Frequently Asked Questions

Can I file a tax return without a Social Security Number (SSN)?

If you need to file a tax return but cannot obtain a valid SSN, you must apply for an Individual Taxpayer Identification number (ITIN) by filing Form W-7: “Application for IRS Individual Taxpayer Identification Number” along with your tax return.

How far back can the IRS request information?

The IRS can request additional information or audit a taxpayer for up to 6 years back. Initially, they will go back 3 years and if they feel they need more information they will see that everything is in order an additional 3 years.

How much money do I need to make to file?

The minimum amount of money you need to have earned during the year will depend primarily on the source of income. If you are self-employed; you will need to begin filing starting at a threshold of 400 USD per year.

*Reason: If you are employed, the threshold will be whatever the standard deduction is for that year. Let’s say for example you’ve earned 12,000 USD in a year and the standard deduction is of 12,550 USD – then it is understood that your deduction will cover your entire tax liability, and therefore there is no need to file. When you are self-employed, however, the threshold becomes substantially less because you are now subject to the 15% self-employment tax that covers Medicare and social security. When employed, these taxes are deducted directly from your pay slips (Form W-2) by the employer and so therefore those 15% are already taken care of. It is important to point out that foreigners who work in the U.S and have a non-resident filing status won’t have a minimum filing requirement amount because the standard deduction does not apply to them. They will need to pay a fixed rate of 30% on any money made in the U.S.

I am a U.S citizen living abroad. Do I still need to file taxes to the IRS?

All U.S citizens and green card holders will need to file a resident tax return regardless of where they are living. This does not mean that expatriates will necessarily have a tax liability; there are different methods to reduce or even fully eliminate the tax owed and avoid double taxation from both the U.S and the foreign country involved. However, a tax return will still need to be filed to depict why that precise income is not taxable.

I worked in the U.S but I am not a U.S. citizen nor resident. What filing requirements do I have?

If you are an inpatriate, you will have to declare the income you made while you were physically working in the U.S. – meaning your U.S. source income. If the amount of days are over 183 in a single year; you will have to file as a U.S. tax resident and declare worldwide income. If they are below 183 then you will need to file as a non-resident. It is important to point out that a tax resident is not equivalent to a resident from an immigration perspective. For example, if you’ve been working in the U.S for 200 days under a J-1 visa, you will be a tax resident but will not have a resident immigration status.

Do I need to file a tax return if taxes have already been retained from my W-2?

Yes, when there is money deducted from your W-2, this does not mean you will not need to file. It simply means that the money withheld was done so monthly so that the employee will not have to pay a lump sum at the end of the year all at once. On the returns, if the amount withheld was less than the amount owed, then the difference will be due by the taxpayer to the IRS and if the amount withheld was greater than the tax, then a refund will be issued from the IRS to the taxpayer. Keep in mind this is the case if we are dealing with this particular source of income and payment method. Different rules apply for other sources of income and methods.

Do I have to pay state taxes?

In general, you will have to file a state return for the income earned while living or working there. There are nine states that do not require state tax filing: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Will I get penalized for filing late?

If the taxpayer owes money and files late, then interest and penalties will be applicable until the tax is paid. If the IRS owes you money, then you will not get penalized for filing late. Of course, in many cases, you will only know this once the return is prepared – so it is advisable to file on time regardless.

How long does it take to get my refund?

If you filed your returns electronically, you could expect the refund to be issued after a minimum of three weeks from the moment it is processed. If the return was paper filed you can expect a current delay of up to 6 months for the returns to be processed.

*Possible cause: This is likely due to the pandemic and short staffing during confinement. Electronic returns could still be reviewed by agents from home while paper ones require physical employees at the IRS. Other variables such as the country it is being shipped from may also play a role in this delay. The exact details aren’t provided fully by the IRS – this is an assumption with no compelling evidence.

Why have I not received a stimulus check?

If you have not received the Covid relief stimulus payments (3 payments in total), chances are that the IRS does not have sufficient or precise recent information from you. The checks are sent out based on the information provided on your previous returns such as the address on physical checks or the bank account if you had opted for automatic debit/ deposit. If you have not filed for those years or you have changed your bank account/ home address then the IRS will not have the tools they need to send the money. The solution is to get up to date on your taxes with the correct information and stating on them that the money has not been issued.

What happens if I received my stimulus check, but it does not correspond to me?

It is possible that the stimulus money may have been erroneously deposited into your bank account and does not necessarily correspond. This is commonly the case of non-resident taxpayers that prepared the wrong forms and are now treated as a U.S. tax residents. Initially, the IRS won’t ask any questions and will assume that the returns provided are correct and will believe the taxpayer. However, they may ask questions if they suspect the taxpayer is not a resident and may even want an audit. Ideally, you’d want to return the money as soon as possible and amend the return filed to correct it.

Can I open a company in the U.S. if I am not a resident?

Yes, foreigners can open a company - even while being abroad. A registered agent will be able to assist you with opening the company, setting up a bank account, bookkeeping, filing tax forms, and more.

What company structure best suits me?

The main branches for structuring a company are partnerships and corporations. The main difference in administrative terms is that members of a partnership will make the decisions while in a corporation, decisions will be made by an executive board chosen by the shareholders. Taxwise – a partnership will have “pass-through tax” while a corporation will pay taxes in it of itself. There is the possibility to opt for a structure that combines both partnerships and corporation. Speak to a registered agent to know which suits your particular business best.

What is the meaning of “pass-through tax”?

Pass through tax means that a company, such as an LLC, will have its tax due flow directly to it’s members. This means they will need to report the gains/ losses pertaining to their ownership directly on their personal tax returns. The company will still need to file an informational form but will not pay taxes on behalf of itself.