DISCLAIMER: The following content is for educational and informational purposes only. Laura Marenco is not an accountant and the following is not intended to be a substitute for professional tax or financial advice. Each tax case is unique. Always seek the advice of a certified public accountant (CPA) with any questions you may have regarding taxes and any other tax-related topics. In addition, every effort has been made to ensure the accuracy and completeness of this content. However, the content below and in the links is subject to change at any time without notice. Besides the links pertaining to our own products and services, Golden Beacon USA does not endorse nor is it affiliated with the companies, organizations or agencies and/or their products or services whose links are included in this post. Golden Beacon USA does not earn commissions from any of these entities. Laura Marenco and Golden Beacon USA assume no responsibility or liability for any errors or omissions in the content provided below. The information contained in this blog is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness and without warranties of any kind, either expressed or implied. Reliance on any of the information found in the content below is solely at your own risk.
Tax time is just around the corner! Due to the ongoing issues with the COVID-19 pandemic, the IRS delayed the 2021 tax deadline from the annual date of April 15th to May 17th. This extension applies to all taxpayers, including U.S. citizens, green card holders, and non-resident aliens. The IRS recommends that you submit your taxes sooner than later, but with the new deadline everyone thankfully has an equal shot at getting them in on time. And remember: the taxes due on Tax Day each year include all income generated from January 1st to December 31st of the previous calendar year.
As an immigrant to the United States, the tax process might seem daunting. But there’s no reason to panic! For the most part, filing taxes as an immigrant is very similar to doing so as a U.S. citizen. However, depending on your citizenship status, you might run into a few hurdles. So in today’s blog, we break down the Dos and Don’ts when filing taxes as an immigrant.
How Does Filing Taxes Differ When You Are an Immigrant?
No matter the type of citizenship status you have in the United States, you NEED to file your tax returns. An immigrant with a green card, for example, is considered a resident alien. However, without a green card, you can also achieve resident alien status by passing the Substantial Presence Test, which means you have been physically present in the U.S. for 31 days out of the tax year and 183 days throughout the past two tax years (including the current year).
Regardless of your income or citizenship status, you must file your taxes. As you can guess, a non-resident alien is an individual who neither passes the green card test nor the substantial presence test.
Resident Alien vs. Non-Resident Alien: Is There a Difference When It Comes Filing Taxes?
There is one key difference between the two. A non-resident alien is only taxed on the income they accrued while working in the U.S. On the other hand, a resident alien is taxed on both their income generated in the U.S. and outside of the country. Even undocumented workers need only to report their income from U.S. sources.
However, the biggest hurdle facing undocumented workers when filing their taxes is possessing the required Social Security Number. It is illegal to write in a random Social Security Number or use someone else’s. These two situations will alert the IRS to fraud, especially if the other person has also filed a tax return. However, if you are temporarily authorized to work because you are a DACA recipient, or Deferred Action for Childhood Arrivals, or possess a work visa or Temporary Protected Status, you can apply for a Social Security Number. Non-citizens without these options can apply for a temporary identification number called the Individual Taxpayer Identification Number (ITIN). Receiving an ITIN doesn’t provide citizenship or permission to work in the U.S.; it only allows you to file a tax return and pay your taxes. However, submitting taxes as a non-resident has both its benefits and drawbacks: you need to do so in order to comply with the law, which will affect your ability to become a full-fledged citizen, but doing so could possibly lead you to court to be removed from the country. It’s best to be extra careful. Research your status and speak to immigration professionals. If you are uncertain about your alien status in the U.S., please check out the IRS website.
What Happens If I Don’t File My Taxes?
As with any U.S. citizen, not paying any taxes owed can be detrimental. The IRS is capable of seizing, also known as garnishing, your wages to help pay the money you owe. Furthermore, they can levy your bank account and apply a federal tax lien on your property. This lien could damage your credit score and prevent you from selling or buying property.
As an immigrant, not paying your taxes could affect your citizenship status. Even filing incorrectly could impact your lawful permanent resident status as well as your ability to naturalize as a citizen. Avoiding or incorrectly submitting your taxes will look bad to the U.S. Citizenship and Immigration Services, leading them to deny your application to become a full citizen.
As an immigrant, taxes can seem tricky, but you have many resources, including tax professionals and immigration attorneys, that you can consult to get your questions answered. You can also submit your taxes conveniently online through companies such as H&R Block and TurboTax. And if the amount you owe seems excessive, check out the alternative ways to pay, including payment plans.
While we do not offer tax advice, please don’t hesitate to reach out to us for help with finding a tax professional in your area through our Resource Referrals service! You can also check out our educational video series on finances in which we speak with a banking expert about managing money in your new country. Our resources are here to help make the transition as easy as possible! Have questions? Contact me today at laura@goldenbeaconusa.com or call or text (866) 403-7173. Remember, you are not alone!