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[quote=Anonymous]The Internal Revenue Code maintains that the immigration status of your nanny or other employee has no bearing on your obligation for employment taxes. Immigration enforcement in the Obama Administration is focused on penalizing the EMPLOYERS - particularly prosecution for employment tax fraud. Employing an undocumented worker is a violation of immigration law. Failure to pay employment taxes for ANY worker, legal or undocumented, is felony tax evasion.
The IRS requires that workers ineligible for Social Security Numbers file form W-7 to request an Individual Taxpayer Identification Number (ITIN) when the worker files his/her first tax return. (Unfortunately this means the employer will not be able to include tax identification on the first Form W-2 that is issued.) This number will be used on all tax reports and returns going forward, including Form W-2. The IRS is currently prohibited from sharing this information with Immigration and Customs Enforcement [ICE] (formerly Immigration and Naturalization Service [INS]) by law - see THE PRIVACY ACT OF 1974 5 U.S.C. § 552a).
What the ITIN Does
 
Enables employers to report wages paid to the domestic employee without fear that the tax returns will be rejected due to missing or inaccurate SSNs.
Enables employers to issue Form W-2 to workers ineligible for a SSN.
Enables employers to claim the Child Care Credit or the Child and Dependent Care Account.
Enables individuals ineligible for a SSN to file US Income Tax returns.
Enables individuals ineligible for a SSN to receive a cash refund of income taxes.
MAY assist individuals in applying for legal immigration status if immigration reform proposals are enacted.
Enables individuals ineligible for a SSN to open bank accounts and credit accounts with certain banks.
Enables individuals ineligible for a SSN to apply for mortgage loans.

What the ITIN Does NOT Do
 
Confer eligibility for employment.
Confer legal immigrant status.
Make the worker eligible for Social Security or Medicare benefits.
Confer eligibility for the Earned Income Tax Credit.

The valid range of ITIN's is 900-70-0000 through 999-88-9999, all numeric values. These numbers are issued to the taxpayer on a letter from the IRS - there is not an "ITIN card."
Non-payment of taxes is a leading reason for denial of an alien's immigration petition. Immigration and Customs Enforcement (ICE) can consider the failure to file an income tax return, if a person earned enough to be required to file, as proof that the noncitizen doesn't have the "good moral character" required of applicants for US citizenship. Failure to file income tax returns or an improperly prepared tax return can cause problems when the permanent resident files for US citizenship or when a US citizen or permanent resident tries to help family members immigrate.
Nannies filing and paying their income taxes using an ITIN are ineligible for many refundable tax credits.[/quote]

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