Complying with tax obligations is oftentimes important to successfully processing an immigration case. Taxes are necessary in many types of cases.
1. Family-based residency status: A petitioner must show that they can provide support to the relative they are petitioning for. This sponsorship requires the petitioner to show that he or she makes 125% more than the poverty guidelines. If the petitioner is employed, immigration authorities expect to review up to three years of income taxes before making the determination. Petitioners who do not meet the required income can provide the proof of income for a co-sponsor and that co-sponsor, if employed, will also be expected to present up to three years of income taxes. Petitioners who cannot comply with the sponsorship requirements can have their case denied.
2. Employer petitions: Companies desiring to hire foreign workers must show that they are able to meet the required salary and that they are a solvent business. Companies prove solvency with tax returns, among other requirements. Further, foreign employees must show that they work for the petitioning company and that they earn the salary required by immigration authorities. Foreign workers are expected to file tax returns that show the proper employer and salary. Companies that cannot show sufficient solvency are unable to hire foreign workers. Foreign workers who are working for a company other than the petitioning company, or who are earning less than required by immigration authorities, can have their status terminated.
3. Naturalizations: Lawful permanent residents seeking to become naturalized citizens must show that they have complied with their tax filing obligations. The application for naturalization has several questions regarding tax filings and tax debt. A person can be (and most likely will be) denied naturalization if tax filings and/or payments are in arrears.
4. Cases in which the person must show good moral character or that favorable exercise of discretion is merited: Individuals seeking to stay in the US oftentimes must show not only that they meet the definition of good moral character but also that they deserve the opportunity. This is particularly true in cases before the Immigration Court, during which an immigration judge will look at a person’s behavior in the US. Immigration judges usually look favorably upon individuals who have complied properly with tax obligations. Some immigration judges have denied cases based in part on a person’s failure to meet such obligations. The rationale is simple—you should not be rewarded with status if you do not feel the need to meet the most basic duty owed by every responsible citizen.
Not all immigration cases require a showing of tax compliance. Examples of these cases include juvenile protection petitions; visas for victims of crimes; and cases where individuals seek protection from abuse, persecution or torture. People eligible for automatic citizenship (usually children of citizens) do not have to show tax compliance to be considered a citizen.
Be aware that mere compliance with tax filing is insufficient. A person’s case can be denied due to improperly filed taxes, meaning taxes that include false or misleading information with the goal of maximizing a refund or minimizing tax liability. False or misleading information can include:
- Underreporting income (e.g., not reporting cash income);
- Padding or overreporting expenses (e.g., deducting items purchased for personal use, inflating mileage);
- Taking improper dependent deductions (for example, citizens of Mexico and Canada can use relatives abroad as dependents if they can show support of over 51% of the annual cost of living but other nationals cannot);
- Filing under the wrong category (such as married persons who live together filing as “head of household” or “single”).
Undocumented employment DOES NOT excuse a person from filing taxes and neither does employment with false documentation. A person who works in the US while undocumented can file a tax return by using a Tax Payer Identification Number (IRS Form W-7) and must file and pay taxes even on income that was obtained while working illegally or with false documents.
The obligation to pay taxes falls upon everyone who works in the US regardless of immigration status, with only minor exceptions. Citizens and permanent residents of the US who live outside of the country must also file tax returns even if their income is earned abroad.