Helping Yourself With Taxes

It started on April 1, 2009 but yet most people do not even feel it. It was the Obama administration’s “Work-Pay Tax Credit,” that was a continuation of the government’s efforts to cure the recession.

This is the third leg of the tax stimulus payment to the poor and the working class in a series of measures, even as you may have received only one check from the Stimulus Rebate. The way it works was you should have a lower federal income tax withholding now or supposed to be from your wage or salary. It will continue that way for the remaining months of 2009 until year 2010.

Should your employer fail to use and/or follow the new IRS federal income tax withholding table, you will have an invisible “tax credit” for your potential tax refund next year.

Those of you with multiple work or employers, (more than one job) may find your total tax withholdings short when you file your tax return in 2010. Each of your work will have a lower withholding tax eventhough you are supposed to only get the lower withholding from just one job. But those in the higher income tax bracket will not qualify.

There will be no check to come in the mail this time unlike the Bush Stimulus Tax rebate. Those receiving only their pensions as their income will not qualify. However, an “economic recovery payment” of $250 will accrue to retirees, disabled vets, and individuals who are recipients of SSI benefits and/or the railroad retirement beneficiaries. The IRS will not administer this “$250 recovery payment” but the Social Security Administration. So, keep watching your pension checks for this add on.

It is easy to take things for granted with taxes, until you realize that it is really very important. But before something worse happens to you, here is what new immigrants must know and understand. U.S. Taxpayers may also be a Resident Alien, Non-resident Alien, or Dual-Status Alien, or Foreign Nationals in addition to all U.S. Citizens.

Foreign Nationals need to submit correct U.S. tax returns to avoid problems when applying for future immigration status. Foreign nationals are Resident Aliens, who are the immigrants (ie, green card holders) or non-immigrants including illegal aliens who are substantially present in the United States under the 183-day formula under Section-7701 (b) of the Internal Revenue Code. There is a formula in the computation of the 183 days, if you are curious of the “substantial presence test” that must be satisfied. A “closer connection” exception, to a foreign country could also override this computation.

Tax Treaties available to nationals of foreign countries have an effect on their tax returns, ie, foreign tax credit. Their tax return filing may necessitate their application for an Individual Tax Identification Number (ITIN). Depending on the countries where they came from, their dependents, spouse, deductions and credits, and disclosures affect their income tax filing.

The IRS cautions that failure to follow the specific tax rules for these taxpayers can now result in substantial penalties for the tax return preparers as well as their foreign national clients. If you are new in this country and quite unfamiliar with the tax laws of the United States as it affects your immigration status, be in tax compliance by seeking professional help. Do not risk your future.

Angel Y. Dayan, EA, ABA, ATA, CPA-Texas is a Federally licensed Tax Practitioner in 50 States. He is a Certified Public Accountant in the State of Texas and is a Graduate Fellow of the National Tax Practice Institute. He completed a Masters Course in Tax Representation practice and procedures. He is an Accredited Business Accountant and Accredited Tax Advisor. He meets clients daily for appointment in his office at 150 East Olive Avenue, Ste.-116, Burbank, California, 91502. He could be reached at (213)-365-1040 for appointment.

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• Ruminating The New TaxTime - February 12th, 2010
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