Immigrants and Tax Return Filing
On November 20, 2014 President Obama announced an executive action on immigration which could extend relief from deportation to an estimated 5 million undocumented immigrants.
The administration has not said which documents it will accept, however, we believe that the Citizenship and Immigration Services which vets applications under Homeland Security may require 5 years of accurately prepared tax returns as additional proof of residence if applicants claim to have worked in the United States since their arrival.
Those who have filed accurate tax returns with their Individual Tax Identification Numbers (ITIN) and have retained their records will be light years ahead of those who have not. We recommend that you and your tax preparers get ready to answer tax questions for those applying for this new program.
1. Make sure you have tax preparation software setup for at least the past 5 years.
2. Understand what documentation your clients need for a W-7
5. 1099 Miscellaneous forms
6. Paid baby sitter receipts
7. Traffic tickets
8. Receipt books
9. Expense receipts
10. Amending prior year returns (filing status, dependents, earnings, etc.)
11. Searching the Internet may help find documentation
Of course we are dealing with individuals who have lived in the shadows for years and gathering information may be very challenging, especially if they have been working under an assumed Social Security Number.
Remind your clients that there is little incentive to lie because getting caught could result in fraud or deportation.
As far as other types of documentation needed, some immigration advocates are taking guidance from the 2012 Deferred Action for Childhood Arrivals program. The DACA program allows travel records, vehicle registrations, baptism records, mortgages, dated bank transactions, etc. http://www.dhs.gov/deferred-action-childhood-arrivals.
Other substantiating evidence suggested by immigration advocates may include utility bills, speeding tickets, dentist or doctor records, money order receipts, movie rental receipts, veterinarian bills, customer loyalty programs, social media postings, a Facebook photo at an amusement park, postmarked letters, whatever it takes to establish a continuous residency.
The search for documents and records is on! Be prepared to help your clients when they ask. As a reputable tax preparer you are a trusted professional to help clients with their taxes and related professional matters.
Carlos C. Lopez, EA
Latino Tax Professionals Association