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How “Undocumented” Workers Are Becoming Entitled To Social Security

Q: How can illegal immigrants get Social Security? They don’t pay taxes!

A: That’s a common misconception. According to estimates from the Social Security Administration’s Chief Actuary, three-quarters of “other-than-legal” immigrants have payroll taxes withheld.

Q: How can payroll taxes be withheld if illegals don’t have a Social Security number?

A: Immigration law forbids working in this country without legal authorization and a Social Security Number (SSN). Yet millions of “undocumented” immigrant workers are earning income. Illegals often get jobs by using illegally obtained, forged, or invalid Social Security numbers. Employers in turn withhold payroll taxes and report the earnings to the Social Security Administration (SSA) using those numbers. When the numbers don’t match up with the numbers issued by SSA, they go into a special file called the “Earnings Suspense File.” Valid numbers issued from the U.S. government are also misused.

Q: What numbers are those?

A: Federal law requires noncitizens who earn income in the U.S. to file tax returns. In order for a person who isn’t eligible for an SSN to do this, the Internal Revenue Service provides an Individual Taxpayer Identification Number (ITIN) to facilitate the filing of tax returns. The number looks very similar to an SSN, having nine digits. Although that number does not authorize the number holder to work, undocumented workers use them to get jobs. More than 7.8 million ITINs were issued between 2005 and 2010. The Social Security Administration (SSA) itself is another major source of abused numbers. Between 1974 and 2003 the SSA issued 7 million “non-work” SSNs. The cards are clearly printed NOT VALID FOR EMPLOYMENT and they do not authorize noncitizen number holders to work. Audits by the Social Security Inspector General have found these numbers are widely misused by illegal workers.

Q: How do they claim benefits if the law prohibits illegals from collecting?

A: There are several ways it happens. One has to do with the type of SSN that was used for employment. The 2004 law requires work authorization in order to claim Social Security. But the law pertains only to individuals who received their SSN after January 1, 2004. If the individual was issued an SSN prior to January 1, 2004, like the 7 million non-work SSNs issued prior to 2003, the 2004 law prohibiting payment of Social Security does not apply. According to the Congressional Research Service and the Government Accountability Office, that group does not need to have ever received legal work authorization in order to claim benefits — they may have worked illegally their entire careers.

As long as all other qualifications are met, and they have evidence of their earnings, like W2s, they may file a claim for Social Security benefits. Others who receive an SSN after 2004 must have work authorization to claim benefits. Yet even people who worked illegally for many years sometimes later change status. That can occur even without an amnesty, especially if the illegals have children who were born in this country. Because the children are born as U.S. citizens, when they become adults they can sponsor their parents to stay in the U.S. legally and to receive work authorization. If their parents kept W2s and evidence earnings, those work credits will be re-instated to their new SSNs. Once they receive work authorization, noncitizens can later file a claim for Social Security benefits.

Currently the SSA uses all earnings to determine entitlement to benefits, including the earnings for jobs worked illegally. The majority of seniors responding to TSCL surveys on the topic believe that noncitizens should not be allowed to receive Social Security based on illegal work. TSCL agrees. Social Security benefits are determined on earnings and work history, regardless of whether taxes were paid or not. Because those earnings are held by Social Security in an Earnings Suspense file, non-citizens could at some point gain access to benefits based on illegal earnings. TSCL strongly supports legislation that would ban the payment of Social Security based on unauthorized work.

Sources: Statement of Martin H. Gerry, Social Security Administration, Before Subcommittee on Social Security of the House Committee on Ways and Means, March 2, 2006. Individuals Who Are Not Authorized To Work In The United States Were Paid $4.2 Billion In Refundable Credits, Treasury Inspector General For Tax Administration, July 7, 2011, 2011-41-061. “Social Security Benefits For Noncitizens,” Congressional Research Service, July 20, 2006, RL32004.

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