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10 Tax Mistakes Immigrants Make in the United States (And How to Avoid Them)

Mistakes That Are Costly, Preventable, and Very Common

Every year, many of us across the United States make tax mistakes that cost money, create legal complications, or trigger IRS notices that take months to resolve. Almost none of these mistakes happen because of dishonesty or carelessness. They happen because the U.S. tax system is genuinely complex and because no one explained the rules clearly.

This guide is about prevention. Understanding the most common mistakes before you make them is far easier — and far less expensive — than fixing them afterward.

Mistake 1: Not Filing a Tax Return at All

This is the most serious tax mistake we can make.

Many of us assume — incorrectly — that without a Social Security Number, or without documentation, or without receiving the correct forms from an employer, we do not need to file taxes.

This assumption is wrong. And acting on it can have serious consequences.

The obligation to file a federal tax return is based on income level — not immigration status, not documentation, and not whether you received the correct forms from your employer.

If you earned income above the filing threshold — approximately $14,600 for a single filer in 2024 — you are generally required to file.

What happens if you do not file:

The IRS may eventually file a return on your behalf — called a substitute for return — using whatever income information they have. This return will use the least favorable deductions and filing status, resulting in the maximum possible tax bill. Interest and penalties are added on top.

Additionally, tax filing history is frequently requested during immigration proceedings. Missing years of returns can raise serious questions during green card applications, visa renewals, and naturalization processes.

What to do:

File a return for every year you are required to. If you have missed prior years, file those returns as soon as possible. The IRS has programs for dealing with late returns, and coming into compliance voluntarily is significantly better than having the issue discovered later.

Mistake 2: Filing as a Non-Resident When You Are Actually a Resident for Tax Purposes

This mistake is common among immigrants who arrived a few years ago but are still filing as non-residents because they are not yet permanent residents or citizens.

Here is the misunderstanding: tax residency is not the same as immigration residency.

You do not need a green card to be a tax resident. If you have been in the United States for enough days to meet the IRS Substantial Presence Test, you are classified as a resident alien for tax purposes — even on a temporary visa.

Why this matters:

Non-resident aliens file Form 1040-NR and are taxed only on U.S.-source income. Resident aliens file Form 1040 and are taxed on worldwide income. Filing the wrong form means reporting income incorrectly — and potentially under-reporting it, which can trigger penalties.

What to do:

Before filing each year, determine your tax residency status using the Substantial Presence Test. If you are uncertain, a tax professional familiar with international situations can help. The IRS website also provides tools and worksheets for this calculation.

Mistake 3: Failing to Report Foreign Income

This is one of the most commonly misunderstood areas of U.S. tax law for us, and the consequences can be significant.

The United States taxes its tax residents on worldwide income. This means income earned in any country is potentially subject to U.S. tax — not just income earned here.

Many of us with income from our home countries believe it is not reportable because it was earned elsewhere, or because taxes were already paid on it abroad. Both assumptions can be wrong.

What must be reported:

For resident aliens, the following foreign income is generally reportable: wages or salary earned abroad, freelance or business income from foreign clients, rental income from property in your home country, interest and dividends from foreign accounts, and pension income from a foreign employer.

The Foreign Tax Credit:

The U.S. has a mechanism to prevent double taxation. If you paid taxes on income in a foreign country, you may be able to claim a Foreign Tax Credit using IRS Form 1116, which reduces your U.S. tax by the amount paid abroad. This often significantly reduces or eliminates the U.S. tax on foreign income.

What to do:

Report all foreign income on your U.S. tax return and claim the Foreign Tax Credit where applicable. Do not assume foreign income is invisible to the IRS. Tax information-sharing agreements between countries have expanded significantly, and the IRS has increasingly sophisticated means of identifying unreported foreign income.

Mistake 4: Failing to Report Foreign Financial Accounts (FBAR)

Separate from reporting foreign income, there is an additional requirement that many of us are completely unaware of: the Foreign Bank Account Report, commonly called the FBAR.

If you are a U.S. tax resident with financial accounts outside the United States, and the combined value of those accounts exceeds $10,000 at any point during the calendar year, you are required to file an FBAR.

The FBAR is filed separately from your tax return using FinCEN Form 114, submitted online through the Financial Crimes Enforcement Network website. The deadline is April 15, with an automatic extension to October 15.

The penalties for failing to file:

Non-willful failure to file can result in penalties of up to $10,000 per violation. Willful failure can result in penalties of up to $100,000 or 50 percent of the account balance per violation — as well as potential criminal prosecution.

These penalties may seem severe for what feels like a paperwork issue. But the IRS treats foreign account reporting very seriously.

What to do:

If you have bank accounts, investment accounts, pension accounts, or other financial accounts outside the United States, track their balances throughout the year. If the combined balance exceeds $10,000 at any point, file the FBAR by the deadline. There is also a related form — Form 8938 — filed as part of your tax return, which reports certain foreign financial assets above specific thresholds. A tax professional can ensure you meet both obligations.

