Tax preparation is one of those areas where it's hard to know who to trust, and it's really important that it's done right. You have to make sure that the tax preparer that you go to isn't just doing everything unethically to get the biggest refund, which can later expose the filer to liabilities in the future.
We love and trust Foundation Communities, they offer lots of different services beyond just tax preparation. Stephanie Chavarria from their prosper center helps us answer some of the most common questions for this tax season. We’ll make an intersection of immigration and taxes.
Foundation Communities have been providing free tax preparation services for the past 15 consecutive years. It is a program that is widely trusted in the community. This program ethically maximizes someone’s tax refund, minimizes the tax bill of taxpayers in the community. Things have shifted a little since COVID started last March. Foundation Communities provide free tax preparation through an online portal, and that's what we are going to mainly focus on this year.
If you have access to the internet on your smartphone, then you're easily able to get your taxes done through our online portal: ProsperTAXHELP.ORG. You can go directly to GetYourRefund.org to get started. Start filling it out on a computer or on your smartphone, you'll be able to start uploading all your tax documents or anything that you may need to get your taxes done. Our staff has extensive training by the IRS so you can rest assured that you are working with experts.
It's really important to get this stuff right for anybody, but especially for immigrants. Tax filings can have a really big impact on immigration petitions or eligibility later on down the line.
Does Foundation Communities only serve people in the central Texas region now that you're virtual? Or can we go beyond state borders?
We usually just focus on serving the Austin area. Now that we're virtual, we're serving the entire central Texas area. We do get some college students that are in town coming in from Oklahoma, Houston or Valley, and we help them get their taxes done as well.
What are your internal Foundation Communities deadlines for people who want your help?
Everyone should receive their W2s or their 1099s from their employers in 2020 by the end of January. You’ll be able to file as soon as you have all of your necessary tax documents.
If you're sending Foundational Communities your information on the day of the deadline (April 15th) we cannot guarantee that we'll get through it. We encourage everyone to send stuff as early as possible. If you do it sooner, then you'll get your refund sooner too. Our cutoff date is one week prior to the 15th of April. Get it done as soon as you can!
Once you submit information, we'll give you a call to make sure we have all the information and we'll be in contact with you in case we need anything else.
The documents that you need, such as W2s or 1099s. should be delivered to you in January. If you're not getting them, your previous employer may not have the correct address. They have to comply with these rules to give you the documents. If you don’t receive them, you can proactively reach out to them. Make sure that all your employers from last year have your correct address. As soon as you get those tax documents, sign up for Foundation Communities or another tax preparer. This is such a crunch season for Tax CPAs, accountants and tax preparers, so submit early! This will help everyone involved.
In the case that you end up not having paperwork by the deadline. You must file for an extension by April to be approved for it, which gives you a couple more months to file and Foundation Communities is also able to help you with that. They are also available during the summer season, mid-July through October, to help all those people who still needed to file and didn't get to file. The sooner you do it, the better. If you owe taxes, you have to make a payment or you'll pay penalties if you don't submit them on time. Even if you're not planning on doing everything by April, there's still work to be done before that deadline.
How do stimulus payments function with tax returns? Is this money going to be included in their income for tax filing? Is this money going to be taxed?
This goes a little beyond that. The stimulus is considered a tax credit for the year of 2020 based on the information that they already have from you. It's not going to reduce your refund and it's not going to increase your income for taxable income.
There’s a distinction between a tax credit and a deduction. A deduction reduces your income and therefore reduces your tax liability, but the stimulus checks are actually different than that.
A credit means you get that amount back from the government. If you've received that payment, you don't get it again so It's not going to impact your tax filing.
Those who did not get their stimulus checks for whatever reason can file their 2020 tax returns now and qualify for the stimulus tax credit. Some might get the money that they didn't get in 2020 when the stimulus was passed. IRS based the first stimulus check off of our 2018 taxes. So if you didn't see it at that moment is because they were basing it off of either 2018 or 2019 taxes, whichever one they had at the moment.
ITIN (Individual Taxpayer Identification Number)
How does someone get an ITIN? Then do they have to renew it? What happens every year once you get it?
The ITIN is the way that people without social security numbers file tax returns. This number is issued by the IRS or people who don't qualify for a social security number and it works for filing purposes only. Once you get it, it doesn't need to be renewed every year. There are certain circumstances where you do have to renew it, for example, if you haven't used it in the past three years or if your number appears on a list that the IRS releases every year, not because they haven't been used, but they're just numbers that they need to renew. That is something that Foundation Communities can also help with. They can help with applying for the ITIN and renewing if it needs to be renewed.
It is important to get your ITIN. For example, a mixed status family where the mother, who is a US citizen, has a social security number. She's married to an undocumented spouse who doesn't have a social security number, but instead of going through the hassle, she just files as head of household or single. That's not proper. If your spouse is undocumented, they need to have an ITIN. You need to file as married. You can’t file a tax return married if you don't list either a social or an ITIN for your spouse. Sometimes spouses end up as dependent, just because they skip that step and it can definitely harm you later on down the line for an immigration case, when you're trying to prove good faith marriage. It’s not a proper and legal tax filing. It's really important to do this step of the ITIN.
Foundation Communities can help change that as well as make amendments to returns that have already been filed. These are usually things that paid preparers charge for every additional thing that you need to do, but Foundation Communities does not. There's so much more that this organization does for the Central Texas communities. You can trust them.
What if I worked under someone else's name? What happens if someone's working under a lawless document?
