Your Taxes and Immigration Consequences
March 2011 - ByShahzad Ahmed with NeJame Law
It is that time of year again . . . to pay your dues to Uncle Sam! But besides just being the only certainty along with death (as the adage goes), taxes can also be necessary for your immigration status. Let us explore how paying, or not paying, your taxes can affect your status in the United States.
When applying for Citizenship
How you treat your tax obligations can affect your eligibility for naturalization. Specifically, when applying for naturalization, one must demonstrate good moral character. The regulations provide that someone who avoids paying taxes lacks good moral character. Therefore, if you are applying for naturalization, you should not be delinquent on your taxes. If you are behind on your tax obligations, then you should enter into an "offer in compromise" with the IRS, which is basically a payment plan. At the naturalization interview, you can present the letter from IRS confirming the payment plan.
Another tax issue that comes up in the naturalization context is paying taxes as a "non-resident." Often, applicants spend a substantial amount of time abroad in their country of birth or derive income from there. As a result, the person may file tax returns with the IRS as a non-resident. However, to be eligible for naturalization, one must establish that he or she has been continuously residing in the U.S. Filing tax returns as a non-resident leads the United States Citizenship and Immigration Service ("USCIS") to believe that one has not continuously resided in the U.S., or that has abandoned his or her residency. Therefore, if at all possible, one should not file as a non-resident.
If you are a Pemanent Resident
As noted above, filing taxes with the IRS as a non-resident or filing in a foreign country can lead the government to believe that a permanent resident has abandoned his or her residency. Consider one scenario: A lawful permanent resident returns to the U.S. after an extended trip abroad. Upon entry, the U.S. Customs and Border Protection questions the person whether he or she has earned income abroad and filed taxes there. If the CBP determines that as a result of filing taxes abroad, the person has been residing there, then it can refer the person to Immigration Court for removal proceedings. The person will have to convince the Immigration Judge that he or she did not intend to abandon U.S. residence.
When filing a Marriage Petition
Taxes can also affect the success of a marriage petition. If you are filing for permanent residence based on your marriage to a U.S. citizen or a permanent resident, you must prove that the marriage is bona fide, i.e. to establish a marital life together and not just to get a green card. As part of the evidence, the USCIS will review your tax returns to confirm that they were filed jointly.
Similarly, if you are filing a petition to convert your two-year residence to a 10 year residence, you must again establish the bona fides of your marriage. Once again, the USCIS will want to see that you filed taxes jointly with your spouse.
When filing any petition
Besides immigrants, it is also important for the petitioners/sponsors to file taxes. In general, after filing an immigration petition and when your relative is applying for permanent residence, the sponsor or the joint sponsor must show that he or she makes income at least 125% of the poverty guidelines (while some exceptions apply). To determine this eligibility, the USCIS looks at the sponsor's income for the last 3 years.
If you have no legal status in the U.S. What if you have no legal status? Should you take advantage and forego your tax obligations? To the contrary, my opinion is to pay your taxes for the following reasons. You may become eligible for certain immigration benefits in the future, which require showing good moral character or attaining favorable discretion of the Immigration Judge or the USCIS. For example, if an illegal immigrant is placed in deportation proceedings, he or she may be eligible for Cancellation of Removal, which requires showing that the person has resided in the U.S. for 10 years and that he has had good moral character throughout those years. Having filed tax returns for those years can help establish both of these requirements.
Similarly, if Congress does pass the Immigration Reform we have been anxiously awaiting, then the undocumented immigrant may be required to prove physical presence and good moral character. Having filed tax returns may help prove these requirements.
If you do not have a social security number and wish to file taxes, you can obtain a Taxpayer Identification Number (TIN) from the IRS to file your taxes.
So don't delay filing your taxes, see your CPA today! While the old adage lumps up death and taxes within the same phrase, the latter one does not have to be dreaded. Rather, it may be the most important thing you do in planning for your or your loved one's immigration status.
The opinions in this column are not meant to be tax or financial advice. For tax advice, please consult with your Certified Public Accountant.