Have an Individual Taxpayer ID Number? There Are Some Changes You Need to Know About

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Photo: 401kcalculator.org

At the end of last year, Congress passed a $680 billion tax package that made a number of tax credits permanent, including 2009 improvements to the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), and extended others for varying periods of time.

The legislation also created new requirements for immigrants who file their taxes in April 2017 with an Individual Taxpayer Identification Number (ITIN) for income earned in 2016 and beyond.

As explained in a recent webinar (slide deck below), ITINs issued after December 31, 2012 will remain in effect unless a taxpayer does not file taxes for three consecutive years. In this case, the taxpayer will need to revalidate their number. Taxpayers with older ITINs will also need to revalidate based on a schedule specified in the law.

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Now, more than ever, it is critical that immigrants understand these requirements and their obligations. The extent to which the Internal Revenue Service plans to notify taxpayers of the revalidation process and schedule is not known. ITINs not only allow immigrants to pay taxes but are needed in many instances to open bank accounts, obtain driver’s licenses, and tax documents can be used to establish proof of residency. For these reasons and many more, NCLR asks its Affiliate Network and partners beyond to let friends, family, and clients know about the new revalidation timeline and process.

ITINs issued before January 1, 2013 will remain in effect until whichever comes first:

  • A taxpayer does not file for three consecutive years
  • ITINs issued before January 1, 2008 must revalidate by January 1, 2017
  • ITINs issued in 2008 must revalidate by January 1, 2018
  • ITINs issued in 2009 or 2010 must revalidate by January 1, 2019
  • ITINs issued in 2011 or 2012 must revalidate by January 1, 2020

To summarize: if any ITIN filer does not pay their taxes for three consecutive years, the taxpayer must revalidate their number. If taxpayers with older ITINs file each year, then they must revalidate by the date specified in the law.

The law specifies that taxpayers can apply for an ITIN in person, by mail, or at a Certified Acceptance Agent by providing original documents. The law does not specify what the process for revalidation will require. For example, it is not known if taxpayers will need to reapply for an ITIN by resubmitting all original documentation, if they will receive a new number or simply continue using their existing number, and more.

What is clear is that if a taxpayer does not understand these requirements, they could risk losing all of their CTC.

If someone with an ITIN issued before 2008 files their taxes in April 2017 without revalidating, those tax filings will be rejected. The taxpayer will need to revalidate their ITIN and refile their taxes. At this point, the individual will no longer be eligible for the CTC.

Decoding the Tax Deal: What It Means for Latinos and What Lies Ahead

Photo: http://401kcalculator.org, Creative Commons

Photo: http://401kcalculator.org, Creative Commons

With the New Year just around the corner, many of us are working to finish projects and tie up loose ends before heading off on vacation. Congress just did the same. Before leaving for the year, Congress passed a $680 billion tax deal making a number of credits permanent, including improvements to the refundable Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) that were set to expire in 2017.

The CTC and EITC help keep low-income working Latino families out of poverty. Because of this legislation, about four million Latino working families, including nine million children, will not lose any of their tax credits. The EITC amounts to as much as $6,143 per family, while the CTC can add up to $1,000 per child. These credits are especially valuable to the Latino community because more than 40 percent of Latino workers earn poverty-level wages.

Even as we celebrate this victory, we are concerned by a number of restrictions targeting hardworking immigrant taxpayers. Some of these changes in the law will keep some from receiving credits and make it harder for other immigrants to access credits for which they are eligible. For example, anyone who receives a new Social Security number (SSN), regardless of immigration status, cannot claim the EITC retroactively (a process called “look-back”) after April 15, 2016. Most other filers remain eligible to claim their EITC for up to three previous years. The previous law allowed people with new SSNs to claim the EITC retroactively as well. Another change targeting immigrants is the fact that anyone who receives a new Individual Taxpayer Identification Number (ITIN) cannot claim the CTC or AOTC retroactively after April 15, 2016.

Other changes may result in challenges for immigrants that depend on an Individual Taxpayer Identification Number (ITIN) to pay taxes and receive credits available to workers. Some of these changes are based on guidance on the ITIN application process issued by the Internal Revenue Service in 2012. Since then, there has been a drop in ITIN applications, leaving some to wonder whether the guidance is making it too hard to get an ITIN. One of these changes includes the requirement for new ITIN recipients to reapply on a recurring basis to keep their ITIN. There are processing delays for ITIN applications under the current system; adding ITIN revalidation could worsen those delays and keep hardworking Latino immigrants from credits available to them.

The dedication and work of NCLR Affiliates and partners helped to successfully push for Congressional action to make tax credits for working families permanent. More work lies ahead to make sure the Latino community can maximize credits under the new law. The lead up to tax season offers the opportunity to make sure Latinos know their eligibility and how to claim credits successfully. There will also be a need to help ensure the new ITIN requirements are implemented fairly and effectively. To that end, the Latino community should be prepared to work with the Treasury Department on implementation. These and other efforts will help make sure now-permanent tax credits continue to make a difference in the lives of millions who are working but still struggling to get by.

For more information about the new tax package and its impact on Latinos read our new fact sheet—The Congressional Tax Package and Latinos: What You Need to Know.