Mistake 5: Missing the Earned Income Tax Credit Due to ITIN Filing

The Earned Income Tax Credit (EITC) is one of the most valuable tax benefits available to lower and moderate-income workers. For a worker with two children, it can be worth over $6,000.

Many of us who file with an ITIN do not know we are ineligible for the EITC — and either miss planning around this or believe we claimed it when we did not.

There is an important opportunity here though: if you later obtain a Social Security Number, you may be able to go back and claim the EITC for prior years when you had earned income and a valid SSN. The IRS allows claims within certain time limits.

What to do:

If you are currently filing with an ITIN and expect to obtain an SSN in the future, keep this in mind. When you receive your SSN, consult a tax professional about whether you qualify to file amended returns claiming prior-year EITC amounts. If you already file with an SSN and have qualifying income, make sure you are claiming this credit — many eligible workers do not.

Mistake 6: Claiming Dependents Incorrectly

Many of us support family members both here and abroad. Whether those family members can be claimed as dependents on a U.S. tax return is complicated — and errors are common.

To claim someone as a dependent, they must generally be either a qualifying child or a qualifying relative, with requirements around relationship, residency, income, and financial support. For family members living outside the United States, the rules are much more restrictive. In most cases, dependents must have lived in the United States, Canada, or Mexico for at least part of the year.

Common errors include claiming foreign-residing family members who do not qualify under U.S. tax law, and claiming the Child Tax Credit for children without Social Security Numbers — which is not permitted.

What to do:

Before claiming anyone as a dependent, verify they meet the IRS requirements. Ensure any child for whom you claim the Child Tax Credit has a valid SSN. If you have questions about specific family situations, a tax professional can provide clarity.

Mistake 7: Incorrect Treatment of Self-Employment Income

Many of us work as independent contractors, freelancers, or informal self-employed workers — driving for rideshare companies, cleaning homes, doing construction, providing translation services, or running small businesses.

This income is fully taxable — but it is taxed differently from employee wages, and many self-employed immigrants are unaware of the full scope of their obligations.

The self-employment tax:

When you work as an employee, your employer pays half of your Social Security and Medicare taxes. When you are self-employed, you pay both halves — a combined self-employment tax rate of 15.3 percent on net self-employment income, in addition to income tax.

Many of us filing taxes for the first time are surprised by this bill because we were not setting aside money throughout the year.

Quarterly estimated payments:

Self-employed individuals are generally required to make quarterly estimated tax payments to the IRS throughout the year using Form 1040-ES. Failing to do so may result in an underpayment penalty.

Deductible business expenses:

Self-employed individuals can deduct legitimate business expenses from taxable income — tools and equipment, business-related travel, a portion of phone expenses, business insurance, and other costs directly tied to earning income. Keeping records throughout the year reduces your taxable income and your tax bill.

What to do:

Set aside approximately 25 to 30 percent of your net self-employment income for taxes throughout the year. Make quarterly estimated payments. Keep records of all business expenses. A tax professional with experience in self-employment can help you identify deductions and stay compliant.

Mistake 8: Ignoring State Tax Obligations

Federal taxes receive most of the attention — but state tax obligations are real and can be significant.

Some of us focused on the federal return miss the requirement to file a state return entirely, file in the wrong state, or miss the state deadline. Common errors include failing to file a state return where one is required, filing in only one state when you lived or worked in multiple states, and missing state-specific credits and deductions.

What to do:

Identify which state or states you lived and worked in during the tax year. Research whether each requires an income tax return. File where required. Most tax software automatically prepares state returns alongside federal returns, which simplifies this significantly.

Mistake 9: Falling for Tax Scams

Tax scams disproportionately target immigrant communities — and the harm they cause can be significant.

IRS impersonation calls. Scammers call claiming to be IRS agents and demand immediate payment, threatening arrest or deportation. The IRS does not initiate contact by phone to demand immediate payment. If you receive such a call, hang up.

Fraudulent tax preparers. Some unscrupulous preparers promise inflated refunds, charge excessive fees, or file incorrect returns that expose clients to penalties. Choose a tax preparer carefully. Use the IRS website to find authorized preparers, or use free services like VITA.

Ghost preparers. These are preparers who refuse to sign the returns they prepare. A legitimate paid preparer must sign your return and provide their Preparer Tax Identification Number (PTIN). A return prepared by someone who refuses to sign is a serious red flag.

Fake charities. Around tax time, fake charities solicit donations and promise deductions. Verify any charity using the IRS Tax Exempt Organization Search tool before making a deductible donation.

What to do:

Never sign a blank tax return. Never agree to have a refund deposited into someone else’s account. Verify preparer credentials before sharing any personal information.

Mistake 10: Not Keeping Tax Records

After filing, many of us simply discard the paperwork. This is a mistake that can cause real problems if questions arise later.

The IRS generally has three years from the filing date to audit a standard return, and six years if it believes there is a substantial understatement of income. In cases of fraud, there is no time limit.

Keep your tax records — including the filed return and all supporting documents — for at least seven years.

