Click on the tax return example to view an actual 2013 tax return from one of the few hundred thousand low-income reporting cash economy workers who received Social Security numbers since the amnesty of 1986.
The presented case illustrates how a hardworking housekeeper from Central America who has earned an excellent reputation can easily game U.S. taxes by underreporting income. She has worked arduously her entire life with an annual income estimating $25,000.
Congress gave cash economy earning immigrants license to commit tax fraud when they gave permission to workers to file tax returns as “independent contractors” and estimate their own incomes. Obviously, little, if any, significant taxes are generated by this group.
On the attached tax return you can see that rather than pay $5,000 April 15 on earnings of $25,000, understandably, Maria chose to declare only $4,320 and subsequently will pay no income taxes.
Significantly more important, and most often overlooked, if you look at line 56, you will see that she paid $610 in Self-employment taxes. If Maria works 30 years before retiring and her annual declarations were consistent, she would have paid into Social Security and Medicare $18,300. Assuming that she lives the average 18 years beyond retirement, she would be eligible to receive approximately $239,900 in gross benefit or $221,600 beyond her contributions.