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Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15437
Experience:  15years with H & R Block. Divisional leader, Instructor
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Should an illegal immigrant pay tax for the year when he was illegal?

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If an illegal immigrant opens a business entity with the IRS and gets a work authorization a year later, does he need to pay the taxes for the past year's income when he was illegal?

Robin D. :

Yes, even income earned while in the US without proper authorization is reportable.

JACUSTOMER-sljb6sbu- :

What if I couldn't report taxes for 2012 because I didn't have SSN ?

Robin D. :

You would need to file the return and if you still do not have an ITIN or SSN you would use the Form W7 to request it. If you do have an ITIN or SSN now you use that number on the prior year return.

JACUSTOMER-sljb6sbu- :

I will get my SSN in December and I'm afraid I will need to pay penalty for not sending the 2012 return on time

Robin D. :

Then you can file after you have it but if you owe for that year you will have penalties and interest that will apply. Of course you can always request that the penalties be abated but not the interest. If you do not owe then you will not have the additional amounts applied.

JACUSTOMER-sljb6sbu- :

I know that illegal immigrants who become green card holders dont need to pay taxes for the time they were here illegally, do you know anything about it ?

Robin D. :

That is not true. The residency rules for tax purposes are found in I.R.C. § 7701(b). Although the tax residency rules are based on the immigration laws concerning immigrants and nonimmigrants, the rules define residency for tax purposes in a way that is very different from the immigration laws.
Income earned from US sources are taxable in the US regardless. The person may be a resident alien or a nonresident alien but that does not stop tax on US sourced income for either.

JACUSTOMER-sljb6sbu- :

I have a few more questions. Basically, I need to clarify a few things about my business, I opened an LLC in 2012 and I never done anything with it. I need you to help me decide what is my best way to pay the least taxes. for 2013 for instance I have 65,000$ income and 35,000$ expenses.

Robin D. :

You will file a Schedule C if you are the only member. The best way is to report all your income and then show your expenses. You cannot do or report any other way. I single member LLC is a sole proprietorship. You can choose later to change to S corp.
The S corp will still pass all income through to you and you would have to pay yourself a salary which would mean payroll taxes. You may wish to stay with sole proprietor to keep things simple. As a sole prop you will pay tax just on the profit and of course self employment tax.

JACUSTOMER-sljb6sbu- :

Ok, so as a sole proprietor who is married, my wife has no income, and my total income is 35,000$ after expenses. how much tax should I expect to pay? (forgot to mention, my business is web design company I offer services therefore I don't pay sales tax)

Robin D. :

Your total tax would be about $6200. That would be $1253 in regular income tax and $4946 in Self Employment. The Self Employment is your Social Security and Medicare. Now that was just looking at standard for married filing joint so if you can itemize you may owe less in income tax.

JACUSTOMER-sljb6sbu- :

How can I do my taxes?

Robin D. :

You can probably do your own using an online service. Many people use TurboTax. I hear Tax Slayer is good. If you can design a website you can use their online service

JACUSTOMER-sljb6sbu- :

I have a client that requested me to fill a w-9 form. Does that mean that the IRS knows about my income from this client?

Robin D. :

The client has to get that on file or they are not supposed to pay you. They keep that though and do not send in to the IRS. BUT, if you are doing work for them they will send you a 1099MISC and that is the copy that goes to the IRS, to advise about your payment from them

JACUSTOMER-sljb6sbu- :

Ok thank you!

Robin D. :

You are most welcome

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