According to American law people who immigrate to the United States, are subject to taxation by the Internal Revenue Service (IRS) and are required to report their income annually. In general everyone who immigrates to the USA and resides in its borders have to pay general taxes and income tax in particular just as if they were American citizens. All immigrants are required to report to the IRS each year for the date of their arrival and as long as they live on US territory.
Planning to immigrate to the United States? It is important to know that all immigrants who settle within US borders are obliged to obtain a residence visa, pay taxes and report the IRS of any property and assets in their possession, including wages and profits received in other countries. Here is everything you need to know about taxation for immigrants.
Becoming an immigrant in the United States
An immigrant in the United States is anyone who holds a Green Card. Green card holders are considered legal residents and are subject to USA taxes and to the instructions of the IRS. American residency is applied upon entering US borders and receiving legal permits from The United States Citizenship and Immigration Services (USCIS). It is important to understand, however, that even if the immigrant decides to leave the US borders and to immigrate to a different country while still holding a valid green card visa, he is still subject to the IRS and must report his income and pay income tax both in the United States and in his new place of residence.
Know your obligations
Legal immigrants must file and submit an individual income tax return form annually (Form 1040), report their incomes and disclose any assets in their possession both in the United States and elsewhere around the world. As a legal immigrant you should know that everything you earn is subject to taxation in the United States according to American law. If you are also paying taxes in your home country and want to avoid double tax payments, you can submit a request for tax refunds to the IRS or to the tax authorities in your home country and receive refunds.
What about foreign bank accounts?
The IRS requires all legal immigrants living within US borders, to disclose information regarding their foreign bank accounts or other types of financial accounts and regarding the funds and securities that are kept in them. You are required to report your foreign bank accounts on a FBAR form as well as on the FinCEN114 form. Foreign financial assets must also be reported using the 8938 form. It must be emphasized these reports are required only if the financial assets kept in your foreign accounts, are worth $10,000 or more. Immigrants who manage businesses in the United States such as corporations, partnerships, limited liability companies, trusts and estates must report to the IRS both on behalf of their businesses and on behalf of themselves as individuals. There are many forms relevant to immigrants who manage businesses, companies, corporations, etc. It is advisable to find out which from is relevant for your business and to submit it on time.
How to prepare for your first tax report?
Immediately upon arrival to the USA all immigrants receive a Social Security Number (SNN) as well as an Individual Tax Identification Number (ITIN). In order to receive the necessary approvals and the new identity numbers it is advisable to open a local bank account in the area of your residence and prepare to submit your first tax report. The month of April is usually the deadline for submitting tax reports each year, although it is possible to get an extension to this deadline. The tax form can be submitted online and it can also be submitted by mail. A request for tax refunds is embodied within the 1040 form. If you are entitled for tax refunds or tax deductions, you will receive them within three weeks from the date of your submission. However, information on the status of your refunds will be available for you on the IRS website within 24 hours and only if you submitted the form online. Immigrants that work as hired employed pay taxes through their employer. Self-employed immigrants have to deduct the statutory tax rates themselves from their income. Every legal immigrant in the United States must file individual income tax return form annually whether they are hired employees or self-employed.
Individual immigrants and immigrants with families
As mentioned above, all immigrants who reside in the United States must report their income to the IRS and pay taxes. Individual immigrants – people who do not have families or dependents and settle in the United States by themselves – have to file the 1040 Form as individuals. Immigrants who have families should submit a joint 1040 form for themselves and their spouses and provide information about their children. Parents are usually entitled to large tax refunds each year. These amounts are important and can help you and your family financially. Many immigrants await these tax returns every year.
Who is exempt from paying taxes?
There are several criteria for exemption from paying taxes in the United States. These criteria apply to legal immigrants as well. For example, single people under the age of 65 whose annual income is less than 12,550 dollars, are exempt from paying taxes. Married couples under the age of 65 whose annual income is less than 25,100 dollars, are exempt from paying taxes. Single people over the age of 65 with annual income of 14,250 dollars or less as well as married couples over that age with annual income of 27,800 dollars or less, are exempt from paying taxes. People who are supported by others, disabled or receive relief allowances from the state, are also entitled to exemptions. If you think you are entitled to exemptions, you should seek the relevant information and act to obtain your rights legally.