Tax records also serve important purposes beyond the IRS. Immigration applications frequently request multiple years of returns. Loan and rental applications may ask for income verification. Having organized records protects you in all of these situations.

What to do:

After filing, save a digital or physical copy of your complete return and all supporting documents. Organize records by year so they are easy to access when needed.

Getting Help Is Not a Weakness

The U.S. tax system is genuinely complicated. Even well-educated Americans with strong English skills frequently make tax mistakes or rely on professional help to file correctly.

For those of us navigating a new system in a new language — often while managing many other challenges — asking for help is not a weakness. It is a smart decision.

Free resources like VITA exist precisely because the government recognizes that many people need assistance. Using these resources is not an admission of failure. It is the intelligent use of available support.

If your situation involves foreign income, foreign accounts, self-employment, multiple states, or dual-status issues, investing in professional tax help for at least your first few years of filing is money very well spent.

The goal is to pay exactly what you owe — not more, not less — to stay compliant with the law, and to protect the financial and immigration future you are building here.

Knowledge Prevents the Mistakes That Cost the Most

Every mistake in this guide is preventable. Not one requires a law degree or advanced financial knowledge to avoid. They require only clear information — which you now have.

File every year when required. Know your residency status. Report all worldwide income. Understand your FBAR obligations if you have foreign accounts. Claim the credits you are entitled to. Pay your self-employment taxes. File your state return. Protect yourself from scams. Keep your records.

These principles, followed consistently, will keep you in compliance with U.S. tax law and protect both your finances and your future here.

The four guides in this tax series have given you a foundational understanding of how the U.S. tax system works, what identification you need, how to file your return, and how to avoid the most costly mistakes. Continue building with MARVODYN’s guides on banking, credit, and investing — the complete financial foundation that every one of us deserves.

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How Immigrants File Taxes in the United States (Step-by-Step Guide)

The Process That Feels Impossible Until Someone Explains It

Every year, as tax season approaches, many of us face the same moment of anxiety. The deadline is coming. The forms are complicated. The terminology is unfamiliar. And the fear of making a mistake — of owing money, of triggering an audit, of somehow running into legal trouble — makes the whole process feel much harder than it needs to be.

The reality is that for most of us with straightforward situations, filing taxes in the United States is manageable. Once you understand what documents you need, what forms you will use, and what the steps are, it becomes something you can handle with confidence.

This guide will walk you through the entire process, step by step. Every term will be explained. Every step will be clear. By the end, you will know exactly what to do and when to do it.

Before You Begin: Determine Your Tax Status

The first step is understanding where you fall in the IRS’s classification of taxpayers. As covered in an earlier guide, the IRS classifies individuals as either resident aliens or non-resident aliens, and the rules for each are different.

Resident Alien

You are generally a resident alien for tax purposes if you hold a green card, or if you meet the Substantial Presence Test — which considers how many days you have been physically present in the United States during the current year and the two prior years.

If you meet either of these, you are taxed the same way as a U.S. citizen. You report your worldwide income, use the same forms and tax brackets, and are eligible for the same deductions and credits.

Non-Resident Alien

If you do not hold a green card and do not meet the substantial presence test, you are generally a non-resident alien. This applies to many recent arrivals, international students on F-1 visas, and people on short-term work assignments.

Non-resident aliens file a different form — Form 1040-NR — and are taxed only on income from U.S. sources. Different rules around deductions and credits also apply.

Dual-Status Aliens

In the year you arrive in or depart the United States, you may be a non-resident alien for part of the year and a resident alien for the other part. This is called dual-status. These returns are more complex and typically benefit from professional assistance.

If you are uncertain which category applies to you, consult a tax professional before filing.

Step One: Gather Your Documents

Before you can file, collect all the documents that report your income and tax situation for the year. Filing without the right documents leads to errors — and errors lead to delays, rejected returns, or incorrect tax bills.

Identification

  • Your Social Security Number or ITIN
  • A government-issued photo ID

Income Documents

W-2 Form. If you worked as an employee, your employer is required to send you a W-2 by January 31. It shows your total wages for the year and the total federal and state taxes withheld from your paychecks. If you worked for more than one employer, you will receive a W-2 from each one.

1099 Forms. If you had income outside a traditional employment relationship, it may be reported on a 1099. There are several types:

  • 1099-NEC: Freelance, contract, or self-employment income
  • 1099-INT: Interest income from bank accounts
  • 1099-DIV: Dividend income from investments
  • 1099-B: Proceeds from selling investments
  • 1099-G: Unemployment compensation or state tax refunds
  • SSA-1099: Social Security benefits received

Income not reported on a form. If you received income that did not generate a tax form — cash payments for work, rental income, or income from abroad — you are still required to report it. Keep records of everything.

Records of Deductions (If Applicable)

If you plan to itemize deductions rather than take the standard deduction, you will need documentation of mortgage interest paid, state and local taxes paid, charitable contributions, and large unreimbursed medical expenses.

For most of us — particularly those renting rather than owning — the standard deduction is the simpler and often better choice.

