Regardless of immigration status, it’s important for all individuals residing in the U.S. to comply with their tax obligations.
Not only is it required by law, but immigrants can accrue certain benefits by filing taxes. For example, filing and paying taxes can help pave a route to success in your immigration matter, and also lead to financial benefits for yourself and your family, such as tax refunds and future retirement benefits.
Pelton and Balducci’s team of immigration lawyers in New Orleans, Louisiana further breaks down the importance of correctly filing your taxes as an immigrant below.
While our team members are not experts in tax law and cannot provide specific advice on filing your taxes, we can provide some basic guidance about why it is so important to comply with tax laws and share some tips we have learned over the years.
Why should I file my taxes?
By law, anyone who resides in the U.S. must file taxes. Each individual must seek advice from a qualified tax professional regarding their requirement to file taxes.
This includes individuals of any immigration status, as well as undocumented people.
Importantly, you can also benefit from filing your taxes as an immigrant.
- Potential Tax Refund
Like all tax-paying individuals, immigrants who file their taxes may be eligible for a tax refund. You may also be eligible for other tax credits, such as an Earned Income Tax Credit, a Child Tax Credit, a Child Care Tax Credit, or a Premium Tax Credit.
- Qualifies you for future Social Security Benefits
Once a worker accumulates 40 quarters of work (roughly 10 years) in the United States, they will generally qualify for the receipt of Social Security benefits upon retirement, disability, or death.
Social Security and Medicare taxes are paid with contributions from both worker and employer through payroll processing, which is another way to pay taxes. Importantly, work that is “under the table” does not count towards Social Security benefits that you and your family could become entitled to upon retirement or death.
Note that Social Security benefits are only available to “qualified aliens” ie. generally lawful permanent residents (and certain others with lawful status) with valid social security numbers and of course U.S. citizens.
However, once a worker becomes a “qualified alien” to receive Social Security benefits, time spent working in undocumented status with an ITIN is also attributable to them.
If you do not have a Social Security number, you can use an Individual Tax Identification Number (“ITIN”) to report taxes. See more information on the ITIN below.
- Builds Record of Your U.S. Presence
When applying for Temporary Protected Status (TPS), DACA, registry, and adjustment of status based on asylee status and U nonimmigrant status, as well as certain forms of relief in immigration court such as Cancellation of Removal, you need to provide a record of your presence in the U.S. You can use paperwork from your tax filings to prove your presence in the United States.
- Retrieve an ITIN
Your Individual Taxpayer Number or ITIN is primarily to help you comply with tax law.
The IRS uses ITINs to keep records of tax-paying individuals without a Social Security Number (SSN). However, your ITIN may have other uses.
For example, many banks accept an ITIN in lieu of a SSN for immigrants who might want to open a bank account. The ITIN is a 9-digit number beginning with the number 9.
Once an individual with an ITIN obtains their valid Social Security number, credit for qualifying quarters of work earned towards qualifying for Social Security benefits may be transferred to the valid account and recognized for purposes of benefits distribution in the future.
- Demonstrates Good Moral Character
Finally, you may need to demonstrate your good moral character for certain immigration benefits applications, such as naturalization, relief under the Violence Against Women Act (VAWA), and other forms of relief such as Cancellation of Removal in immigration court removal proceedings.
The failure to file or pay taxes could result in a finding that you lack good moral character and could in certain instances contribute to a denial of your application.
- Sponsor Family Members to Immigrate
If you are a Lawful Permanent Resident or a U.S citizen, filing taxes will facilitate your sponsorship of family members to immigrate. One requirement for Family Immigration is the I-864 Affidavit of Support, which is a contract between the sponsor and the government, in which the sponsor agrees to reimburse the government if their family member relies on certain public benefits in the United States.
In conjunction with the submission of the I-864 form, USCIS requires that the Sponsor submit copies of their most recent year’s taxes to establish that they earn sufficient income (or have adequate assets) to meet the applicable poverty guidelines.
If a sponsor does not have accurate and qualifying taxes available at the time of sponsorship, this can complicate and delay the process of immigrating family members.
What are some tips for filing taxes as an immigrant?
It’s been widely reported that the IRS is still backed up this year due to the pandemic, so tax filers are encouraged to file early. Furthermore, if you expect a refund, the sooner you file, the sooner you will receive your money.
Here are some other tips to keep in mind, as well:
- Start a file of documents as soon as the new year begins to collect this non-exclusive list of relevant tax documents:
- W-2s or 1099s,
- property tax statements,
- mortgage documents,
- charitable contributions,
- Child Tax Credit advance,
- childcare expenses, and
- documentation on loss (such as hurricane casualty loss)
- To file your taxes, you need either a valid Social Security number or an Individual Taxpayer Identification Number (ITIN). If you don’t have a SSN, you should apply for and file with an ITIN for yourself and for family members who lack a SSN.
- Consider hiring an accountant to prepare your taxes because the USCIS, Immigration Judge, and the ICE attorneys WILL scrutinize your taxes. Remember that the typical tax preparer is not at all concerned about the impact your tax return will have on your immigration case. We have seen countless errors in tax return preparation lead to delays and unfortunate results in immigration cases. Thus, consider working with an accountant.
- It is important for immigrants and their families to file their taxes with accurate and consistent information. For example, if you are immigrating based on marriage, filing taxes as “single” can cause problems when USCIS goes to adjudicate your adjustment of status case. Also, failure to report all income can have similar negative consequences when it comes to sponsoring family members for immigration. For example, an applicant may claim to be the sole household provider, but the income listed on the tax returns may suggest otherwise if the reported income is very low. Always report all income. Further, while tax preparers may suggest adding many dependents or filing as “head of household” in order to minimize taxes due or maximize a refund, these choices will not necessarily play out in your favor when USCIS adjudicates an I-864 Affidavit of Support. For purposes of the Affidavit of Support, the more people listed as dependents, the higher the income requirement is to qualify as a Sponsor.
- Finally, if you have not filed tax returns in the past or if past returns contain errors, it is not necessarily too late to fix these situations. Amended returns may be filed to correct prior filing errors, and late returns may be filed for at least some prior years. Again, your best bet is to work with an accountant if you need assistance with prior returns.
Filing Taxes in Louisiana
Both Federal and Louisiana state taxes are due in 2022 on Monday, April 18.
As a resident of southern Louisiana or other areas impacted by recent hurricanes, you may be eligible to file a Casualty Loss Form due to losses suffered as a result of recent storms. For example, Hurricane Ida is a designated disaster casualty loss for 2021. IRS relief may include extensions of time to file and the ability to claim financial losses.
Have questions about how the tax filing process in Louisiana affects your immigration case? Our New Orleans immigration attorneys at Pelton + Balducci are here to help.
Contact Pelton and Balducci Louisiana Immigration Lawyers
If you need help understanding the importance of filing your taxes as an immigrant, reach out to our New Orleans-based team today. Pelton and Balducci’s experienced team of immigration attorneys can help set you up for your successful American dream. Contact us today.
