewise, those who own property within the country or live in a tax jurisdiction that levies property taxes are also required to pay these. Additionally, counties and cities may impose local taxes, including earnings taxes on certain wages earned within those jurisdictions.
Even if there is no immediate refund, taxes paid on wages and investment income can be claimed as deductions and are used to calculate potential refunds or owed amounts.
Tax Revenue Allocation in the USA
Taxes paid by non-citizens, like those paid by citizens, go towards essential public services in the USA. This includes the upkeep and maintenance of infrastructure such as roads, schools, and public transportation systems. The collected tax revenue supports government operations and services that benefit all residents and citizens.
Additional tax revenue is also used for public welfare programs, environmental protection, and other social benefits, ensuring that the overall economy and society function efficiently and sustainably.
Common Misconceptions About Taxation for Non-Citizens
One common misconception is that non-citizens can avoid paying taxes if they do not have a Social Security Number. In reality, those with an H1B visa or similar work visas are still required to comply with tax laws. Furthermore, many non-citizens without a Social Security Number can still work under certain conditions and be eligible for an ITIN to facilitate tax compliance.
Another misconception is that tax payments by non-citizens are not utilized in the USA. In fact, the taxes collected generate significant public benefits that impact the lives of all Americans, including improvements in infrastructure, education, and safety.
Conclusion
In summary, non-citizens working in the USA are subject to the same tax obligations as citizens. They must pay income, sales, and property taxes. The tax revenue collected supports crucial public services and infrastructure, benefiting everyone. Even those who do not have a Social Security Number can still pay taxes using an ITIN, ensuring they comply with the law and contribute to the country's public good.