Prior Year Tax Return

If you have filed in the United States before, having a copy of your prior year return is helpful. Some software and preparers ask for your prior year’s adjusted gross income as a verification step.

Step Two: Choose How You Will File

Option 1: Tax Preparation Software

Software guides you through the filing process with a series of questions, then generates and submits your return electronically. Many platforms offer free filing for simple returns.

TurboTax is one of the most comprehensive and user-friendly options. Available in Spanish. It guides you through a step-by-step process. Free for simple returns; paid versions handle more complex situations.

H&R Block is another widely used platform with a similar format. Also offers in-person filing at their offices. Available in Spanish.

FreeTaxUSA handles more complex returns at a lower cost than the major platforms.

IRS Free File — if your income is below approximately $79,000 for 2024, you may be able to file for free through this IRS partnership program at the IRS website.

Important note for non-resident aliens: Most standard tax software is designed for resident returns using Form 1040. If you need to file Form 1040-NR, use software designed specifically for non-resident filers. Sprintax is one platform built for this purpose.

Option 2: Free In-Person Help — VITA

The Volunteer Income Tax Assistance (VITA) program is IRS-sponsored and provides free tax preparation to people who generally earn $67,000 or less, people with disabilities, and limited English-speaking taxpayers.

VITA sites are staffed by IRS-certified volunteers trained to prepare basic returns. Many sites serve immigrant communities and have multilingual staff.

VITA is an excellent option for those of us filing for the first time, who have questions about our specific situation, or who prefer in-person guidance. Find your nearest location at the IRS website or by calling 2-1-1.

Option 3: Professional Tax Preparer

A paid professional — a Certified Public Accountant (CPA), an Enrolled Agent, or a licensed tax preparer — can prepare and file your return for a fee.

This makes the most sense for immigrants with complex situations such as self-employment income, income from multiple countries, dual-status returns, significant investment activity, or ownership of foreign financial accounts.

Fees vary widely. A straightforward return typically costs $150 to $350. Complex returns cost more. Look for someone with experience working with immigrants and international tax situations. An Enrolled Agent is federally licensed by the IRS and specializes in taxes — a strong option for complex cases.

Option 4: Paper Filing

You can complete a paper return and mail it to the IRS. This is the slowest option — paper returns take significantly longer to process and refunds arrive later. Electronic filing is strongly preferable for most people. However, if you have specific documentation that must be mailed or simply prefer paper, this option exists.

Step Three: Complete Your Tax Return

Whether you use software, a professional, or a paper form, the process involves the same core steps.

Report all income. Enter income from every source. If you received a W-2, enter the information exactly as it appears. Enter all 1099 amounts. If you had income not reported on a form, report it anyway. All income must be reported.

Claim your filing status. Your filing status affects your tax bracket, your standard deduction, and your eligibility for various credits.

Single — you are unmarried or legally separated. Married Filing Jointly — you and your spouse file a combined return. Generally the most beneficial status for married couples. Married Filing Separately — sometimes necessary but generally less advantageous. Head of Household — you are unmarried but paid more than half the cost of maintaining a home for a qualifying dependent. Provides a larger standard deduction than single filing.

For those of us whose spouses are not yet in the United States or who have dependents abroad, determining the correct filing status can be complex. A tax professional can help.

Claim the standard deduction or itemize. For most of us, the standard deduction is the right choice — simpler and typically larger than our qualifying itemized expenses.

Claim tax credits you are eligible for. Tax credits reduce the amount of tax you owe, dollar for dollar. Some are refundable — meaning if the credit exceeds your tax liability, the excess is paid to you as a refund.

Credits immigrants may be eligible for include:

Child Tax Credit — up to $2,000 per qualifying child under age 17. Requires the child to have a Social Security Number.

Child and Dependent Care Credit — for qualifying child care or dependent care expenses while you work.

American Opportunity Credit and Lifetime Learning Credit — for qualifying education expenses.

Earned Income Tax Credit (EITC) — for lower and moderate-income workers with earned income. Requires a valid SSN. Not available to ITIN filers.

Premium Tax Credit — if you purchased health insurance through the government marketplace and your income qualifies, you may be eligible.

Step Four: Review Before Submitting

Before submitting, review every section carefully.

Confirm your name is spelled correctly and matches your identification documents. Verify your Social Security Number or ITIN — a single digit error can cause significant problems. Make sure all income is reported and all numbers match your W-2 and 1099 forms. Confirm your bank account information if you are expecting a direct deposit refund.

Errors are one of the primary causes of delayed refunds and IRS notices. A careful review takes only a few minutes and can save significant time and stress later.

Step Five: File and Pay Any Taxes Owed

Electronic filing. If filing through software or a professional, your return is submitted digitally. You will receive confirmation within 24 to 48 hours that it was accepted. Keep this confirmation.

If you are owed a refund. Choose direct deposit. Refunds by direct deposit typically arrive within 10 to 21 days of acceptance. Paper checks take longer. Track your refund using the IRS “Where’s My Refund” tool on the IRS website or the IRS2Go mobile app.

