Tax season isn’t just about minimizing your company’s liability — for businesses sponsoring foreign workers, it’s a critical compliance checkpoint for employment-based green card petitions. The financial decisions you make on your tax return today can directly determine whether USCIS approves or denies an I-140 petition tomorrow.

Here’s what employers, HR professionals, and immigration teams need to understand about the intersection of tax filings and the I-140 ability to pay requirement.

What Is the USCIS Ability to Pay Requirement?

Under federal immigration law, any employer sponsoring a foreign national for an employment-based green card (EB-2 or EB-3) must demonstrate it can financially support the offered position. This is known as the ability to pay requirement.

Specifically, the sponsoring company must prove it can pay the proffered wage — the salary listed on the PERM Labor Certification (ETA Form 9089) — from the date that PERM application is filed through the date the employee receives Lawful Permanent Resident (LPR) status.

USCIS will scrutinize financial documentation at the I-140 petition stage to verify this ability.

What Financial Documents Does USCIS Accept?

Employers can satisfy the ability to pay requirement by submitting one of the following:

• Federal income tax returns (most commonly used)
• Independently audited financial statements
• Annual reports accompanied by payroll records confirming the employee was paid at least the proffered wage

The specific tax form required depends on how your business is structured:

Business Type	Required Tax Form
Sole Proprietorship	IRS Form 1040 with Schedule C
Partnership	Form 1065
C-Corporation	Form 1120
S-Corporation	Form 1120-S

 

Which Numbers Does USCIS Actually Look At?

USCIS evaluates two key financial metrics: net income and net assets. The employer must show that at least one of these figures equals or exceeds the proffered wage.

Net Income by Entity Type

USCIS pulls net income from specific lines depending on your tax form:

• Sole proprietorships: Schedule C of Form 1040 (Profit or Loss from Business)
• Partnerships: Form 1065, Schedule K, Line 22 (Ordinary Business Income)
• C-Corporations: Form 1120, Line 30 (Taxable Income)
• S-Corporations: Form 1120-S, Line 21 (Ordinary Business Income)

How USCIS Calculates Net Assets

Net assets are derived from Schedule L of your tax return using a defined formula:

Total current assets (cash, accounts receivable net of bad debt, inventories, government obligations, tax-exempt securities, and other current assets — generally Lines 1–6 of Schedule L)

Minus total liabilities (accounts payable, mortgages and bonds payable beyond one year, and other current liabilities — Lines 15–17 on Form 1065; Lines 16–18 on Forms 1120 and 1120-S)

The resulting figure represents your company’s net asset position, which USCIS uses as an alternative measure of financial strength.

How Much Income or Assets Is “Enough”?

There is no universal dollar threshold USCIS mandates for approval. The standard is simple: your net income or net assets must meet or exceed the proffered wage offered to the sponsored employee.

If the numbers fall short, USCIS will likely issue a Request for Evidence (RFE) or deny the petition outright.

Key strategic implication: Certain tax minimization strategies — accelerated depreciation, heavy deductions, income deferral — can artificially reduce reported net income on paper. While these may benefit shareholders, they can create serious problems for I-140 petitions. Employers with active immigration sponsorships should weigh the tradeoffs carefully before deploying aggressive tax reduction strategies.

Which Tax Year Does USCIS Want?

USCIS generally requires the most recently filed tax return when evaluating ability to pay. In practical terms:

• In 2025, USCIS looks to the company’s 2024 tax return
• Through the April 15, 2025 filing deadline, USCIS will continue accepting 2023 tax returns
• After April 15, 2025, USCIS expects either the 2024 return or a timely filed Form 7004 tax extension

When a Form 7004 extension is submitted alongside the prior year’s return, USCIS typically treats that combination as sufficient through October of the relevant year — at which point the completed 2024 return becomes required.

Can You Use Something Other Than Tax Returns?

Yes. Tax returns are not the only option. USCIS will also accept:

• Independently audited financial statements — useful when tax returns reflect strategic deductions that misrepresent actual financial health
• Annual reports — available to certain publicly traded companies, typically submitted alongside supporting payroll documentation

If your company’s tax returns don’t paint a favorable financial picture despite the business being financially healthy, audited statements may provide a stronger evidentiary foundation.

