Why Do Immigrants Need To File Taxes?
What Is The ITIN Number?
People who are living in the United States, whether they are immigrants or American citizens, have a civic duty to be paying into the tax system, and that’s the money that goes to fund all aspects of the Government, from infrastructure to education, and we pay taxes involuntarily.
In Texas every time we purchase something we pay sales tax, we all pay property taxes whether we own our property or rent our property, if you’re a renter your property taxes are built into the cost of your monthly rent, we are all paying into the system in multiple ways, and federal taxes is one of those.
Tax Day is on April 18, 2022, unless you filed for an extension. By the deadline, you must file your federal tax return and pay taxes if you owe them or you will get a refund if you’ve overpaid taxes.
If in general, you work for an employer or a company as an employee, then they will be withdrawing or withholding your federal taxes and paying them for you.
At the end of the year, you get a document that you use to file your tax return, and it shows what your income was and what your taxes were, and you look at what credits and deductions you get, maybe the child tax credit, and at the end of the return you either owe an amount or you get a refund.
Usually, it’s very rare that nothing happens, that you don’t owe anything and they don’t owe you anything, so it depends on whether you’ve paid into the system or not, whether you’ve been an independent contractor or not, but we must file a tax return every year on April 15.
Tax time is now and people are preparing to file if they haven’t already paid their taxes for the last year of 2021.
By January if you worked last year as an employee, you’ll get your W-2 which you use to file your taxes, and if you work as an independent contractor you get your 1099 which you use to file your taxes, and if you’ve been paid as an independent contractor you don’t have taxes withdrawn.
Oftentimes people who work for themselves as a business owner, maybe they are a painter, maybe they do nails, maybe they do lawns, maybe they work as a consultant and they are hired as an entity, then their taxes aren’t paid for them by their employers and in most cases, they will need to pay into the system when they file their taxes.
Taxes can be quite complicated, people use to compare immigration law to tax law in terms of complexity, so it’s really important that you as you hire a knowledgeable immigration attorney and experienced to help you on your immigration case because isn’t it one of the most important things in your life, it’s true for taxes as well, you need to be hiring and working with entities that you trust.
You can go to the IRS website and find non-profit organizations like Foundation Communities, we at Lincoln-Goldfinch Law trust in them and recommend them, they speak English and Spanish and they help with tax prep.
Every single person must understand their tax obligations and they file their returns in a time because the consequences of not doing it can be really big depending on what’s going on in your life.
Are Taxes Different From Place To Place?
Typically your taxes are going to vary depending on your state, not your city or your county, you shouldn’t have city-specific tax returns that you need to file, for example, but definitely, state returns are different.
In the state of Texas, we have a high sales tax, so on every purchase that we make or almost every purchase we make, it’s eight and a quarter percent tax that we pay.
Every time you buy clothes, anything, you’re paying that tax into the system just automatically.
Whereas in other states like New Hampshire, for example, they don’t have any sales tax but they have an income tax, at the end of the year they have to file a state income tax return.
Some states have a hybrid, they have a sales tax and they have a state income tax, it is going to vary based upon the state where you live, in Texas, you only have to file a federal tax return, you don’t have to also file a state tax return.
Do All Immigrants Pay Taxes The Same?
From a policy pro-immigrant anti-immigrant perspective, all of the legitimate studies that have been done on an economic basis show that immigrants are an economic benefit to the overall economy, not only do they pay the taxes that we’ve already talked about like sales tax and property taxes, they also pay into income tax if they’re working with a social security number.
Even if they’re not, even if they’re working for a company and they’ve used a false social security number those taxes are still being taken out with help, and paid to the Federal Government but also the benefit of immigration overall.
Immigrants are much more likely to start businesses, to create jobs, and there is just no question when you dig into the data about whether immigration is a good thing or a bad thing for the overall economy of our nation, it is 100 percent a good thing.
Responding to do immigrants need to file taxes our answer is yes, everyone should file a tax return, and even undocumented people who aren’t working with a social security number, who are maybe working cleaning houses and only get paid in cash, you still have a duty to contribute by filing and paying your taxes.