If you owe additional tax. Pay by April 15 even if you file for an extension. Payment options include electronic payment through IRS Direct Pay, debit or credit card (fees may apply), check or money order, or a payment plan if you cannot pay in full.

If you cannot pay the full amount, do not simply fail to file. File your return on time and contact the IRS about a payment arrangement. The IRS has programs to help people pay over time. Working with them proactively is always better than ignoring the obligation.

Step Six: Keep Records of Your Filed Return

After filing, keep copies of the following for at least seven years:

  • Your complete filed tax return
  • All W-2 and 1099 forms
  • Receipts or documentation supporting any deductions or credits claimed
  • Your confirmation of electronic filing acceptance
  • Records of any tax payments made

Tax records serve multiple purposes beyond filing. They document income for loan applications, rental applications, and immigration proceedings. They allow you to verify past information if questions arise later.

What to Do If You Receive an IRS Notice

Receiving a letter from the IRS can feel alarming. But many notices are routine — simple requests for information or minor corrections.

Do not ignore it. Every notice has a deadline for response. Ignoring it will not make it go away and can make the situation worse.

Read it carefully. The notice will explain what the IRS is communicating, what they need from you, and the deadline for responding.

Respond to the specific issue. If the notice asks for documentation, gather it and respond within the timeframe given.

Seek help if needed. If you do not understand the notice or if it involves a significant issue, a tax professional or VITA can help you respond appropriately.

One Completed Return Builds Confidence for the Next

Filing taxes for the first time as an immigrant is the hardest year. The forms are unfamiliar. The process is new. The anxiety is real.

But each year becomes easier. By the second year, you know what documents to expect. You know the process. You know the deadlines. What felt overwhelming becomes routine.

You now have a clear, step-by-step understanding of how to file your taxes in the United States. Gather your documents. Choose your filing method. Report all income. Claim the credits you are entitled to. File on time.

In our final guide in this series, we cover the most common tax mistakes we make as immigrants — and exactly how to avoid them.

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SSN vs ITIN — What Immigrants Need to Know for Taxes

Two Numbers That Determine How You File

When we begin navigating the U.S. financial and tax system, one of the first confusing moments involves a simple question that appears on almost every important form: “What is your taxpayer identification number?”

For people who grew up in the United States, this question has an automatic answer. They have had a Social Security Number since childhood. The question barely registers.

For many of us, it stops everything. Do you need a Social Security Number to file taxes? Can you use an ITIN instead? Are they the same thing? Can you have both?

These questions matter enormously. Getting the wrong answer can mean filing taxes incorrectly, missing refunds you are entitled to, or creating complications that affect both your finances and your immigration case.

This guide will explain the difference between the two numbers, who needs each one, how to get them, and exactly how they affect the way we file taxes in the United States.

What Is a Social Security Number?

A Social Security Number — or SSN — is a nine-digit number issued by the U.S. Social Security Administration. It was originally created to track workers’ earnings and calculate retirement benefits. Over time, it has become the primary identification number used across the entire American financial and administrative system.

Your SSN is used for filing federal and state tax returns, opening bank accounts, applying for credit cards and loans, employment verification, and accessing government benefits.

Who is eligible for an SSN:

Social Security Numbers are issued to U.S. citizens, U.S. nationals, and certain immigrants authorized to work in the United States. This includes lawful permanent residents (green card holders) and immigrants authorized to work on certain visa types such as H-1B, L-1, O-1, TN, E-3, and others.

If you are authorized to work in the United States, you are generally eligible to apply. Applications are made through the Social Security Administration with documentation of your identity, age, and immigration status.

When you cannot get an SSN:

Not all immigrants are eligible. If you are in the United States but not authorized to work — on certain visa types, a tourist visa, or in an undocumented status — you are not eligible for an SSN.

This does not mean you have no tax obligations. Many people without an SSN still have income in the United States and are required by law to file tax returns. For these situations, the IRS created a separate identification number: the ITIN.

What Is an Individual Taxpayer Identification Number (ITIN)?

An ITIN is a nine-digit number issued by the IRS specifically for tax purposes. It is for individuals who have a U.S. tax filing obligation but are not eligible for a Social Security Number.

ITINs always begin with the number 9, which distinguishes them from Social Security Numbers.

Who uses an ITIN:

  • Immigrants who have U.S. income but are not authorized to work
  • Undocumented immigrants who earn income and are required to pay taxes
  • Foreign nationals with U.S. tax obligations due to investments or rental income but who do not live here
  • Spouses and dependents who need to be listed on a tax return but are not eligible for an SSN

What an ITIN is used for:

An ITIN is used exclusively for tax purposes. It allows people without SSNs to file federal tax returns, pay taxes on U.S.-source income, be claimed as a dependent on another person’s return, and open certain bank accounts or apply for certain financial products.

What an ITIN cannot do:

An ITIN is not a work authorization document. It cannot be used to verify employment eligibility, obtain a Social Security card, or establish immigration status. It does not entitle the holder to Social Security benefits or the Earned Income Tax Credit in most circumstances.

