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What are the consequences of not filing taxes?

Not filing your tax return can have negative consequences, from a delay in receiving your tax refund to civil sanctions and penalties. If you owe taxes and you do not pay, you can face fines for not paying. 

Some potential consequences include: 

  • Not receiving your tax refund- If you are owed a refund, you will not receive it until you file your tax return

  • Fines and interest- the IRS can charge you interest and fines

  • The IRS can file a tax return in your name This is called a “Substitute for Return (SFR).” Due to the fact that the IRS does not have the needed information, they can exaggerate how much you owe in taxes. This could mean you will owe more in taxes or receive less in your refund than if you had filed your taxes yourself. If the IRS files an SFR, you can still file your own tax return and take advantage of extensions, credits and deductions you have the right to receive. 

  • Collection actions- When you file a tax return or the IRS files an SFR for you that shows an owed balance, the IRS will try to charge you for that amount. Depending on the situation, the IRS can file a lien on your property or garnish your bank account, salary or other income. 

  • Identity theft- Another potential consequence of not filing your tax return is that another person could use your Social Security number and file a false tax return to steal your identity. If this happens, when you file your taxes, your tax return and whatever refunds you should receive will be delayed while the IRS determines which tax return is correct. 

  • Lose your refund- You must file your tax return by a specific date in order to receive your refund. Generally, you can lose your refund if you do not file within three years of the due date of your tax return or two years from the payment date, whichever is later. 

If I don’t file my taxes, will the IRS send me a notice? 

In some cases, yes. If the IRS records show that you received income for that year, and they have not received a tax return from you for the year in question, the IRS could send you a CP59 Notice. This notice is sent to taxpayers when the IRS does not have record of your filed tax return. The notice will explain what your next steps should be and what you should do if you think you do not need to file. 

What are the benefits of filing taxes? 

  • First of all, an important benefit is following the law; when you file and pay your taxes on time (if you owe them), you know you will be following the law. 

  • Recover money- in some cases, it is possible that you are owed money when you file your taxes

  • Tax returns back up your income claims, residency in the United States, good character and marital status

  • Avoid interest and extra fines

  • Avoid losing future refunds, because part or all of your refund will first be used to pay off late owed taxes 

Is my marital status in Mexico recognized in the United States for tax purposes? 

Yes, if it is a valid marriage in Mexico. The IRS follows state or foreign laws to determine whether or not a marriage is valid. In most cases, a foreign marriage is recognized for US tax purposes. 

If I am legally married in Mexico, can I file as “Married filing jointly?”

Yes, if you are married you have the option of filing jointly so long as you and your spouse decide to treat your foreign, non-resident spouse as a resident of the United States for tax purposes. However, if you decide to file as married filing jointly, both you and your spouse will need to provide your combined income levels from both countries. Furthermore, by choosing the option “married filing jointly,” your spouse will need to get a Individual Taxpayer Identification Number (ITIN) if they are not eligible for a Social Security number. Therefore, both spouses will need a SSN or ITIN. Getting an ITIN can require putting together many extra documents to send to the IRS. 

It is important to emphasize that making this decision does not change your spouse’s immigration status in the United States. If you made this decision one year or previously and you do not change it, the IRS will continue to identify you both in the same way. Be aware of the fact that if you are legally married in your home country, you should not file your taxes as if you are single. Normally, you should choose “married filing jointly” or “married filing separately.” 

What is the Substantial Presence Test? 

The Substantial Presence Test, is a test used by the IRS to determine how the IRS will tax someone who is not a legal permanent resident but is physically in the United States and needs to file taxes in the United States. Workers with H-2 visas that have been in the United States for a short time and do not pass the test are considered “non-resident aliens” for tax purposes and file a Form 1040NR with the IRS. Workers with H-2 visas that have been in the United States for longer amounts of time and pass the Substantial Presence Test are resident aliens for tax purposes and file a Form 1040 with the IRS. 

The Substantial Presence Test requires you to be physically in the United States for 183 days of the tax year or 183 days within a period of three years with a minimum of 31 consecutive days during the current tax year. IF you have any concerns about the Substantial Presence Test, email 

What are the most common wage deductions that one needs to pay?

Wage deductions are deducted from your salary and you receive the rest. 

Everyone who works in the Untied States is subject to federal tax laws and will have similar deductions. Most temporary foreign workers are subject to the same wage and income taxes as other workers in the United States: federal returned earnings, Social Security and Medicare tax, unemployment tax and state returned earnings (not all states). 

Foreign agriculture workers (H-2A visa) are unique because they are paid for agricultural work and their salary is exempt from Social Security, Medicare and unemployment taxes. 

Non-agricultural temporary foreign workers (H-2B visas) are treated like all other workers in the United States They have to pay income taxes and Social Security and Medicare taxes. 

Notice: A worker can choose to have money from their paycheck withheld to pay federal and/or state taxes. However, employers do not have the right to withhold federal and/or state rental taxes with the consent of the worker. It must be agreed upon by the employer and employee. If the worker does not have any returned earnings, it is possible they will have to pay taxes at the end of the year when they file their tax return. 

How does my employer know how much of my earnings to retain? 

To calculate returned earnings, an employer uses the Form W-4 of the employee, Employee’s Withholding Certificate. This form is usually completed by the employee when they start a new job and it tells the employee how much they should withhold in federal taxes from each paycheck. States that have state rental tax will have an equivalent form to the IRS’ Form W-4. For example, the state of Virginia has Form VA-4 that tells the employer how much they should withhold in state taxes from each paycheck. 

Do you have more questions about taxes in the United States? Contact the Community Tax Law Project at 804-358-5855 if you are in Virginia, or contact Low Income Taxpayer Clinic in your state.

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