It’s also really beneficial to you personally to do this in terms of your future immigration cases, for example, if you have a deportation case in court, the judge is going to want to see that you’ve been filing and paying your taxes, or if you’re filing a DACA application, and you need to show your physical presence and your time spent in the United States, tax returns are one of the main ways that you can do if you’ve been here for years and years.
If you’ve filed your tax returns for 10 years you can get a transcript from the IRS that shows that you regularly file and pay your taxes, and that can help you beyond just being sort of like a moral obligation, it can help the individual for their immigration case.
How To File For Taxes As An Undocumented Immigrant
There’s the individual taxpayer identification number, the ITIN number, which undocumented people can use to file their tax returns.
You can apply online but you can also get help from an organization like Foundation Communities, you have to apply, you can do it online, you have to show certain documentation and there is a requirement to keep it up.
Every few years you also have to renew it, but that is the way that an undocumented person who doesn’t have a social security number files their taxes, they would use their ITIN number.
Can I Lose My DACA Or Work Visa If I Don’t Work?
We don’t believe that it is a risk, just because you have permission to work doesn’t mean you are required to work, especially if you’re in high school studying.
There was this little window of time during the Trump administration where the public charge rule looked at an applicant for Green Cards, work history, and their financial history, and one of the elements of that inquiry was: Does this person provide for themselves? Do they support themselves? and if they have a work permit, and they’re not studying, and they’re not working at that little window of time would be a mark against that person’s public charge review.
That policy was very short-lived, it was battled and immigrated, and not in federal court, it was blocked by the courts, it ended up just not moving forward under the Biden administration.
We would say no, there’s no requirement to work with a little asterisk that says immigration policy, it is very ever-changing and wavering, and who knows what will happen in the future, who our next president is going to be, what immigration policies are they going to put in place.
Do You File For Taxes Even If You Are Not Working?
If you’re dependent on your parent’s tax returns, you don’t have to file your own return, and then there are limits, if you’re employed and you earn under around $12,000 as an individual you don’t have to file a tax return, but if you’re self-employed and you get paid as a 1099 person contractor, the limit is much lower it’s like $4,000.
If you earn nothing you shouldn’t have to file tax returns, but you should pay attention to how much you earned.
Don’t take Lincoln-Goldfinch Law’s word for it, we always say on these programs that this is general advice, this is not meant to be specific advice for any particular person on any particular case, if you have immigration questions specific to your case, please, do call us for a free evaluation of your case, that’s confidential.
If you have tax questions, call a CPA (Certified Public Accountant) or Foundation Communities, we do not recommend one of these like national chains, we think that the people who prepare taxes at chains like that, they’re not CPAs, they don’t have the level of expertise that we would feel comfortable with.
Do People With ESTA Or Tourist Visa Have To Pay Taxes?
No, because they should not be earning any money, if you’re here on an ESTA or you’re here on a Tourist Visa it would be considered a violation of your Visa to be working in earning money.
If you’re following the rules of your Visa you’re not earning money and therefore you don’t have to file a tax return.
Do I Have To Pay Double Taxes If I Have Double Citizenship?
Yes, you have your tax obligations in your home country which vary obviously by country, and you have tax obligations in the United States, which is an area that can get even more complicated.
There are experts, sub-specialists in immigration tax questions, one of the people that we at Lincoln-Goldfinch Law refer to commonly is a guy named Robert Alcorn, and he’s a CPA who’s based in Dallas, you can Google him, and he actually comes to the immigration lawyer seminars to talk to us as lawyers about the basics that we need to know for our clients, he’s the one we refer to when someone reaches out to us.
Can I Pay For Taxes For The Years I Haven’t Paid?
You can file back tax returns, again you would want to talk to someone who is a sub-specialist in amending or filing an old tax return, you can go back 3 years and at that point you know that would be something if you’re considering filing taxes for an immigration benefit, that would be something that we would want to talk to someone about.
For example, when we are defending someone in deportation proceedings before an immigration judge, this may be someone who has been in the United States for a long time and maybe they got picked up after an arrest, driving without a license, or maybe even they got arrested in a work raid, maybe they were detained temporarily, got out on bond and now they’re in deportation proceedings.
