Tax for N400 applicant who never worked in US?

[newbie001]

Hi All,

My parents got their GC through my brother's naturalization. Now they are eligible to file for N400 for themselves. They never worked in US. But they do have a bank account with some money (around 10K - 15K). Now the question is....

1. Since they never worked here, Can they say "No" for the question "Have you filed taxes?". Because they never had to file taxes.

2. I am not sure if they got 1099 for the interest they earned through their bank account. ARE THEY SUPPOSED TO FILE TAXES? Because they never filed. We never thought that they should.

3. How is this going to affect their citizenship?

4. Is there any way they can pay the penalty and file the taxes retroactively?

Thanks,
Newbie001.

 

[boatbod]

Tricky problem. The IRS says that a married couple with an income less than $16,900 do not need to file a tax return unless they wish to claim a refund. Trouble is, USCIS want to know that you have been paying your taxes properly, and the only way they can do that is ask if you have been filing your returns on time.

Seems like there may be two approaches:
i. Try to explain to the IO that you don't need to file due to low income. Most likely they would then request you provide proof of income etc.
or
ii. Go back and file returns for the years you missed. No tax or penalties should be due, assuming of course that you really didn't owe anything. That way you can at least say "yes I filed, and no, I don't owe anything".

 

[Huracan]

That sounds like sensible advice to me. You can file those tax returns even if your parents don't owe a dime to the IRS. I am sure there is going to be other people that might comment on actual experience with interview and not having filed tax returns.

 

[JohnnyCash]

First of all, people need to pay taxes on income whenever their income is $400 or more in a year especially when s/he is self-employed. If filing status is other than self-employed then other tax rate would apply to an individual on the income.

Secondly, it's not specifically stated in the post if OP's parents have been earning any interest on their money (10k-15k) which they have in the bank so to figure it out if they were earning any taxable money. However, I doubt that they are earning any taxable interest on the said money unless this money is put into money market account with high return. So, don't worry about tax issue on this money.

Third, USCIS asks about filing/paying REQUIRED taxes/tax returns, which means if someone was/is NOT required to file/pay any tax returns/taxes then they are okay if they did not file any tax returns. Thus, their answer should be NO. Because they have NOT failed to pay any taxes nor failed to file any tax returns due to the fact that they were/are actually NOT required to.

Fourth, people can ALWAYS pay taxes and file tax returns retroactively. But then not only they will be required to pay the penalty but also the interest as well. However, OP's parents do NOT require to pay or file anything as they don't seem like having taxable interest on the money they have in the bank.

Fifth, it's always better to file tax returns even if it's not required. USCIS likes to see tax returns for many purposes than just to know whether taxes were paid or not. Thus, if OP's parents would wish then they can still file tax-returns for all those years even though they were not required to. Nevertheless, this issue of taxes/tax-returns is totally irrelevant in their case given their situation, but they should take an sworn affidavit from someone who is supporting them because USCIS might like to know how they have been supporting themselves without a job and sufficient income because 10K-15K is not enough to say that they have been supporting themselves with this money alone.

Good luck....

Hi All,

My parents got their GC through my brother's naturalization. Now they are eligible to file for N400 for themselves. They never worked in US. But they do have a bank account with some money (around 10K - 15K). Now the question is....

1. Since they never worked here, Can they say "No" for the question "Have you filed taxes?". Because they never had to file taxes.

2. I am not sure if they got 1099 for the interest they earned through their bank account. ARE THEY SUPPOSED TO FILE TAXES? Because they never filed. We never thought that they should.

3. How is this going to affect their citizenship?

4. Is there any way they can pay the penalty and file the taxes retroactively?

Thanks,
Newbie001.

 

[Jackolantern]

First of all, people need to pay taxes on income whenever their income is $400 or more in a year especially when s/he is self-employed.

The standard deduction plus personal exemption will mean that no federal taxes have to be paid until income exceeds approx. $8K for an individual, $16K for a couple. However if they are employed they would pay SS regardless of income, and state income tax may also be required regardless of income or employment status.

As far as regular bank interest is concerned, it most definitely will be taxable. It is only tax free if it is in the form a tax-free bond or tax-deferred account like an IRA. But if the bank interest plus other income is still under the standard deduction and personal exemption, no federal taxes are to be paid.

 

[newbie001]

Thanks for your reply... Here are more details

Thank you all for your reply.

1. The bank account (joint account) is a checking account, not a money market or CD. They get approximately 5% interest on the account. Balance is around 15K (max).

2. They are totally supported by 3 sons (including me). My 2 older brothers are USC (naturalized). I am a PR (about to apply USC very soon). We can definitely give affidavit of support.

Thanks,
Newbie001.

 

[McMahon]

They are totally supported by 3 sons (including me). My 2 older brothers are USC (naturalized). I am a PR (about to apply USC very soon). We can definitely give affidavit of support.

Does any of you declare them as dependents on their 1040? If so, they are OK because they would not need to file a distinct 1040.
My 2 cents.

 

[Jackolantern]

Does any of you declare them as dependents on their 1040? If so, they are OK because they would not need to file a distinct 1040.
My 2 cents.

Actually dependents do have to file their own 1040 if the have income that exceeds a certain amount (I think the standard deduction). Of course, in this case their income is purely from bank interest and is far below that amount.