Does Immigration Check Your Taxes?

Updated on January 7, 2024

At a Glance

  • Understanding U.S. tax obligations depends on determining residency status: nonresident or resident alien.
  • Green card holders, even with an expired card, must file taxes correctly for immigration status maintenance.
  • Filing taxes with an ITIN is crucial for undocumented immigrants, supporting future immigration processes and cancellation of removal cases.

Tax season can be the most stressful time of the year. It combines the difficulty of navigating complex laws with the challenge of understanding your finances. The process is even more complex when you are an immigrant because it is not always clear if you are expected to pay U.S. taxes if you are not a U.S. citizen. Are there taxes for H1B visa holders? Read on to find out does immigration check your taxes.

Resident vs. Resident Alien and Taxes

The key to understanding your tax obligations in the U.S. is understanding whether you are a tax resident of the U.S. If you are not a U.S. citizen, then you fall into one of the following two categories for tax purposes:

  1. Nonresident Alien
  2. Resident Alien

Generally, a resident alien is required to pay taxes as a U.S. citizen. This means they pay federal income tax to the Internal Revenue Service (IRS) on all of their income from anywhere in the world.

The best way to figure out whether you are a resident or nonresident alien according to the IRS is using the Green Card Test and the Substantial Presence Test.

These tests check whether you are a lawful permanent resident (green card holder) or if you spend a lot of time physically in the U.S. If you pass either test you are a resident alien for tax purposes.

If you do not pass either of those tests and you are not a U.S. citizen then you are a nonresident alien.

Why Permanent Residents Need to Take Taxes Seriously

If you have a lawful permanent resident card (green card) then you are a resident alien for tax purposes. You are required to pay taxes like all U.S. citizens, and there are serious financial and legal penalties if you do not. Some important tax considerations for green card holders are discussed below.

Use the Correct Residency Status When Filing

The U.S. Immigration and Citizenship Services (USCIS) is not responsible for making sure you pay your taxes. However, many U.S. federal government agencies share information about people.

Although filing your tax return as a nonresident alien could benefit you in terms of paying less tax, that decision could affect your immigration status.

If you are a permanent resident but you file your tax returns with the IRS as a nonresident alien, that could be taken by USCIS to mean that you intend to give up your permanent residence in the U.S.

That, in turn, could result in you being summoned to Immigration Court under removal proceedings to end your permanent residency in the U.S.

If you don’t understand how your tax filing status could affect your immigration status, you should consult a specialized immigration attorney before you file your tax returns.

Your Tax History Can Impact Your Chances of Naturalization

One of the requirements for naturalized citizenship in the United States is good moral character. Paying your taxes is considered part of showing good moral character.

That means being up to date with your federal income tax obligations is important if you ever intend to apply for naturalized U.S. citizenship. If you have failed to file tax returns in the past, your best option is to contact the IRS to arrange a payment plan (known as an offer in compromise). It is also important to do this long before you apply for naturalization.

Then, when you go to your naturalization interview, you can present the letter from the IRS detailing the payment plan you have arranged. You should also bring receipts for all the payments made up to that point. In this way, you can prove good moral character even if you owe the IRS.

Expired Green Cards

If you fail to renew your Green Card, you are still legally a permanent resident of the United States. It just means that you have no proof that you are a permanent resident.

Even with an expired green card, you are required to file federal income tax with the IRS.

If you fall behind on your taxes, that won’t prevent you from renewing your Green Card, but it may negatively affect some of your immigration benefits in the future.

Abandoned Green Cards and Exit Taxes

Surrendering your green card sets off a process called exit tax. This is a once-off tax obligation that you must pay when you stop being a U.S. resident.

Not everyone who abandons their permanent residence will be required to pay an exit tax.

It is a very good idea to consult a tax professional if you are considering abandoning your green card. They can help you understand if you will be required to pay an exit tax, and how best to manage it.

The Importance of Including Your Spouse When You File

If you or your spouse came to the U.S. under a K-1 (spousal) visa, then it is also important to make sure you correctly file your joint tax returns. This is because submitting joint tax returns is very strong evidence for the USCIS that your marriage is bona fide (genuine).

The Importance of Taxes for Undocumented Immigrants

An undocumented immigrant is someone who entered the U.S. without inspection, or whose temporary visa expired while they were in the country. However even without lawful residence status, if you pass the Substantial Presence Test, you are a resident alien for tax purposes.

You can file a federal tax return with the IRS as an undocumented immigrant by applying for an ITIN (Individual Taxpayer Identification Number).

It is important to file your tax returns regularly because a history of correct tax returns will be very helpful if you ever need to apply for lawful permanent residence or naturalized citizenship in the U.S.

