How Taxes Impact Your Path to U.S. Citizenship
As part of the naturalization process, applicants must submit several supporting documents with their U.S. citizenship application, including proof of their tax history. It’s essential to have your taxes in order as you move forward with your naturalization application, as tax issues can affect your standing with the “good moral character” requirement.
Whether you are a U.S. citizen or not, you are required to pay taxes based on your residency status. If you have failed to file or pay your taxes, this can be fixed by working with the Internal Revenue Service (IRS). Once those issues are resolved, you can continue with your Form N-400, Application for Naturalization.
Understanding U.S. Taxes
The U.S. tax system is complex, and immigrants and U.S. residents need to understand their tax obligations. This is particularly true if you want to become a U.S. citizen.
U.S. citizens must file their federal and state taxes annually, with the deadline typically on April 15 (or a later date if filing for an extension). For some, taxes may be due quarterly, depending on their income and work status. Most people file their taxes on their own using tax software, or they hire a tax professional. Depending on income, dependents, work expenses, and charitable donations, you may either owe taxes or receive a tax refund.
Paying taxes supports local and federal services, which you will benefit from once you become a U.S. citizen.
Filing Taxes in the U.S.
Your tax status depends on your residency and the type of visa you hold. The IRS uses two tests to determine your residency status for tax purposes: the Green Card Test and the Substantial Presence Test.
Green Card Test
You are considered a resident alien for tax purposes if you have been granted permanent resident status under U.S. immigration laws.
Substantial Presence Test
If you’ve spent at least 31 days in the U.S. in the current year and 183 days in total over the past three years (the current year plus the two previous years), you meet this test and are considered a resident alien for tax purposes.
If you do not meet these criteria, you are considered a nonresident alien for U.S. federal tax purposes.
Resident Aliens vs. Nonresident Aliens
- Resident Alien: As a resident alien, you are taxed almost the same as a U.S. citizen. You must report all types of income, including wages, interest, and dividends, regardless of where they are earned. You can also claim deductions like a U.S. citizen.
- Nonresident Alien: If you are a nonresident alien, you must file a tax return if you have conducted business in the U.S. Nonresidents do not pay FICA taxes (Federal Insurance Contributions Act), which means you could be eligible for a refund of these taxes. To receive a refund, you must file the appropriate tax return.
To ensure your path to U.S. citizenship is smooth, it’s essential to stay on top of your tax filings. If you need help, consult a tax professional.
Taxes and Your Citizenship Application (Form N-400)
When you apply for U.S. citizenship, you must submit your tax returns as part of your Form N-400 application. You are eligible to file Form N-400 if you are at least 18 years old and meet one of the following requirements:
- You’ve had a green card for 5 years (or 3 years if married to a U.S. citizen), or
- You’re applying based on military service.
If you are applying based on marriage, you will need to provide three years of tax returns, either joint tax returns or tax transcripts.
All applicants must submit proof of their IRS tax payments or any overdue tax obligations for the last five years of tax filings (or three years if applying based on marriage).
If you’ve traveled abroad for more than six months, you may also need to submit income tax returns or transcripts to show that you maintained permanent residency in the U.S. You’ll need to provide five years of these tax documents unless you’re applying through marriage, in which case, three years are required.
What if You Have Overdue Taxes?
While it’s best to pay all your taxes before filing your N-400, many applicants may have overdue taxes. If this is the case, file your taxes as soon as possible and consider working with a trusted tax professional. If you can’t pay immediately, you can set up a payment plan with the IRS.
After setting up the payment plan, get official letters from the IRS confirming that you have filed your taxes and are making progress in paying off your tax debt. This shows U.S. Citizenship and Immigration Services (USCIS) that you are taking steps toward meeting the good moral character requirement.
Taxes and Naturalization FAQs
How does owing back taxes affect my naturalization application?
Owing back taxes does not automatically disqualify you from naturalization. However, if you fail to resolve your tax debts, it could raise concerns about your moral character. Set up a payment plan with the IRS and bring proof of this arrangement to your naturalization interview.
What if I filed taxes as a nonresident while holding a green card—will that affect my naturalization?
Filing taxes as a nonresident while holding a green card can raise questions about whether you’ve abandoned your U.S. residency. If you made an error, work with the IRS to correct the issue and be prepared to explain it during your naturalization interview.
Does claiming tax exemptions, like the foreign earned income exclusion, affect my eligibility for naturalization?
Claiming tax exemptions like the foreign earned income exclusion might make it seem like you are a nonresident, which could affect your naturalization application. Be prepared to explain how you’ve maintained continuous U.S. residency, especially for tax purposes.
What should I provide if I am self-employed and applying for naturalization?
If you are self-employed, submit your Schedule C (Profit or Loss from Business) along with your Form 1040. Additionally, provide supporting records, such as bank statements or invoices, to show you’ve been filing taxes and meeting your tax obligations.
Staying on top of your taxes is crucial throughout the naturalization process. By addressing any issues with the IRS early on, you can help ensure your application moves forward smoothly. If you need help, don’t hesitate to consult a tax professional to ensure you’re in good standing when applying for U.S. citizenship.
