Everyone’s favorite time of the year is here! No we’re not talking March Madness, the start of baseball, or the Masters Golf tournament. Tax season is upon us!!!

As the filing deadline approaches, companies are either preparing their fiscal year 2024 tax returns or requesting extensions. For businesses that sponsor immigrant workers, it’s essential to understand how these tax documents impact immigration sponsorship petitions. The financial figures in these filings—and the strategies used to achieve them—can have unintended consequences. While certain tax approaches may be advantageous from a business or shareholder perspective, they can negatively affect a company’s ability to sponsor foreign talent.

Though it may seem like a bureaucratic technicality, a company’s financial viability—as reflected in its tax returns and supporting financial records—can be the deciding factor in whether it can secure highly skilled immigrant employees.

USCIS “Ability to Pay” Requirement in Employment-Based Green Card Petitions: What Employers Need to Know

When filing an employment-based immigrant visa petition, one of the most critical components is the Labor Certification (PERM ETA Form 9089), which includes the proffered wage—the salary offered to the foreign national for the position tied to the green card. To receive approval from U.S. Citizenship and Immigration Services (USCIS), the sponsoring employer must prove its financial ability to pay the proffered wage from the date the PERM is filed until the foreign worker obtains Lawful Permanent Resident (LPR) or green card status.

To satisfy this “ability to pay” requirement, USCIS requires employers to submit one of the following types of financial documentation:

• Federal income tax returns
• Audited financial statements
• Annual reports, supported by payroll records showing the employee was paid at least the proffered wage during the relevant period

The type of financial documentation required depends on the employer’s business structure. For example:

• Sole proprietors must submit IRS Form 1040 and highlight Schedule C (Profit or Loss from Business)
• Partnerships must provide Form 1065 (U.S. Return of Partnership Income)
• Corporations are required to submit Form 1120 (for C-Corps) or Form 1120-S (for S-Corps)

Ensuring compliance with these documentation standards is essential, as USCIS closely scrutinizes financial evidence to determine whether the employer can support the green card process. Businesses seeking to sponsor foreign workers must be prepared to align their tax and payroll records with immigration requirements—failure to do so can result in delays or denials of the petition.

What financial numbers does USCIS look at?

When evaluating an employer’s financial eligibility to sponsor a foreign national for an employment-based green card, U.S. Citizenship and Immigration Services (USCIS) focuses on two critical figures reported in the company’s tax filings: net income and net assets. To satisfy the regulatory “ability to pay” requirement, the sponsoring employer must demonstrate that either its net income or its net assets meet or exceed the proffered wage—the salary offered to the immigrant employee—from the date the labor certification is filed until the worker becomes a lawful permanent resident.

USCIS relies on specific lines from federal tax forms to assess these financial metrics, and the relevant sections vary depending on the business structure. In the case of a sole proprietorship, net income is reported on the business owner’s Form 1040, specifically within Schedule C, titled “Profit or Loss from Business.” Since the sole proprietorship is not a separate legal entity, the owner’s personal assets are considered part of the business’s financial profile and may be used to establish ability to pay.

For partnerships, net income is typically recorded on Form 1065, particularly on Schedule K, Line 22, which reflects “Ordinary Business Income (Loss).” Corporations filing Form 1120 report net income on Line 30 of the first page, under “Taxable Income.” S-corporations use Form 1120-S, and the net income figure appears on Line 21 of the first page, labeled “Ordinary Business Income (Loss).” USCIS carefully reviews these specific lines when assessing whether the business’s income meets the necessary financial threshold.

To evaluate net assets, USCIS uses a defined formula derived from Schedule L of the relevant tax form. This process involves aggregating the year-end values for cash, accounts receivable (net of bad debt allowances), inventories, U.S. government obligations, tax-exempt securities, and other current assets—typically found on Lines 1 through 6 of Schedule L. From this total, the agency subtracts the sum of liabilities, including accounts payable, long-term debt such as mortgages and bonds payable beyond one year, and other current liabilities. These are generally found on Lines 15 through 17 of Form 1065, and Lines 16 through 18 of Forms 1120 and 1120-S. This calculation provides a snapshot of the company’s overall financial strength, which USCIS uses to determine whether the employer is financially capable of supporting the green card process.

 How much income or assets should the company show?

Typically, there is no one number that USCIS requires or wants to see before they approve immigration petitions. What is most important is that a company demonstrates its ability to pay the offered wages and this is typically based on the company’s net income or net assets. If the offered wage is lower than the company’s income or assets, USCIS will likely question the company’s ability to pay and subsequently deny the petition.

Therefore, as a general rule, it is always a best practice to demonstrate a net income and/or net assets exceeding the wages offered to your prospective foreign-worker employees. That said, it may be in the company’s overall best interest to forego certain tax avoidance strategies that lower the face value net income on a tax return so that this ability to pay requirement with USCIS is met.

Are the company’s tax returns too old? Can we submit Tax Extensions to USCIS?

Typically, USCIS will require the previous year’s tax return when analyzing a company’s ability to pay.  Therefore, in 2025 USCIS looks to the company’s 2024 Tax Returns.

Currently as of April 2025, USCIS will continue to accept the company’s 2023 Tax Returns to show ability to pay in years 2024 and/or 2025. However, after the April 15, 2025 tax filing deadline, USCIS will want to see either the company’s 2024 Tax Returns, or otherwise a timely filed Form 7004 Tax Filing Extension. When submitting a tax extension along with the previous year’s tax return, USCIS will likely accept those documents as sufficient for ability to pay purposes until October of the given year. After that date, USCIS will expect the 2024 tax documents.

Do we have to submit the company’s tax returns?

Not necessarily. While it is most typical that a company will submit its tax returns, USCIS will also accept independently audited financial statements, or for certain publicly traded companies their annual reports.

Are there any government changes for ability to pay?

There have been no recent statutory or regulatory changes to USCIS’s “ability to pay” requirements or the method used to calculate financial eligibility. However, we are observing a significant rise in prevailing wage levels across the United States, which has created new challenges for employers seeking to meet these financial thresholds. In particular, companies must now be especially mindful of aligning the wage levels used for nonimmigrant visas, such as H-1Bs, with those required for employment-based green card sponsorships.

Historically, the wage offered to an employee under an H-1B petition closely matched—or was identical to—the wage required for a green card petition. This made it relatively simple for employers to demonstrate the ability to pay, as they were already compensating the employee at or near the required level. However, due to certain structural differences in how the Department of Labor calculates wage levels, green card prevailing wages have increased at a faster rate than those for H-1Bs. As a result, it is now common to see green card wage requirements exceed H-1B wages by $10,000 to $40,000 or more.

In individual cases, this wage gap—or “delta”—must be covered by the employer’s net income or net assets as shown on their tax returns. When multiplied across multiple cases in a company’s immigration portfolio, this discrepancy can create a significant financial shortfall—potentially totaling tens or even hundreds of thousands of dollars in required wage obligations.

For employers with ongoing or frequent I-140 filings, it is critical to proactively evaluate tax return filings in light of USCIS’s ability to pay standards. Ensuring that reported income and assets can support not only individual sponsorships but also the broader immigration strategy will help avoid petition denials and maintain compliance across the board.

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.