Filing taxes can be difficult for anyone in the United States, but asylum seekers, immigrants, and refugees may find the experience especially challenging. Most asylum seekers, immigrants, and refugees are classified as “resident aliens” and are required to pay the same amount of tax as American-born U.S. citizens. However, because there are exceptions to this rule – and because most tax-filing advice is not tailored to immigrants – ProsperityME is sharing these general guidelines to help Amjambo Africa readers better understand their tax obligations and to know when and where to get help.
1. Paying taxes or filing a tax return on time is mandatory. Failing to do so has very serious consequences. Unpaid taxes can affect the filer’s immigration status. The filing date is April 15, 2021.
2. “Resident aliens” and “nonresident aliens” have different tax burdens under U.S. law. “Resident aliens” are taxable at the same rate as U.S. citizens. Resident aliens include:
- a. Green card holders and lawful permanent residents
- b. Individuals who pass the “substantial presence test.” This is complicated, but in general, any person who resided in the U.S. for more than 31 days in the current calendar year, and a total of 183 days or more during the previous two years, passes this test and is taxable as a resident for that time. Some types of visas are exempt from the “substantial presence test.”
“Nonresident aliens” are handled differently by the IRS and are only responsible for income made in the U.S. Taxpayers who are unclear of their status should reach out to an attorney or tax professional for guidance. Filing under an incorrect status could result in paying too much or too little tax.
3. All income made during the previous calendar year must be reported on the tax return. Income made in a country other than the U.S. may be deducted through a foreign tax credit, under certain circumstances.
4. Any dependents claimed on a tax return must qualify as residents of the U.S., and the taxpayer must be the parent or legal guardian of any children claimed as dependents. Taxpayers cannot claim a spouse or children living abroad on a tax return. The “dependent test” can help a filer determine if a child qualifies.
- a. Must be a member of your household.
- b. Must have the same residence for more than half the year.
- c. Must be under the age of 19, or under 24 and a full-time student for at least 5 months. They can be any age if permanently disabled.
- d. Cannot provide more than half of their own support.
- e. The child cannot file a joint return.
5. File taxes as soon as possible. Most employers will remit W-2 or 1099 forms in mid-January. Small business owners should balance their internal books and collect all expense receipts from the previous year by that time.
6. Avoid scams. The IRS does NOT make phone calls, send emails, or texts to taxpayers.
7. Avoid overpaying to file. Most tax returns are simple and do not cost hundreds of dollars to prepare. Many immigrants qualify for free tax preparation through the CA$H program. Registering for an appointment with the local CA$H Maine branch can save low-income taxpayers a lot of time and money.
These tips can help taxpayers approach tax season with confidence. Those with questions can reach out to ProsperityME for resources to help with tax-related issues.