Cancelation of Removal

In certain circumstances, you can get a green card through a process called cancellation of removal. This is something that can happen after you have been put into deportation proceedings. Cancellation of removal is available to anyone who is not a lawful permanent resident of the U.S., with any immigration status, whether they are a documented immigrant or not.

You could be eligible for cancellation of removal if you:

  • Have been in the U.S. (continuously, physically present) for 10 years or more
  • Have shown good moral character for the entire time you have been in the U.S.
  • Have not been convicted of certain crimes or violated certain laws
  • Establish that your removal from the U.S. would cause “exceptional and extremely unusual hardship” to your family in the U.S. (spouse, parent, or child who is a U.S. citizen or permanent resident).

Generally, cancellation of removal also results in you being awarded a green card. However, there is a limit on the number of green cards awarded every year, and the decision to grant cancellation of removal is up to the judge in the Immigration Court. Providing a lot of evidence of all of the conditions (including proof of regular tax payments) is a good start in terms of proving that you deserve to be granted a cancellation of removal.

How Immigrant Taxes Impact Immigration Reform

In the very long term, paying your taxes, even as an undocumented immigrant, could build a path to documentation in the future.

There is a possibility that immigration reform in the U.S. may one day create a pathway for the millions of undocumented immigrants in the U.S. to gain lawful residence in the country.

If this happens, it is likely that two of the major requirements that prospective applicants will have to meet are physical presence and good moral character.

If you pay your taxes now and continue to do so for years into the future, this history of tax filings will go a long way towards proving both of those things about you.

How Tax Records Help You Sponsor Family Members

U.S. immigration law allows you to help a member of your family immigrate to the U.S. by acting as a sponsor on their immigration application. To do so, you must prove that you are financially capable of supporting your family member when they arrive in the U.S.

Your history of federal tax filing serves as your historical proof of income, so it is important to keep up to date with your taxes.

Frequently Asked Questions (FAQ)

Does U.S. immigration check your tax records?

Yes, U.S. immigration authorities may check your tax records. When applying for certain immigration benefits, such as lawful permanent residency or citizenship, you may be required to provide proof of having filed taxes.

Why is tax compliance important for immigration?

Tax compliance is important because it demonstrates good moral character, a requirement for many immigration statuses. Filing taxes properly can be a critical factor in immigration applications, especially for green card and naturalization processes.

How do immigration authorities verify tax compliance?

Immigration authorities can verify tax compliance through:

  1. Tax transcripts or tax returns submitted by applicants.
  2. Coordination with the Internal Revenue Service (IRS).
  3. Background checks that include financial history.

Do all immigrants need to file U.S. taxes?

Most immigrants who earn income in the United States are required to file U.S. taxes. This includes lawful permanent residents, certain visa holders, and undocumented immigrants who have a tax filing obligation.

What happens if an immigrant has not filed taxes?

Failure to file taxes can negatively impact immigration applications. It can lead to a denial of certain benefits, such as adjustment of status or naturalization, and in severe cases, it might lead to deportation.

Can owing taxes affect an immigration application?

Owing taxes does not automatically disqualify you from immigration benefits, but it can affect your application. Demonstrating a plan to pay back taxes, such as an installment agreement with the IRS, can help mitigate this issue.

Are tax returns required for all types of immigration applications?

Tax returns are not required for all immigration applications but are commonly needed for family-based petitions, adjustment of status, and naturalization applications.

How should immigrants handle taxes if they have not filed in previous years?

Immigrants who have not filed in previous years should consult with a tax professional to file back taxes. It’s important to address any tax issues before proceeding with immigration applications.

Can using an Individual Taxpayer Identification Number (ITIN) affect immigration status?

Using an ITIN to file taxes does not directly affect immigration status. ITINs are used by individuals who do not have a Social Security number to comply with tax laws.

Is tax information shared between the IRS and immigration authorities?

While tax information is generally confidential, immigration authorities can access certain tax information for the purpose of verifying compliance with U.S. tax laws in relation to immigration applications and benefits.

Read More

Final Thoughts

If you are wondering does immigration check your taxes, the answer is – sometimes. Taxes for TN visa holders do exist. If you have a green card, do not file your taxes as if you were a nonresident. This could lead to the loss of your permanent resident status. Also do not evade your taxes or it could damage any application you make for naturalization. Paying taxes on time can also help you sponsor family members to immigrate to the U.S. As an undocumented immigrant, a history of tax filing may help you obtain lawful permanent residence in the future. If you are confused about your tax obligations as a non-U.S. citizen, you should consult a tax professional or immigration lawyer for help.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.