Four Things for Latino Families to Remember on Tax Day

By Yuqi Wang, Policy Analyst, Economic Policy Project, NCLR

For many Latino households, the tax refunds they receive every April is one of the largest influxes of cash they receive all year. The refunds help families pay debts, keep them out of poverty, and help to buy necessities like clothes and groceries. Below are a few things for Latino families to keep in mind as the 2016 tax filing season wraps up today.

1. You may be eligible for critical refunds, such as the EITC or CTC. Filing your taxes means that you might be eligible for critical refunds like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). The EITC and the CTC are two refundable tax credits that benefit low- and middle-income earners. They increase the earnings of lower-income workers, reduce child poverty, make low-wage work more rewarding, and offset the effect of paying regressive payroll taxes. Both credits raised more than nine million Americans out of poverty in 2015, and made 22 million others less poor. It is important to note that taxpayers filing with an ITIN number are eligible to claim the CTC, but not the EITC.

2. If you file your tax return with an ITIN, you may need to renew your ITIN to get a refund. Under legislation passed by Congress in 2015, the IRS requires that certain taxpayers renew their ITINs before they submit their tax return and claim certain tax credits, primarily the Child Tax Credit. Affected ITINs expired on January 1, 2017, and unless renewed, taxpayers using expired ITINs on their tax returns will face a delay in receiving eligible tax refunds. For more information and resources on renewing ITINs, visit nclr.us/ITIN.

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ITIN Revalidation Process in Need of Streamlining

A new survey of NCLR Affiliates reveals challenges Certified Acceptance Agents face in assisting immigrants through the process

In the weeks ahead, the Treasury Department and the Internal Revenue Service (IRS) will implement a requirement enacted last December that immigrants with older Individual Taxpayer Identification Numbers (ITIN) must revalidate. The details of the revalidation process are not yet known but it is clear that Certified Acceptance Agents (CAAs) will be critical. CAAs are full-time staff, frequently at community-based tax preparers, providing immigrants with one-on-one assistance when applying for an ITIN.

ITIN Revalidation Deadlines

One way that CAAs help is by certifying identity documents as originals and submitting an ITIN application on behalf of an immigrant. The IRS currently requires original identity documents—including birth certificates or passports—from immigrants applying for an ITIN. Once an application is submitted, it may take 10–14 weeks before these documents are returned with the ITIN.

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New Law Creates Challenges for Immigrants Trying to File Taxes

Guest blog post by Max Moy-Borgen, Tax Program Manager, Mission Economic Development Agency

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Photo: John Morgan

Last December, Congress passed legislation that will make it more difficult for immigrants with an Individual Taxpayer Identification Number (ITIN) to file and pay their taxes. Immigrants with older ITINs will have to revalidate their number based on a schedule specified in the law.

I oversee tax preparation for low-income and immigrant families at the Mission Economic Development Agency (MEDA), the largest free tax preparation service in San Francisco, with four Volunteer Income Tax Assistance sites in the city that help 4,200 clients each year. From my experience, I know that if this requirement is not implemented properly, it will have a detrimental effect on those who are just trying to pay their taxes.

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Usuarios del ITIN Deben Preparar Para Proceso de Renovación

Antes del fin de año, el Congreso pasó una nueva legislación que requiere algunos inmigrantes que declaran sus impuestos con un Número de Identificación Individual del Contribuyente (ITIN, por sus siglas en inglés) revalidarlo. NCLR ha creado recursos para la comunidad que incluyen las fechas límite para renovar su ITIN:

ITIN_Sharegraphic_Spanish

Aunque aquellas personas con ITIN que se emitieron antes del 2008, tendrán que revalidar su ITIN (antes del 1ro. de Enero de 2017), el Servicio de Impuestos Internos (IRS, por sus siglas en inglés) aún no ha compartido detalles sobre ese proceso y dudas permanecen.

Por ejemplo:

  • Para los inmigrantes que revalidan su ITIN, ¿podrán mantener el miso ITIN o recibirán uno nuevo?
  • ¿Sera igual el proceso de revalidar un ITIN a el proceso de aplicar por un ITIN nuevo, o existiera un proceso simplificado?
  • ¿Tendrán que revalidar su ITIN al momento de declarar sus impuestos o podrán entregar la aplicación de revalidación de una manera separada a el IRS?

En lo que esperamos respuestas a estas preguntas y muchas más, el IRS ha expresado públicamente que inmigrantes contribuyentes con ITINs que necesitan ser revalidados no deben revalidar con la declaración de impuestos de este año. Más información será disponible en las semanas siguientes en cuanto a cuando y como deben de proceder los inmigrantes que tienen que revalidar su ITIN empezando el 1ro. de enero de 2017.

Hasta entonces, los preparadores de impuestos deben utilizar esta temporada de impuestos para informar a sus clientes que serán afectados por la nueva ley que tendrán que preparar documentos para revalidar el ITIN (LINK TO PREVIOUS BLOG ABOUT WHY IMPORTANT) y al mismo tiempo enfatizar que este proceso aún no está establecido.

Para más información y recursos adicionales visite: http://www.nclr.org/issues/economy/employment/save-tax-credits/