There are probably half a million people in that situation in the United States immigration court system.
One of the main defenses that we often use for our clients is called Cancellation of Removal, and to qualify for cancellation you have to show you’ve been in the United States for at least 10 years before your case was initiated, that you have had a good moral character that whole time, and that you have an American citizen or permanent resident parent, spouse or child who would suffer exceptional hardship if you were to be deported.
Those are the 3 main things where we got to prove the time, we got to prove the good moral character, hardship to the family which may be based on an illness or something along those lines, but that middle part about good moral is that there are a lot of immigration judges who will not approve a cancellation case unless they see that for those 10 years, that you’ve been in the U.S, you’ve either filed a return or you weren’t required to file a return.
If we are representing an immigrant who’s in cancellation proceedings, and they skipped the last 3 years of returns but they were earning money, we probably are going to recommend that they amend and file late returns so that we can show the court that our client has met their duty to file returns, and therefore can meet the good moral character requirement.
In some cases, it will be useful in an immigration case to file old returns or amend previously filed returns.
Sometimes this is one of the reasons that we want people to get good advice because we’ve seen people get terrible advice from tax preparers or even like notarios or people who don’t know any better.
We had a client many years ago who listed children on her tax return who were not her children, they were actually her neighbor’s children, and her neighbor was undocumented but she had legal status, so she and her neighbor decided to list the neighbor’s kids as dependents and then split the proceeds.
It was crazy but that kind of stuff goes down, and people don’t know what they should do, who can be dependent, who can’t be dependent, and if you take wrong advice from someone you are unknowingly committing fraud on a tax return, and you come to us, we’re probably going to recommend that you amend that.
If your tax return is going to be reviewed in your immigration case we don’t want you to have a fraudulent return on record.
What Happens To The ITIN Number If I Get A SSN?
It will eventually expire so you just will stop using it, whereas with a social security number it’s slightly different.
Once you get a social security number it’s yours for life, there are people back in the 90s beneficiaries of immigration petitions, even if they were out of status got social security numbers.
There’s a lot of people who’ve been in the United States for a long time who have socials but no legal status, and that’s their social number forever, for example, the social security number that you got when you got DACA, eventually when you get your permanent residency and citizenship and all that down the road, your social security number will stay yours for life.
It doesn’t expire, you don’t have to do anything to keep up your social security number as you do with an ITIN.
Common-Law Marriage & Taxes
When a United States citizen and an undocumented individual are married, they can pay their taxes jointly, in fact, when you’re married there are rules about how you file your taxes so you either have to file married filing separately, married filing jointly, or you can file head of the household but you have to be separated.
You don’t want to file as a single person if you are married, and lots of people do this if they’re in a mixed-status family, let’s say the wife is a citizen, the husband’s undocumented, he doesn’t have an ITIN and they gotta follow their tax returns, and she just submits a return, that’s not an accurate return because she’s not single, she’s married.
These are things to be thinking about now, it’s March, work on getting your ITIN in time so that you can file as a couple, as a married couple if you are married because that is a requirement.
How Can Someone Be Exempt From Taxes?
There are tons of cases where people don’t have to file taxes, one of the ones is what we already talked about, is if your income’s under a certain amount, then there’s certain types of income that are not taxed, maybe social benefits, for example.
These are questions for an expert, it’s worth whatever time investment it will be for you because like Foundation Communities is free to go and ask the questions of the expert, to do your taxes the right way, and to have that peace of mind.
Filing a bankruptcy petition is scary, filing an immigration petition is scary, filing taxes can be scary, you are going up against a federal agency that has lots of rules and lots of ways to break them unknowingly.
In case you have additional questions about your taxes, your income, or your specific case, you can contact us at (855) 502-0555. After a short 10 minute evaluation of your case over the phone we will let you know what options you have. You can also follow us on our social networks so as not to miss our weekly transmissions via Facebook, YouTube & Twitch.
Frequently Asked Questions About Tax Season
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