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Tax Implications for Immigrants

Tax consequences on one’s income are bound to arise regardless of the way a person has immigrated to the US- – through investment, employment, or family relationships. This article will explore some of the common tax issues faced by noncitizens , whether here temporarily or permanently

Taxes from Employment

As a threshold matter, only those with employment authorization from the Department of Homeland Security can work legally in the United States. Legal permanent residents (green card holders) are free to work for any employer, or even for multiple employers, either full time or part time. However, foreign nationals on nonimmigrant visas (J-1, H1-B, etc.) have to f first obtaining employment authorization and must ensure that they work within the limits of their nonimmigrant visas.


The IRS has its own classification system for tax purposes. Although the immigration system makes the distinction between immigrants and nonimmigrant, the IRS makes the distinction between resident and nonresident aliens. The IRS has its own way of calculating who is considered a resident versus a nonresident alien, and it has the most implications for those who are on nonimmigrant visas for extended periods of time or for those who derive income from both foreign and domestic sources.

Furthermore, a resident alien (i.e. most if not all green card holders) is taxed at a graduated or scaled rate on all income from both domestic and international sources just like a United States citizen. A nonresident alien, however, is taxed on certain types of income that has United States sources. Furthermore, nonresident aliens may be taxed at a flat rate on “passive” income with United States sources or at a scaled rate if the income is effectively connected with a U.S. trade or business.

And always, special rules may apply for certain types of occupations, such as teachers, medical professionals, athletes, and employees of foreign governments and international agencies.

If you have questions about your income, employment authorization, or other tax issues and how they may be affected by your immigration status, contact our office so that we may help with your issues.

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Immigration Agency Overview

When people talk about overhauling the immigration system, they are really talking about overhauling a complex network of various agencies that may wear different hats for different audiences. This article will explore a general overview of the agencies involved so that readers may understand just how broad the immigration system can be.

Department of Homeland Security



Perhaps the main “trunk” of immigration is the Department of Homeland Security, or more specifically the three agencies highlighted above in the picture: Customs & Border Protection (“CBP”), Citizenship & Immigration Services (“CIS”), and Immigration & Customs Enforcement (“ICE”). CBP is responsible for the enforcement of the borders and you will see them at airports and at the northern and southern borders.

CIS is responsible for the processing of most immigrant and nonimmigrant petitions, and citizenship applications. As further explained below, although the Secretary of State is often known for issuing visas in foreign countries, it is CIS that is responsible for adjudicating petitions and reviewing evidence. They may also, for employment-related immigration matters, conduct site visits and inspect businesses to ensure compliance with immigration laws. Finally, ICE is the enforcement arm of the immigration system. ICE is the department responsible for going after those who have committed immigration violations as well as exercising prosecutorial discretion when appropriate.

Department of Justice



The Department of Justice houses the Executive Offices for Immigration Review, which holds many of the agencies responsible for the many courts involved in the immigration system. There are the Immigration Courts where people who have committed immigration violations are processed as well as adverse decisions on immigration adjudications by USCIS, as well as the various appellate levels beyond that.

Department of Labor



The Department of Labor is an expansive agency, as one could tell by the chart. The Department of Labor’s role in immigration may seem small relative to the other immigration agencies, but the Department of Labor is the one who manages the lengthy labor certification application process, which may be required for a number of visas.

Secretary of State



Finally, the Secretary of State is responsible for the consular offices abroad and embassies. For many, if not all, immigrants, the consular offices will be the first contact they have with the immigration system. They are primarily responsible for screening individuals for visa eligibility. If a visa was denied, they will also guide the individual with the waiver process.

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Sanctions for Immigration Noncompliance

Congress’ power over immigration is plenary, meaning it is absolute. This attitude towards immigration has been deeply embedded into the immigration system for at least a century. Although a variety of exceptions, waivers, and exemptions exist in the immigration system, both individuals and employers ought to be wary of the devastating consequences for not complying with immigration regulations. This article will explore just some of the noncompliance issues employers may face.