A Critical Point: Everyone With U.S. Income May Have a Tax Obligation

This is one of the most important things for us to understand about the U.S. tax system.

Your obligation to pay taxes is based on your income — not your immigration status or documentation.

Many immigrants believe incorrectly that without a Social Security Number, or without documentation, they do not need to pay taxes. In fact, the IRS requires anyone with income above certain thresholds to file a return and pay applicable taxes, regardless of immigration status.

The IRS and immigration authorities are separate agencies. The IRS’s role is tax collection, not immigration enforcement. Filing a tax return does not trigger immigration consequences. In fact, filing taxes often creates a documented record of presence and compliance that can support immigration applications.

The ITIN exists specifically to allow people without SSNs to meet their tax obligations legally.

How to Apply for a Social Security Number

If you are eligible for an SSN, applying for one is an important early step.

Applications are made at your local Social Security Administration (SSA) office. You can find the nearest location on the SSA website.

You will need proof of identity such as a passport, proof of your immigration status and work authorization such as your visa or I-94 arrival record, and proof of age. All documents must be originals or certified copies — photocopies are not accepted.

Some immigrants are able to request an SSN as part of the visa application process. Others must apply after arriving. In general, wait until you have arrived and your immigration documents are current before applying.

Processing typically takes two to four weeks from the date of your application.

How to Apply for an ITIN

If you are not eligible for a Social Security Number but have U.S. tax obligations, applying for an ITIN is a necessary step.

The application form: IRS Form W-7 — “Application for IRS Individual Taxpayer Identification Number.” Available on the IRS website.

What to submit: You must prove two things — your foreign status and your identity. A passport is the most straightforward document because it proves both at once. You must also typically submit a completed federal tax return with your W-7 application, unless you qualify for one of the specific exceptions listed on the form.

Three ways to submit:

By mail. Send your completed Form W-7, your tax return, and your original identity documents to the IRS ITIN Operations center. Note that mailing original documents carries some risk — documents can be lost. Use this option with care.

In person at an IRS Taxpayer Assistance Center. Staff can review and certify your documents on the spot, so you do not have to mail originals.

Through a Certified Acceptance Agent (CAA). A Certified Acceptance Agent is a person or organization authorized by the IRS to assist with ITIN applications. They can review your original documents, certify copies, and submit the application on your behalf. Many tax preparation services, community organizations, and legal aid organizations are Certified Acceptance Agents. This is often the most practical option for us.

Processing typically takes seven to eleven weeks during tax season, less during off-peak periods.

ITIN expiration: ITINs can expire if not used on a federal tax return for three consecutive years, or due to IRS changes to certain ITIN ranges. Check whether your ITIN is still current before filing. If it has expired, you will need to renew it first.

What Happens If You Get an SSN After Having an ITIN?

This is a common situation for immigrants whose status changes.

When you receive an SSN, notify the IRS so your prior tax filings can be associated with your new number. Write to the IRS providing both your ITIN and your new SSN. Once your records are updated, use your SSN going forward and no longer use your ITIN. Notify your employer and any financial institutions as well.

The Earned Income Tax Credit and ITIN

One important limitation of the ITIN is worth understanding. People who file taxes using an ITIN are generally not eligible for the Earned Income Tax Credit (EITC).

The EITC is a significant tax benefit for lower and moderate-income workers. For workers with children, it can be worth thousands of dollars per year. It is available only to people who file with a valid Social Security Number.

If you have been filing with an ITIN but later obtain an SSN, you may be able to go back and claim the EITC for prior years. The rules are specific — a tax professional can help you determine whether you qualify for any back credits.

Children of Immigrants: SSN vs. ITIN

Children born in the United States are U.S. citizens and eligible for Social Security Numbers at birth. You can request an SSN for your child at the hospital or afterward through the Social Security Administration.

Children born outside the United States who do not qualify for an SSN can be listed on a parent’s tax return using an ITIN, if they meet dependency requirements. Make sure you have the correct identification number — SSN or ITIN — for each child you claim as a dependent.

Protecting Your SSN and ITIN

Both numbers are sensitive pieces of personal information. In the wrong hands, they can be used for identity theft and financial fraud.

Do not carry your Social Security card in your wallet — keep it in a secure place at home. Do not share your SSN or ITIN over the phone or by email unless you initiated the contact with a trusted institution.

Be aware of IRS impersonation scams. The IRS primarily communicates by mail. If someone calls claiming to be from the IRS and demands immediate payment or personal information, this is almost certainly a scam. Hang up and contact the IRS directly using the number on their official website.

Review your tax transcripts annually to ensure no one has filed a fraudulent return using your identification number.

The Right Number Makes Everything Easier

Understanding the difference between an SSN and an ITIN, knowing which one applies to your situation, and having the correct number before tax season begins makes the entire filing process significantly simpler.

If you are eligible for a Social Security Number, apply as soon as possible. If you are not eligible and have U.S. income or tax obligations, apply for an ITIN using Form W-7 before you need to file your first return.

In our next guide, we walk through the complete step-by-step process of filing your taxes as an immigrant in the United States — from gathering your documents to submitting your return.

