Although the 2013 Tax Season ended last month, legal immigrantsshould be aware of the heavy penalties that can be levied for tax evasion. In short, any green card or nonimmigrant visa holderwho makes a false statement on a tax return involving $10,000 or more could face automatic deportation.
According to the US Supreme Court’s 2012 ruling in Kawashima v. Holder, filing corporate or personal tax return that underestimates taxable income by more than $10,000 constitutes an aggravated felony and is a deportable offense. In that case, the Kawashimas, U.S. business owners and legal permanent residents for over a decade, were ordered deported after USCIS determined their tax evasion conviction to be an aggravated felony. Under the Supreme Court’s ruling, any immigrant who makes a false statement on a tax return could face automatic deportation.
This case heightens the already important principle of filing accurate and timely income tax returns and schedules. When it comes to inaccurate tax return preparation, ignorance of the law is never an excuse. Regardless of whether a tax preparer was utilized in the filing process, the U.S. tax payer is always responsible for what is on their tax return. Some intuitive, but important principles of accurate tax preparation include:
A. Claim the correct filing status:
Make sure you truly qualify for the filing status you are claiming, and that it is not merely wishful thinking because of accompanying benefits. The most common incorrectly selected status option is that of “Head of Household.” The Head of Household filing status is advantageous to single parents or people caring for family members because of the corresponding lower tax rate and higher standard deductions. However, in order to qualify, that family member must live with the individual claiming head of household all year long notwithstanding a narrow set of exceptional circumstances. So, for example, if Venkat’s parents and wife live in India, and Venkat works in the U.S., Venkat cannot properly claim head of household just because he sends them a portion of his U.S. earnings.
B. Claim only appropriate expenses:
Businesses expense must be "ordinary and necessary" for your trade or profession. That is a vague definition, so we recommend you keep track of your expenses closely and then consult a professional to determine if those expenses are deductible. But also, use common sense – if you are not a professional gambler, it is likely not permissible for you to claim gambling losses as a business expense.
C. Claim only eligible dependents:
Before claiming a child or relative as a dependent, make sure that they meet the “qualifying child” or “qualifying relative” criterion. Relevant factors for determining whether a child or other relative is a qualifying dependent include relationship, age, residence, and support. Depending on the complexity of your situation, you may want to consult a professional tax preparer.
Reddy & Neumann, P.C. is an immigration law firm in Houston, Texas. For over 15 years, our firm has successfully represented corporate clients across the United States in their efforts to bring foreign workers and business professionals to the United States. Reddy & Neumann, P.C. is highly experienced in working with employment-based visas, adjustment of status, green cards, and PERM labor certification. From filing, through approval, and on to appeal, we do everything possible to ensure that your company can bring the best and brightest in the world to the United States.