Both civil fines and criminal sanctions may be imposed on employers who hire unauthorized labor. The civil fines may range from $375 to $3,200 for each unauthorized worker for just the first offense. A second offense will lead to a fine of $3,200 to $6,500 for each unauthorized worker. For each subsequent offense, the fines range from $4,300 to $16,000. In all cases, a cease-and-desist order may follow.

The fines do not stop there. Should an employer require an employee put up a deposit, security, bond, or other insurance to protect the employer from these fines may result in a fine in and of itself for up to $1,000. Not maintaining proper I-9 records can result in fines of $110 to $1,100 for each individual.

The fines can be imposed on “employers,” which has a technical definition under immigration law. “Employer” for the sake of assessing fines is defined as the entity or person, including an agent or anyone acting directly or indirectly in the interest of an employer, who engages the services or labor of an employee. For some of these fines, there may be some small leeway for employers who are so large that central hiring practices are impracticable or nearly impossible.

Criminal sanctions may also be imposed in lieu of or in conjunction with the civil penalties. Criminal proceedings may lead to seizing company assets derived from work made by the undocumented worker and bars to federal contractor work. Prison sentences for up to 10 years may result for hiring undocumented workers under the felony charge of harboring illegally present individuals for financial gain, encouraging or inducing a person to reside illegally in the United States for financial gain, conspiracy, and/or transporting an undocumented person for financial gain. If money laundering charges are involved, a 20 year sentence may imposed as well as a $500,000 fine.

Noncompliance, which could range from simply not maintaining proper I-9 records to knowingly hiring an undocumented worker, can be an expensive and life-altering mistake for those involved. It is also important to know that “undocumented” or “illegal” workers are not just who the popular media paints them as. In fact, this could include a student visa worker improperly employed without their OPT extension, a H-1B worker who overstayed their visa, a B-1 tourist who engages in unauthorized work, or any number of circumstances conceivable under the immigration laws. If you feel your company’s immigration compliance standards are not up to date or if you are an individual who has questions about your immigration status, contact our office so we may help you with your issues.

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Skilled Workers and Professionals – The EB-3 Visa

This will be the final part in the survey of the EB visas, as we have already covered the EB-5 visa and the EB-4 visa is too specific to talk about generally. Should you have questions about these or any visa, contact our office so we may assist you.

The EB-3 visa is less stringent in its requirements, but the backlog is much higher than the EB-1 or EB-2 categories. Currently, applications from 2008 are being processed for many counties and are much longer for certain others – 2003 for immigrants from India and 2006 for immigrants from the Philippines.

The EB-3 visa is intended for three distinct categories: “skilled workers,” “professionals,” or “other workers.” The requirements are that the EB-3 visa beneficiary must find a sponsoring employer. Each applicant, regardless of whether they are “skilled workers,” “professionals,” or “other workers,” must go through the Labor Certification process, have a job offer for a permanent, full-time position, and demonstrate that they will perform work for which qualified workers are not available in the United States. Through this process, the employer must prove the unavailability of qualified U.S. workers and that U.S. worker’s wages and working conditions will not be negatively affected. Sometimes, precertification of the petitioned position may be pre-certified under Schedule A of the Department of Labor.

For skilled workers in particular, they must demonstrate at least two years of job experience or training. The Labor Certification form, ETA 9089, has instructions on how to determine whether a job is skilled or unskilled.

Professionals in particular must possess a U.S. bachelor’s degree or a foreign degree equivalent AND must demonstrate that the bachelor’s degree is the normal requirement for entry into the occupation. Education and experience unfortunately cannot replace the requirement for a bachelor’s degree.

For the “other workers” category, the beneficiary must prove that, at the time of filing the petition by the sponsoring employer, he or she is capable of performing unskilled labor and that the work is not seasonal or temporary and cannot be done by qualified workers in the United States due to lack of availability. Unskilled labor of defined as requiring less than 2 years of training or experience.

The EB-3 visa is not the most ideal given the backlog and the required labor certification process. But it may be useful for those who are not in a rush to receive their green card and/or have trouble meeting the other EB visa requirements. Contact our office if you have any questions related to the EB-3 visa or any other immigration issues.

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