For example, someone who's undocumented needs a job and they unlawfully might get a social security number, where either someone lends them their own identity or they get a fake social security number that may or may not actually belong to another person in order to get a job.
Filing with that social security number is not good. What you end up doing if you don't qualify for social security is getting an ITIN through the IRS. Even though you worked with this other social security number, you file under yourself with this ITIN that the IRS has given you.
Why? It helps your case when you show that you are somebody who's going through or will later go through an immigration process, that you've had a job and that you've also paid your income taxes. It’s better to get that ITIN so that it goes under your history.
If someone is undocumented that has a SSN, does that number still belong to them?
Once you get a SSN, that's going to be yours for the rest of your life.
No matter what process it was obtained through or whether that process was finished, that social security number is going to stick with them forever. Once the time comes that they can finish that process, that social is still going to be the same social. That's going to be their history of filing through that SSN. You definitely don't need to get an ITIN if that process didn't go through, that social is just going to stick with you.
Filling Taxes as an Undocumented Immigrant
Is it good for me to file taxes if I'm undocumented? Will filing taxes while being undocumented help me if I later adjust status?
Yes, absolutely. We encourage undocumented folks to do so. There are several circumstances in which they may also qualify for a refund. They may also qualify for credit that is refundable. Once they are able to start an immigration process, taxes are one way to show that you're a good citizen.
Paying taxes is required of everyone in the country. Even if you don't have work permission, your kids go to school, you drive on the road, and you use all of the services that our taxes pay for. It's a moral duty, but it's also very important for future immigration cases and almost any case that you're going to file.
Now with the public charge rules, if you're applying for a green card, they ask for the tax returns of the applicant. For humanitarian cases, whether it's DACA, VAWA, etc., you have to prove your physical presence in the United States and taxes are the primary way to show that you've been here, that you've been working and you've been paying your dues.
Taxes also help demonstrate your good moral character, which is a requirement for many case types. In fact, a lot of judges won't even approve a cancellation of removal case, which very often is the way that you stop a deportation, without showing you've been paying your taxes for the last 10 years. It’s super critical to pay taxes even if you are undocumented. Foundation Communities can help you get the ITIN that you need to file your tax returns.
What if someone else had claimed my dependent, can I amend?
For example, if an undocumented person or a mixed status family doesn't claim their own children as dependents because they don't get the tax credits associated with those kids, they might ask their neighbor to claim the kids and then split the money.
People can do questionable things with dependents, and it's not always the applicant who even knows what's going on. There are some unethical tax preparers who will do these types of things without the knowledge of the applicant. Something to be aware of and watch out for is to make sure who can be claimed as a dependent and what you do if a mistake has been made in your previous returns.
These are the things we look at for our clients who are filing for a naturalization. The IRS will look at your tax returns so we want to see what kind of stuff has been going on with dependents. Sometimes we will make amendments before we file with immigration, just to make sure that it's all cleared before you submit anything to immigration. When you file an immigration case, the immigration agency, USCIS, is asking you, the applicant, to turn in your tax returns. They don't go directly to the IRS to get the documents and the data. So you do have the opportunity to fix it before you submit it.
Different Ways You Can File
How do you know if you're supposed to file head of household, married? Do you file jointly? Do you file separately? What are the rules around that?
There are certain things that Foundation Communities’ tax preparers do. They make sure that you're filing correctly and that the way you’re filing is going to be the best option.
We determine how it should be done based on what the IRS requires. That's something that the team at Foundation Communities gets training for. There are certain people that get paid to do these things and they do it just because you might get more money, but it's not the right way to do it. There are differences, and these are the kinds of things that can get you into trouble with the IRS. These are some other reasons that you need to have trust in your tax preparer, not just for immigration reasons, but also because you can get audited. People can get randomly audited in their tax returns and also get in trouble if things are not exactly the way you declared them.
How much do you have to earn to file taxes?
- If you are married and filing jointly and earn over $24,800.
- If you are married and filing separately and earn over $12,400.
- If you are the head of household and you earn $18,650
- If you are single and you earn over $12,400.
- If you're earning under those amounts, you don't have to file a return.
What if most of your income was unemployment benefits last year and the unemployment benefits bump you over that amount, you have to file?
Yes. Unemployment benefits are considered as income.
Even if you earn less than is required to file, you may still be eligible for a tax refund if you still had a job and money was deducted from your paycheck. Whether or not you have a requirement to file, it is in your best interest to do so because you may be able to receive that $300, $400, or even $50 back once you file. If you're earning under or even close to the minimum required amount, you're not going to owe any taxes. However, if there was any deductions made from your paycheck, then that's going to be a refund to you.
What if I'm paid in cash, do I still have to file?
Yes, even if you're paid in cash, you have to do your taxes. Register with Foundation Communities for help.
They can help file for people who perhaps have their own business or don't get a W2 book or get a 1099. When you have your own business or you get paid in cash, usually the employer's not making any payments to the IRS for your taxable income. That's something that you're going to be responsible for. They can help people that get paid in cash, paid with a check, or that have their own businesses.
Foundation Communities tax preparers can help file for current year returns, which are going to be 2020 returns. They can help with previous year returns, with changes or amendments that need to be done to already filed returns, ITIN applications, ITIN renewals. They also help with responding to IRS letters.
This is not a service you have to pay for. You can get free help, and I know all of us need that when we can find it these days.
Foundation Communities is at ProsperTAXHELP.ORG. They also have preparers available in many different languages including Spanish, English, and more.