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When you’re new to a country, the language, customs, currency, and other aspects of everyday life can be overwhelming. The U.S. tax system can seem even more daunting, but we are here to help you with any questions or concerns you may have. Read on to learn about what may be expected of you and what some of your first steps may be.
Tax obligations for immigrants
The U.S. collects income taxes on all monies earned by an individual while in the U.S. This includes everything from a job to interest on savings. The Internal Revenue Service (IRS) is the federal agency responsible for collecting federal taxes and enforcing U.S. tax laws.
Broadly speaking, your U.S. residency starts when you initially obtain your Permanent Residency Status, commonly called your Green Card. This is the date the U.S. Citizenship and Immigration Services (USCIS) officially approved your petition to become an immigrant.
If you received a Green Card in a U.S. embassy outside the U.S., then the residency starting date is the first day you are in the U.S. after you received the Green Card.
Once you have your Green Card, the IRS treats you as a lawful permanent resident and you are considered a U.S. tax resident for U.S. income tax purposes.
Types of income subject to taxation
All income earned, whether it is from a job, self-employment, or investing your money, is taxable. If you’re an immigrant working in the U.S., you are considered a resident and must include your income from abroad on your tax return.
Reporting and paying taxes as an immigrant
You’ll either need a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) to file your taxes. If you are unable to get an SSN, you can get an ITIN when you file your first tax return. The ITIN will remain yours until you are eligible for an SSN. Once you get your SSN, the IRS will expire your ITIN.
Only the U.S. government’s Social Security Administration can issue you an SSN, and the IRS issues the ITIN.
Getting a Social Security Number or Individual Taxpayer Identification Number
First, what is an SSN, and how do you get one? To work in the U.S., you will need a Social Security card that has your SSN.
There are several ways to get a Social Security card, including:
- The easiest way is to apply for it as part of the immigration process in your home country, before you come to the U.S. You can do this when filing an application for an immigrant visa with the U.S. Department of State.
- If you did not get a Social Security card as part of the immigration process, you will have to apply for a Social Security number with the Social Security Administration.
- If you are lawfully present in the U.S. and plan to apply for work authorization, you can apply for work authorization from the Department of Homeland Security (DHS), USCIS, and request a Social Security card from the Social Security Administration at the same time.
What is an ITIN, and how do you get one?
If you’re working and earning money in the U.S., but you don’t qualify for an SSN, you’ll need an ITIN.
You can apply for an ITIN for you, your spouse, and your dependents when you prepare your tax return. You’ll fill out IRS form W-7, attach all tax returns, including the current year’s, and send them to the IRS. You can also reach out to a local Jackson Hewitt Tax Pro to help guide you through this process.
Once the IRS provides the ITIN, it’s important to note that it is not a legal identification and can’t be used for any reason other than taxes.
What are resident aliens?
Resident aliens will have either received a Green Card to authorize their right to live and work in the U.S. as a non-citizen permanently, or have passed the IRS Substantial Presence Test. To meet the latter rule, you must meet time and other requirements.
What are non-resident aliens?
Non-resident aliens are those that have the right to work in the country but do not have a Green Card or pass the Substantial Presence test. They must file tax returns if they own a business that earns money from U.S.-based endeavors, or if they work for a U.S. company but did not have enough tax withheld by their employer.
Filing taxes as an Immigrant
Most immigrants are considered resident aliens and will file IRS Form 1040 (or IRS Form 1040-SR for those age 65 or older). You may be able to e-file your tax return or file a paper return. If you are not eligible for an SSN, you must mail a paper return with your application for an ITIN. The Tax Pros at Jackson Hewitt can help you with filing the exact forms you need and avoid common tax filing mistakes. It’s hard when the U.S. tax system is probably very different from your home country’s tax system. We have helped millions of people just like you.
Understanding tax deadlines and extensions as an immigrant
Tax seasons usually end April 15, or the first day after weekends and federal holidays. If you aren’t ready to file then, you can file an extension by the due date, and this gives you until October 15 (the same exceptions to weekends and holidays apply here) to file.
It’s important to note that to file a federal extension, you’d fill out Form 4868, but this applies only to federal taxes.
Extensions don’t get you out of paying taxes in April. Generally, you still need to pay your federal taxes by the federal deadline. The forms aren’t due until October 15, but payment is due April 15. If you haven't filed, it’s important to do so as soon as possible to limit the penalties and interest you may have to pay. The IRS also has payment and installment plans . A Jackson Hewitt Tax Pro can help you with what route is best for you.
Tax rights and benefits for immigrants
It’s important to understand your rights as an immigrant taxpayer. You have a right to fill out forms in your native language and use an interpreter when dealing with the IRS. You have a right to fair and courteous treatment. You have a right to free tax preparation. You also have a right to a refund when eligible.
Potential credits for immigrants
There are several potential benefits and credits available to eligible immigrants that could reduce your taxes or increase your refund. Below we outline a few, but a professional could identify more for you.
Earned Income Tax Credit for immigrants
First, the Earned Income Tax Credit (EITC) should be on your radar. You must have an SSN, must be a documented immigrant, and you must have your SSN before the due date—including extensions—of the tax returns. There is no grandfathering of credits available, meaning that you can’t get credit for a tax year or season that is already passed.
Child Tax Credits for immigrants
The Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) credits may be important for you. Without an SSN, you won’t be eligible for these credits. Credit for Other Dependents (ODC) is allowed if you have an ITIN. As with all these credits, it’s important to speak with one of our Tax Pros about your individual and family situation. This will ensure that you’re filing the right tax forms and getting all the credits you may be eligible for.
Education tax credits
If you have an ITIN or have children with an ITIN, you may be eligible for educational tax credits. You must meet all the qualifications for the credit and our Tax Pros can work with you on what you and your qualified dependents may be eligible for.
Filing your taxes as an immigrant can be a confusing and overwhelming experience. We have helped millions of people who have come to the U.S. looking to start a new life for themselves and their families. Find a Jackson Hewitt Tax Pro near you who can help answer all the questions you may have now and for many years to come.
About the Author
Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 35 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.