Category Archives: Legal Thoughts Podcast

Federal Tax Obligations of Gig Workers | Legal Thoughts

Coleman Jackson, P.C. | Transcript of Legal Thoughts
Published July 25, 2021

Federal Tax Obligations of Gig Workers

Legal Thoughts is an audiocast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This episode of Legal Thoughts is an audiocast where the Attorney, Coleman Jackson is being interviewed by Alexis Brewer, Tax Legal Assistant of Coleman Jackson, P.C. The topic of discussion is “Federal Tax Obligations of Gig Workers”. You can listen to this podcast by clicking here:

If you enjoy this podcast, make sure to stay tuned for more episodes from the taxation, litigation, and immigration Law Firm of Coleman Jackson, P.C. Be sure to subscribe. Visit the taxation, litigation and immigration law firm of Coleman Jackson, P.C. online at www.cjacksonlaw.com.

TRANSCRIPT:

ATTORNEY: Coleman Jackson

LEGAL THOUGHTS

COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY: Coleman Jackson

Welcome to Legal Thoughts

My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.

In addition to myself, we have Alexis Brewer – Tax Legal Assistant, Leiliane Godeiro – Litigation Legal Assistant, Gladys Marcos – Immigration Legal Assistant, and Johanna Powell – Tax Legal Assistant.

On today’s “Legal Thoughts” podcast, our Tax Legal Assistant, Alexis Brewer, will be interviewing me on the important topic of: “Federal Tax Obligations of Gig Workers.”

INTERVIEWER: Alexis Brewer, Tax Legal Assistant

Hi everyone, my name is Alexis Brewer and I am a Tax Legal Assistant at the tax, litigation and immigration law firm of Coleman Jackson, Professional Corporation. Our law firm is located at 6060 North Central Expressway, Suite 620, right here in Dallas, Texas.

Good afternoon, Attorney; thank you for agreeing to sit with me as I interview you with respect to this hot tax topic: “Federal Tax Obligations of Gig Workers.”

Let’s jump right in,

Question 1: What is gig work and who classifies as a gig worker?

Attorney Answer – Question 1:

Hello Alexis.

The IRS defines gig work as “any activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website.” Since the COVID-19 pandemic, we’ve seen an increase in gig workers.

Gig work includes jobs like:

  1. Driving for ride-sharing apps or deliveries (for example: Uber, Amazon, DoorDash)
  2. Running errands or completing tasks (for example: Instacart or TaskRabbit)
  3. Selling goods online or renting equipment (for example: Etsy or online shops)
  4. Renting out property or part of it (for example: Airbnb or Turo)
  5. Providing creative or professional services (for example: Upwork or Handy.com)
  6. Any other temporary, on-demand or freelance work

INTERVIEWER: Alexis Brewer, Tax Legal Assistant

Question 2: What do gig workers need to know about their federal tax obligations?

Attorney Answer – Question 2:

First and foremost, Alexis, Gig workers must know that gig work is taxable under the Internal Revenue Code!

Whether it’s a full-time job or just a side hustle, taxpayers must report gig income on their federal tax return. Under the 2021 American Rescue Act, the reporting threshold for gig workers was reduced to $600 with no minimum transaction requirement. That means regardless of how many “jobs” or transactions you do, if you made more than $600, you are required to pay taxes on that income.

INTERVIEWER: Alexis Brewer, Tax Legal Assistant

Well, what taxes are gig workers responsible for?

Attorney Answer – Question 3:

This is a very complex question, and requires a nuanced answer since it depends on whether the gig worker is properly classified as an employee or as an independent contractor.

The IRS defines an employee as “anyone who performs work when an employer has the right to control what will be done and how it will be done. Even if the employer gives freedom of action.” This is the most intuitive classification because it is the normal employee/employer relationship we’re used to.

When a gig worker is classified as an employee, their employer withholds required taxes from the employee’s paycheck; such as, Income Taxes, Social security taxes & Medicare. Let me point out that Texas does not have a state income tax. As with typical employee-employer jobs, gig employees who are properly classified as an employee will receive a standard w-2, and includes their gig earnings reported on their W-2 on their annual Form 1040 tax return.

The more difficult or complex situation occurs when a gig worker is properly classified as an independent contractor. The general rule is that a worker is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. For example, independent contractors normally have the freedom to hire others to complete their work.

Unlike employees, independent contractors do not have withholdings taken out of their paychecks before they receive them. This means independent contractors will receive annually a Form 1099 instead of a Form W-2.  Independent Contractors are responsible for paying self-employment taxes. Self-employment taxes consist of the same two parts: Social security & Medicare. Unlike when the worker is an employee and employers pay one-half of these taxes, independent contractors are required to pay the entire amount of these taxes.

INTERVIEWER: Alexis Brewer, Tax Legal Assistant

How will gig workers know if they are employees or independent contractors?

Attorney Answer – Question 4:

It is the employer/business owner who will make this classification because they are ultimately responsible for withholding taxes if the worker is an employee. (If the employer cannot decide, Form SS-4 can be filed with the IRS, and the IRS will make the determination. Form SS-4 can be filed by the employer or the worker. Currently the IRS may take up to 6 months to process Form SS-4).