The Growing Wage Gap Problem: H-1B vs. Green Card Prevailing Wages

One of the most important — and often overlooked — developments in recent years is the growing divergence between H-1B wage levels and green card prevailing wages.

Historically, these figures tracked closely. Today, due to structural differences in how the Department of Labor calculates wage levels for each program, green card prevailing wages have grown faster than H-1B wages. The result: it is increasingly common to see green card wage requirements that exceed the corresponding H-1B wage by $10,000 to $40,000 or more for the same position.

This delta matters because USCIS requires the employer’s net income or net assets to cover the green card proffered wage — not merely what the employee is currently earning under their H-1B. When an employer has numerous active I-140 petitions, these gaps compound quickly. A portfolio of ten cases with a $20,000 average wage delta represents $200,000 in wage obligations that must be reflected in the company’s financial position.

Practical Steps for Employers Sponsoring Foreign Workers

1. Review tax strategy through an immigration lens before filing. If your company has pending or anticipated I-140 petitions, work with both your CPA and immigration counsel before finalizing your return. Deductions that reduce reported income below the aggregate of proffered wages across your immigration portfolio could trigger RFEs or denials.
2. Audit your immigration portfolio for wage gaps. Pull the proffered wages from all pending PERM applications and I-140 petitions. Compare them to current H-1B salaries and verify your tax return can support the difference.
3. File or request the correct tax documentation. If your 2024 return isn’t ready by April 15, file Form 7004. Having a timely extension on file maintains your ability to demonstrate financial eligibility through October 2025.
4. Consider audited financials when tax returns are misleading. If aggressive tax strategies have reduced your net income below the proffered wages, independently audited financial statements may better reflect your company’s true ability to pay.
5. Plan proactively for future sponsorships. Companies with regular or high-volume immigration activity should treat financial documentation requirements as an ongoing compliance consideration — not an afterthought addressed only at petition time.

Frequently Asked Questions

Has USCIS changed the ability to pay rules recently? No statutory or regulatory changes have occurred recently. However, rising prevailing wage levels — particularly for green card sponsorships — have made compliance more challenging for many employers in practice.

What happens if USCIS questions our ability to pay? You will likely receive a Request for Evidence (RFE) asking for additional or supplemental financial documentation. Depending on what’s submitted in response, USCIS will either approve the petition or issue a denial.

Can a startup or early-stage company sponsor a green card? Yes, but the financial scrutiny is higher. Net assets are often more useful than net income for early-stage companies that are investing heavily in growth. Audited financial statements are strongly recommended in these cases.

Does the employee’s current salary help satisfy ability to pay? If the employee is already being paid at or above the proffered wage by the sponsoring employer, that payroll record can be submitted as evidence. However, this doesn’t eliminate the need for company financial documentation at the I-140 stage.

For more information, or for a detailed conversation regarding tax filings and potential immigration issues, please schedule a time to speak here.

By Ryan A. Wilck, Partner and Attorney at Law

Ryan Wilck is a Managing Partner and attorney at Reddy & Neumann, P.C. with over a decade of US immigration law experience, enthusiastic and proactive in his approach assisting clients and their employees through the various phases of the permanent residency a/k/a Green Card process. “Concilio et labore” is not only the motto of Ryan’s favorite sports club but is also his life’s motto; all things come through wisdom and effort. Ryan is passionate about gaining the trust of his clients by utilizing a relentless and detail-oriented approach to understand their specific goals and concerns, hoping to instill a sense of confidence and stability. Whatever your immigration problem or interest, he and his team will find a solution, through wisdom and effort. Reddy & Neumann, P.C. has been serving the business community for over 20 years and is Houston’s largest immigration law firm focused solely on employment-based business immigration. We work with employers and their employees, helping navigate the complex immigration process efficiently and cost-effective.

 We are committed to assisting our clients with navigating the complex PERM Labor Certification (ETA 9089 and other challenging immigration matters as an accomplished immigration law firm in Houston, Texas. Our team is here to offer the direction and support you require, whether you’re a company trying to hire top talent or a foreign worker seeking to develop a career in the United States. To find out more about how we can help you with your immigration issues, get in touch with us right away.