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Taxes in America Explained for Immigrants: A Beginner’s Guide

A System That Surprises Almost Every New Arrival

When we come to the United States, taxes are rarely at the top of our preparation list. There is so much else to manage — finding housing, opening a bank account, starting a job, learning how things work in a new country.

Then January arrives. Or February. And suddenly everyone around us is talking about filing taxes, sending forms, getting refunds or owing money. The language is unfamiliar. The process is unclear. The consequences of getting it wrong feel serious.

For many of us, the U.S. tax system is one of the most confusing and anxiety-producing parts of American financial life. And that anxiety is understandable. Taxes here are genuinely complex. The rules are different from almost every other country in the world. And the IRS — the agency that collects taxes — carries a reputation that makes many people nervous, especially those who are new.

But here is what most of us are never told: the U.S. tax system, while complex, follows clear rules. Once you understand how it works, it becomes manageable. And filing taxes correctly is not just a legal obligation — it is also how you protect yourself, access financial benefits you are entitled to, and build a documented financial history in the United States.

This guide will explain the U.S. tax system clearly, from the beginning. No jargon. No assumptions. Just a clear explanation of how the system works and why it matters for us.

Why the United States Collects Taxes

Taxes are the money that individuals and businesses pay to the government to fund public services — roads, schools, hospitals, public safety, and the countless other systems that keep the country functioning.

The United States collects taxes at multiple levels of government. Understanding these levels is the first step.

The Three Levels of Taxation

Federal Taxes

Federal taxes are collected by the central government of the entire country. They apply to everyone who earns income in the United States, regardless of which state they live in.

The agency responsible for collecting federal taxes is the Internal Revenue Service, commonly known as the IRS. Federal income tax is the largest and most significant tax most of us will encounter.

State Taxes

Most U.S. states also collect their own income taxes, separate from the federal government. If you live and work in a state with an income tax, you may need to file two tax returns each year — one federal and one state.

Tax rates and rules vary significantly by state. Some states, such as Texas, Florida, and Nevada, have no state income tax at all. Others, such as California and New York, have relatively high rates. Knowing whether your state has an income tax is an important part of understanding your complete tax situation.

Local Taxes

Some cities and counties collect local income taxes as well. These are less common and typically simpler. If you live somewhere with a local income tax, your employer or state tax authority will usually provide guidance.

What Is Taxable Income?

Not every dollar you receive is taxed in full. The government allows certain deductions and adjustments that reduce the amount of income you are actually taxed on. This reduced amount is called your taxable income.

Types of income that are generally subject to federal tax include wages and salaries from an employer, self-employment income from freelance or contract work, investment income such as dividends and capital gains, rental income from property you own, and certain government benefits.

A note on income from abroad. This is particularly important for us. The United States taxes residents on worldwide income. If you receive income from your home country — from work, a business, investments, or property — and you are a U.S. tax resident, that income may be subject to U.S. taxes. We will cover this in more detail in a later guide on common tax mistakes.

How the U.S. Income Tax System Works: Progressive Rates

The United States uses a progressive tax system. This means the tax rate increases as your income increases. Your income is divided into ranges called tax brackets, and each bracket is taxed at a different rate.

Importantly, moving into a higher bracket does not mean your entire income is taxed at the higher rate. Only the income within each bracket is taxed at that bracket’s rate.

Here is a simplified example using approximate 2024 rates for a single filer:

  • The first $11,600 of income is taxed at 10%
  • Income from $11,601 to $47,150 is taxed at 12%
  • Income from $47,151 to $100,525 is taxed at 22%
  • Higher income continues into higher brackets

So if you earn $50,000, you do not pay 22% on all $50,000. You pay 10% on the first portion, 12% on the next, and 22% only on the small amount above $47,150.

Your marginal tax rate is the rate applied to your highest dollar of income. Your effective tax rate is the average rate you actually pay across all your income — always lower than your marginal rate.

This distinction matters. Many people incorrectly believe that earning more can result in taking home less money by “pushing them into a higher bracket.” This is not how it works. A higher bracket only affects the income within that bracket — not your total income.

The Standard Deduction: Reducing What You Owe

One of the most important features of the U.S. tax system for most of us is the standard deduction — a fixed amount the IRS allows you to subtract from your income before calculating your tax.

You do not need to prove any specific expenses to claim it. It is available to almost everyone who files a return.

For 2024, the standard deduction is:

  • $14,600 for single filers
  • $29,200 for married couples filing jointly

This means if you are single and earned $40,000 in 2024, you subtract $14,600, leaving $25,400 of taxable income. You pay tax only on that amount — not on your full $40,000.

Alternatively, you can itemize deductions by listing specific qualifying expenses such as mortgage interest or charitable contributions. Itemizing only makes sense if your qualifying expenses exceed the standard deduction. For most of us in the early stages of our U.S. financial lives, the standard deduction is the simpler and often more beneficial choice.

