Expiring ITINS & Renewals under the PATH Act Luz A. Arévalo, Sr. Attorney Linda E. Neary, Attorney Greater Boston Legal Services LITC larevalo@gbls.org

What is an ITIN? A number created for tax purposes to enable people ineligible for a SSN to pay taxes ITINs are NOT SSNs – though both have 9 digits, an ITIN will always begin with a 9 and have a 7 or 8 in the fourth place: 9xx-7x-xxxx ITINs do not provide legal status or work authorization, but many immigrants have ITINs (both EWIs and those lawfully present).

What an ITIN is NOT Not an immigration enforcement tool, because the fact that the IRS does not share applicants’ private information is key to immigration compliance

Expiring ITINs The following ITINs will expire by 12/31/16: ITINS with middle digits 78 or 79, e.g.: 9xx-78-xxxx and 9xx-79-xxxx, as well as All ITINs not used to file a U.S. tax return at least once for tax years 2013, 2014, or 2015 TPs who filed tax returns at least once in the past 3 years and have expiring ITINs (i.e., middle digits 78 or 79) will get a letter from the IRS explaining how to renew their ITINS (Letter 5821)

Renewing ITINs If a person with an expiring ITIN plans to file a tax return or claim a refund in 2017, the person should renew her ITIN and may do so beginning 10/1/16. The person should submit a Completed Form W-7 and all required identification documents to: Internal Revenue Service ITIN Operation P.O. Box 149342 Austin, TX 78714-9342 Only original identification documents or certified copies of same should be submitted

Renewing ITINs Persons with expiring ITINs can renew ITINs of family members even if those numbers are not expiring. All family members should submit a Form W- 7 and supporting documents at the same time

Do Not Renew an ITIN If the taxpayer has or is eligible for a SSN

How a Tax Clinic Can Help 1. Am I a resident for tax purposes? The definition of “resident” under tax law is not the same as under immigration law. IRC 7701. For undocumented workers, we often use the substantial presence test. Generally, some foreign government-related individual, teacher, trainee, or student who is present in the United States on an A, F, J, M, or Q visa, cannot qualify as “residents” under the substantial presence test. See IRC, secs. 7701.

How a Tax Clinic Can Help How do I get a Tax ID number (i.e., an ITIN, Individual Taxpayer Identification Number)? No tax return will be processed under a “fake” social security number. Taxpayer needs a valid Tax ID Number. 26 CFR 301.6109-1. Application is free!

How a Tax Clinic Can Help 3. Am I an employee or an Independent Contractor? Misclassified workers may have more options when reporting income: substitute W2 (half of self employment tax) or Schedule C with business expenses. Option depends on immigration status, and nature of the work.

How a Tax Clinic Can Help Do I qualify for Tax Credits? Beware of fraudulent tax preparers who claim EITC from the State only under fake SSNs; or change data after taxpayer leaves; adds preparer’s personal bank account to the return

Credits & Deductions: How do they differ? Deductions are subtracted from income, and thus reduce the filer’s ultimate taxable income. They are worth more to high-income filers than to low- income filers. Credits are subtracted from the tax the filer owes, and thus reduce the filer’s actual taxes. Some credits are also refundable in cash to the taxpayer even if no tax is owed, e.g., the Earned Income Tax Credit (EITC).

TAX CREDITS Earned Income Tax Credit – Up to $6,252 Child Tax Credit – Up to $1,000 per child Additional Child Tax Credit Premium Tax Credit American Opportunity Tax Credit Circuit Breaker Credit – MA, Up to $1,070 All except Child Tax Credit are refundable tax credits. That is, Taxpayer receives money if no taxes owed or if credit is larger than tax owed. Sample Tax Return

TAX CREDITS Earned Income Tax Credit and Premium Tax Credit require SSNs All others (including Child Tax Credit, Additional Child Tax Credit, Child and Dependent Care Credit; American Opportunity Credit, and Circuit Breaker Credit) can be claimed with ITINs or SSNs.

The process is known as “unscrambling” earnings with SSA LITCs will amend returns when SSN is assigned, so client gets credit towards pension The process is known as “unscrambling” earnings with SSA See “Who Said Your Immigration Client Cannot Get Credit for Social Security Payments?” Bender’s Immigration Bulletin, Vol. 19, No. 21, November 1, 2014, pp 1181-1186 http://shusterman.com/pdf/immigrants-get-credit-for-social-security-payments.pdf

COMMON MISTAKES OUR IMMIGRANT CLIENTS MAKE AND HOW TO AVOID THEM: NOT COMPLETING W-4 CORRECTLY Too many allowances/exemptions = taxes owed Too few allowances/exemptions = TP is making a loan to Uncle Sam (interest free!)

COMMON MISTAKES: CASH INCOME Not keeping track of cash income and expenses

COMMON MISTAKES: Filing as “Single” when Spouse is Overseas A legal marriage elsewhere is considered a legal marriage in the U.S. Usually the overseas spouse is not earning income and depends on remittances from spouse in the U.S. Note: Mexican dependents living in Mexico can be claimed by U.S. taxpayers. Refer to Attorney!

2015 PATH Act* Makes the EITC and CTC permanent Deactivates certain ITINs Denies recent SSN recipients retroactive EITC claims Eliminates retroactive claims to Child Tax Credit for new ITIN filers Denies retroactive American Opportunity Credit claims for recent ITIN applicants Refer to Attorney! *Protecting Americans from Tax Hikes Act (PATH)

ITINS DEACTIVATION DATES If the ITIN Was Issued: The ITIN Will Deactivate On: Before January 1, 2008 January 1, 2017 In 2008 January 1, 2018 In 2009 or 2010 January 1, 2019 In 2011 or 2012 January 1, 2020 See Protecting Americans from Tax Hikes Act (PATH) § 203

New, under PATH Foreign nationals should be sure to file their taxes on time! ITINs and newly assigned SSNs can no longer be used to claim the EITC, CTC and the AOTC retroactively.

interactive EITC model There are options available to taxpayers who owe taxes: Hardship requests, Offers in Compromise, Payment Plans, and Bankruptcy

List of Low-Income Taxpayer Clinics (LITCs) Greater Boston Legal Services 197 Friend Street Boston, MA 02114 (617) 371-­1234; (617) 603-­1569 larevalo@gbls.org Low Income Taxpayer Clinic Springfield Partners for Community Action 721 State Street Springfield, MA 01109 (413) 263-6500 martino@springfieldpartnersinc.com Federal Tax Clinic at the Legal Services Center of Harvard Law School 122 Boylston Street Jamaica Plain, MA 02130 (617) 390-1729 Bentley University Low Income Taxpayer Clinic 175 Forest Street MOR 133 Waltham, MA 02452 (781) 891-2083