This Week in Immigration Reform — Week Ending December 4

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Week Ending December 4

This week in immigration reform: NCLR joins Congressional leader to talk tax extenders; Coalition urges Supreme Court to hear administrative relief case; and USCIS unveils tool for navigating its website.

NCLR kept the community informed with staff quotes in the Las Vegas Sun, Latin Post, and Diario Las Americas.

NCLR calls on Congress to consider immigrant families in tax extender negotiations: As Congress looks to renew tax credits for businesses and working families in year-end negotiations, NCLR reminded lawmakers to include immigrant families in extensions of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Senator Robert Menendez (D-N.J.) joined NCLR and the National Immigration Law Center (NILC) on Tuesday to urge Congress to keep immigrant families eligible for credits which are proven to fight poverty, promote employment, and bolster the overall economy. “I have seen and I have fought against these attacks for several years, both in public and in private, and now I’m doing everything possible to ensure that immigrants and all working families have access to the CTC and EITC. A vote against these important family credits is a vote to increase the taxes on millions of working immigrant families,” said Senator Menendez, senior member of the Senate Finance Committee. Clarissa Martínez-De-Castro, Deputy Vice President of the Office of Research, Advocacy and Legislation at NCLR, added, “The EITC and CTC, first and foremost, reward hard work. Millions of American families deserve this hard-earned income boost, which many rely on to pay for basic expenses such as school supplies and child care. Renewing the improvements that were made to these programs is sensible policy that strengthens our workforce.”

NCLR joins over 200 organizations urging Supreme Court to hear president’s immigration executive action case: NCLR joined a coalition of 223 immigration, civil rights, labor, and social service groups filing an amicus brief urging the Supreme Court to hear Texas v. U.S., involving President Obama’s executive action on immigration. The brief shares personal stories from potential recipients of administrative relief, explaining how the two deferred action initiatives (DAPA and expanded DACA) would positively impact millions of community members currently residing in the United States. “The individuals profiled in the brief illustrate the havoc this case has wreaked on the lives of millions of immigrants who remain in legal limbo,” remarked Benjamin Johnson, executive director of the American Immigration Council, one of the organizations included in the brief. “We urge the U.S. Supreme Court to take up this case and give hardworking immigrant families the chance to live and work without fear of deportation.” An additional brief calling for similar Supreme Court action was filed by 216 Congressional Democrats this week, including Senate Minority Leader Harry Reid and House Minority Leader Nancy Pelosi.

DCist features work of NCLR Affiliate Carlos Rosario at International Public Charter School: In a profile of Chef Benjamin Velasquez, DCist shares the story of the Director of Food Services at Carlos Rosario and his work training aspiring culinary workers.  Chef Velasquez has worked at Carlos Rosario for 29 years and oversees two training kitchens that teach immigrant students about working in professional kitchens while working to earn a GED.  The students who hail from all over the world also increase their English skills and computer literacy skills. As the story notes, “Today, the school runs three teaching shifts—morning, afternoon, and evening for its 2,500-strong student body. Many of the students enrolled in Carlos Rosario also have full-time jobs. In addition to ESL training, students can pick from three career paths: culinary arts, health care, and technology. The program has graduated more than 50,000 immigrants from all over the globe, and continues to provide services after graduation.”

USCIS unveils “Emma” personal assistant: U.S. Citizenship and Immigration Services (USCIS) rolled out a new tool to make navigating its website easier this week. “Emma,” named after Emma Lazarus, who wrote the poem at the Statue of Liberty about helping immigrants, is a new computer-generated assistant designed to answer questions and provide assistance finding the right areas on the USCIS website. Currently available in English only, USCIS expects to add the feature to its Spanish website within the next few months.

Protecting Nevada’s Working Families

Last week, NCLR traveled to Las Vegas for a town hall where local elected officials, as well as business and advocacy groups in the area, joined a discussion on the need to protect refundable tax credits for working families.

With Congress set to renew tax credits for businesses this fall, panelists, which included Nevada State Assemblyman Nelson Araujo; Margarita Rebollal, Executive Director of Community Services of Nevada; and Rafael Collazo, Director of Political Campaigns at NCLR, shared personal stories about how the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) offer vital financial relief for low- and moderate-income families throughout the Las Vegas area.

In 2009, Congress expanded the EITC and CTC, which are only available to working people, in order to reach lower-income earners. The expansion had an important impact for Nevadans. Approximately 500,000 households in Nevada received the credits in 2013, helping lift more than 100,000 households out of poverty. The EITC also added more than $550 million into Nevada’s economy in 2012. If Congress doesn’t act to make the expansions permanent this fall, more than 440,000 Nevadans could lose some or all of their working-family tax credits, pushing more than 100,000 of Nevada’s children deeper into poverty.

“If lawmakers are willing to help Nevada’s businesses, then they should also support Nevada’s hardworking families. After all, our local businesses rely on consumers in order to thrive,” said Collazo.

The event generated a lively discussion among attendees, who also had the chance to register to vote with Mi Familia Vota, and sign on to a letter to Nevada’s Congressional representatives asking that they support working families by protecting these vital tax credits. A number of local officials also came out to support the campaign and hear from constituents on the issue, including Nevada State Assemblywoman Olivia Diaz and Councilman Issac Barron.