How Taxes Are Collected: Withholding

One feature of the U.S. system that surprises many of us is that for most employees, taxes are collected automatically from each paycheck throughout the year. This is called tax withholding.

When you start a job, you fill out a form called a W-4. This tells your employer information about your tax situation, which they use to calculate how much federal income tax to withhold from each paycheck. Your employer sends that money directly to the IRS on your behalf throughout the year.

When you file your tax return at the end of the year, two things can happen. If too much was withheld, you receive a tax refund — the government returns the excess. If too little was withheld, you owe additional tax and pay the difference when you file.

While a refund feels good, it technically means you gave the government an interest-free loan of that money during the year. Under-withholding, on the other hand, can result in penalties if the shortfall is large enough.

What Is a Tax Return?

The term confuses many of us because it sounds like something is being returned. In fact, a tax return is simply the document you file with the IRS each year.

It reports your income, calculates how much tax you owe, accounts for how much you already paid through withholding, and determines whether you get a refund or owe additional tax.

The most common federal tax return form is called Form 1040. Filing your tax return means submitting this form — along with any supporting documents — to the IRS by the annual deadline, which is typically April 15.

For example, taxes on income earned in 2024 are reported on a return filed in early 2025, with a deadline of April 15, 2025.

Who Must File a Tax Return?

Not everyone is required to file every year. Whether you must file depends primarily on how much income you earned.

Generally, if your income exceeds the standard deduction for your filing status, you are required to file. For 2024, a single filer under age 65 must generally file if their gross income exceeds $14,600.

However, many people who are not required to file still choose to, for good reasons. To receive a refund — if taxes were withheld during the year and you do not file, you will not receive the money you are entitled to. To claim tax credits that are only available if you file. To create a financial record that can be used for loan applications, rental applications, and immigration proceedings. And to demonstrate to immigration authorities that you are meeting your legal obligations here.

For us specifically, there is an important principle: filing taxes when required is a legal obligation. Failing to file can result in penalties, interest on unpaid taxes, and potential consequences for immigration proceedings.

The Tax Calendar: Key Dates to Know

January. Your employer must send you a W-2 form by January 31. This shows your total earnings and taxes withheld for the previous year. Banks and brokerages will also send forms reporting interest, dividends, and other income.

January to April. Tax filing season — when most people prepare and file their returns for the previous year.

April 15. The deadline to file your federal tax return and pay any taxes owed.

October 15. The deadline if you requested an extension. An extension gives you more time to file — but not more time to pay. If you expect to owe taxes, you must still pay by April 15.

Quarterly estimated tax dates. If you are self-employed or have income not subject to withholding, you may need to make quarterly estimated payments to the IRS. These are due in April, June, September, and January.

Social Security and Medicare Taxes

In addition to income taxes, most employees pay two additional payroll taxes automatically withheld from each paycheck.

Social Security tax funds the Social Security retirement and disability program. The employee rate is 6.2% of wages up to an annual income limit.

Medicare tax funds health insurance for seniors. The rate is 1.45% of all wages, with an additional 0.9% on very high incomes.

Together these are called FICA taxes. If you are self-employed, you pay both the employee and employer portions — 15.3% in total.

An important note for us: in many cases, paying into the Social Security system for a sufficient number of years makes you eligible for Social Security retirement benefits, even without U.S. citizenship. The specific rules depend on your work history and visa status — and it is worth understanding how your contributions today may benefit you in the future.

State Income Taxes

If you live in a state with an income tax, you will file a separate state return in addition to your federal return. Most states follow a similar calendar, with returns due around the same time as the federal deadline.

If you lived in more than one state during the tax year — for example, if you moved for work — you may need to file returns in multiple states. Most tax preparation software handles both federal and state returns together, which simplifies the process considerably.

Taxes and Immigration: The Connection

Taxes and immigration intersect in ways that matter for us.

Filing on time and accurately demonstrates to immigration authorities that we are meeting our legal obligations here. Tax returns are frequently requested as supporting documents in immigration applications — including applications for green cards, citizenship, and visa renewals.

A pattern of unfiled tax returns can raise concerns during immigration proceedings, even when the filing obligation existed. The IRS and immigration authorities are separate agencies, but the two can intersect meaningfully during applications that require proof of financial responsibility.

The practical guidance is clear: file your taxes on time, every year you are required to. If you have fallen behind on prior years, programs exist to help you come into compliance. Doing so proactively is far better than having the issue surface later during an immigration process.

Understanding the System Is the First Step to Managing It

The U.S. tax system is complex. But it is not impossible to understand. And now you have the foundation.

You know why the United States collects taxes and at what levels. You understand how income is taxed, how progressive rates work, and how the standard deduction reduces your taxable income. You know how withholding works, what a tax return is, and when it must be filed.

This foundation makes everything that follows easier to understand and less intimidating.

In our next guide, we address one of the most specific and important questions we have about the U.S. tax system: the difference between a Social Security Number and an Individual Taxpayer Identification Number — and what each means for how you file your taxes.

The tax system rewards people who understand it and comply with it. That process begins with exactly this kind of clear, foundational knowledge.