In some situations, immigrants might be required to pay taxes. Here are some common cases and some information about how to file.
● Why Should I File Taxes?
You may be going against tax law if you don’t file and due to this, you may have to pay extra money for penalties and interest for failing to file and or failing to pay tax due. If you overpaid your taxes through your paychecks and are entitled to a tax refund, you can’t get a refund, if you fail to file.
● Which Form Should I Use to File Taxes
If you are a foreign resident:
● Form 1040-EZ is the easiest tax form to use. It can be filed if you have no dependents and had income consisting of only wages, unemployment or interest: (Income Tax Return for Single and Joint Filers with No Dependents), or;
● Form 1040(A) or 1040 is the form used if you have dependents and other income not reportable on 1040-EZ: (US Individual Income Tax Return).
If you are a not a foreign resident:
● Form 1040 NR (US Nonresident Alien Income Tax Return) or
● Form 1040 NR-EZ (US Income Tax Return for Certain Nonresident Aliens with No Dependents) if:
✔ You do not claim any dependents; and
✔ You cannot be claimed as a dependent by someone else; and
✔ You are not claiming an exemption for your spouse; and
✔ Your taxable income was less than $100,000; and
✔ You do not claim any federal itemized deductions other than for state and local taxes; and
✔ Your income was from wages, salaries, tips, taxable refunds of state and local income taxes, and scholarship or fellowship grants; and
✔ You are not claiming any adjustments to income other than the student loan interest deduction or scholarship and fellowship grants; and
✔ You are not claiming any credits; and
✔ You are not filing an expatriation return (U.S. citizens renouncing their citizenship); and
✔ The only tax you owe is a tax from tax tables or from form 4137 or 8919; and
✔ You are not requesting a credit of overpaid social security or Tier 1 RRTA tax withheld.
Can I File Taxes if I Don’t Have A Social Security Number
Yes, you can. If you do not have a Social Security Number, the IRS can issue an Individual Taxpayer Identification Number (ITIN). You use this number on your tax returns instead of a Social Security Number.
The ITIN is for tax use only and cannot be used as a Social Security Number for other reasons. It does not affect your employment or immigration status and it does not entitle you to Social Security Benefits. An ITIN does not grant you authorization to work.
To apply for an ITIN, you have to file form W-7. It takes around 4-6 weeks to get your ITIN. Publication 1915 is available to address your questions about ITINs.
Can I Claim The Earned Income Credit?
A foreigner may be able to claim the Earned Income Credit if:
✔ You have earned money from a job in the last three years lesser than a certain amount; and
✔ You have taken care of children in your household in the past three years; (these children must be considered “qualifying children.”
✔ There is a smaller credit available for taxpayers without children.
✔ You have a Social Security card which doesn’t read “Not Valid for Employment.”
✔ You are a foreign resident but you elect to be treated as a resident spouse when filing a joint return with a US citizen or resident spouse.
You cannot claim the Earned Income Credit if:
✔ Your filing status is “married filing separate”; or
✔ You are filing under an ITIN;
✔ Your children do not have valid Social Security Numbers that permit them to work in the United States; (the Social Security card states – “Not Valid for Employment”)
✔ You are not a resident alien for tax purposes;
✔ If the children did not live with you six or more months during the tax year
✔ Your Social Security card states – “Not Valid for Employment.”
Can I Claim the Child Care Credit?
If you are a resident alien (for tax reasons), you can claim the Child Care Credit if:
✔ You paid someone to care for your child so you can work or look for work; and
✔ The child is under the age of 13 years;
✔ You are able to claim an exemption for the child.
If you are a nonresident alien (for tax purposes), you can claim the Child Care Credit if
✔ You paid someone to care for your child so that you can work or look for work; and
✔ The child is under 13 years old;
✔ You are able to claim an exemption for the child;
✔ If you are married, you are filing a joint return with a US citizen or resident spouse.
Can I Claim the Child Tax Credit?
An immigrant can claim the child tax credit for his or her child if:
✔ The child is a United States Citizen or resident alien for income tax purposes and
✔ You claim the child as your dependent on your tax return; and
✔ The child was younger than 17 at the end of the tax year; and
✔ The child is a qualifying child who is either:
✔ Your son, daughter adopted child, grandchild, step child, your brother, sister, stepbrother or stepsister; or
✔ The descendant of anyone listed above; or
✔ A foster child who is a child placed with you by an authorized placement agency.
Does the New Requirement to Have Health Insurance or Pay a Penalty Apply to me and my Household?
Immigrants who are lawfully present in the U.S.:
1. May have a duty to maintain health insurance for themselves and their tax dependents who are also lawfully present; or
2. Pay a penalty called a “shared responsibility payment.”
3. An immigrant who is not lawfully present will not have to pay a shared responsibility payment for him or herself.
a. However, if this immigrant has a dependent for tax purposes, who is either lawfully present or who is a U.S. Citizen, the immigrant may have to pay a penalty for the dependent if the dependent does not have health insurance.
4. Most people will have insurance through their employers or often will have coverage through Medicaid. If you and your dependents for tax purposes already have health insurance that grants you minimum essential coverage then you don’t have to do anything.
If you don’t have insurance:
1. Immigrants and their children who are legally present may be eligible for insurance through the “Health Insurance Marketplace” also called the “Healthcare Exchange.”
2. They may also qualify for a tax credit to help pay for insurance.
3. An immigrant who is not legally present is allowed to apply for insurance for a lawfully present child through the exchange and receive a credit for that child.
4. Immigrants who received deferred action for childhood arrivals (DACA) do not qualify for insurance even though they are currently considered lawfully present.
5. “DACA” recipients and the taxpayers that may claim them as dependents for tax purposes do not have to pay a penalty for the recipient.