To determine if a worker is an employee or an independent contractor the employer will examine the relationship between the worker and the business.

Employers (or the IRS, if necessary) will need to consider all evidence of the degree of control and independence in this relationship. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and Relationship of the Parties.

  1. Behavioral Control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training, or other means.
  2. Financial Control covers facts that show if the business has a right to direct or control the financial and business aspects of the worker’s job. This includes:
    1. The extent to which the worker has unreimbursed business expenses
    2. The extent of the worker’s investment in the facilities or tools used in performing services
    3. The extent to which the worker makes his or her services available to the relevant market
    4. The extent to which the worker can realize a profit or incur a loss, and
    5. How the business pays the worker
  3. Relationship of the Parties covers facts that show the type of relationship the parties had. This includes:
    1. Written contracts or oral agreements describing the relationship the parties intended to create
    2. Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay
    3. The permanency of the relationship, and
    4. The extent to which services performed by the worker are a key aspect of the regular business of the company

Employers will need to consider the entire relationship with the worker when determining whether to classify the worker as an employee or independent contractor. Proper classification of workers is governed by federal and state labor laws and misclassification of workers can carry huge federal and state consequences.

INTERVIEWER: Alexis Brewer, Tax Legal Assistant

Okay, so let’s say a gig worker is classified as an independent contractor and is responsible for the self-employment tax you referenced.

QUESTION 5:
What does this mean?

Attorney Answer – Question 5:

If a gig worker is classified as an independent contractor, they are responsible for self-employment taxes.  The United States tax system is a pay-as-you-go system, which means that gig workers classified as independent contractors who earned over $600 during the tax period are required to pay quarterly estimated tax payments.

The general rule is that everyone is required to pay federal taxes as they earn/receive income. Again, a pay-as-you-go system. Estimated tax payments are required when earned income is not subject to automatic withholdings (as with employees) and taxpayers expect to have tax liability at the end of the year.

Estimated taxes are calculated at the beginning of the year and are paid on a quarterly basis, typically due on April 15, June 15, and September 15 of the tax year, and the final payment is made on January 15 of the following year. Failure to pay estimated tax could result in a tax penalty assessment by the IRS.

INTERVIEWER: Alexis Brewer, Tax Legal Assistant

Attorney, thank you for such clear and thorough answers to my questions this afternoon. We’ve discussed a lot in a very short period of time, so let me wrap up my questions regarding the gig worker and federal income taxes with this one final question.

QUESTION 6:
What are the big takeaways for gig workers?

Attorney Answer – Question 6:

Thank you, Alexis for your excellent questions on this very important tax topic, because you are right, the gig economy took off during the pandemic.  Let me summarize like this—

  1. The main takeaway is that gig work is taxable!
  2. The next big takeaway is that gig workers tax reporting responsibilities are based on how their company/employer classifies them… either as an employee or as an independent contractor:
    1. If a gig worker is classified as an employee, taxes will be withheld from their paycheck, and they will receive a standard Form W-2.
    2. If a gig worker is classified as an independent contractor, no taxes are withheld, and they are responsible for paying self-employment taxes for earnings over $600.
  3. Finally, the last major takeaway is that if a gig worker is an independent contractor and is responsible for self-employment taxes, they may also be required to make quarterly estimated income tax payments directly to the IRS. I cannot overemphasize the importance of keeping up with estimated tax payments if required.

Interviewer Wrap-Up

Attorney, thank you for siting with me today to explain how U.S. law:

  1. Defines what the term, “gig workers” even means,
  2. Splits gig workers into two broad classifications as either employees or independent contractors, and
  3. How U.S. tax law imposes varying federal tax obligations and responsibilities upon gig workers depending upon how they are classified by their employers – as either employees or independent contractors.

It seems like the overall idea here is that gig workers need to be aware of how their employers are classifying them, especially if they are independent contractors. And a general takeaway here is that surprises are not good where federal tax obligations and responsibilities are concerned.

To our listeners who want to hear more podcast like this one please subscribes to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or where ever you listen to your podcast. Take care, everyone!  And come back in about two weeks, for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206.

English callers:  214-599-0431 | Spanish callers:  214-599-0432 |Portuguese callers: 214-272-3100

Attorney Closing Remarks

This is the end of today’s Legal Thoughts!

Thank you all for giving us the opportunity to inform you about: “Federal Tax Obligations of the Gig Worker.”

If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C.  Subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever you listen to your podcast.

Stay tuned!  We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published March 5, 2021.

USCIS Reverting back to 2008 US Citizenship Test

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Immigration Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test”.  You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:

ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Immigration Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, and immigration law firm based in Dallas, Texas.
  • Our topic for today is: Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test. Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant; Reyna Munoz, Immigration Legal Assistant; and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz, will be asking the questions and I will be providing the answers to the questions on this very important immigration topic: Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 1:

Good morning Attorney, as you know we will be discussing a very important topic this week to keep our listeners informed on Immigration Matters that they ought to know about. Our topic of interest is the new United States Citizenship Test that has been announced by USCIS. Can you tell me what this is about?

Attorney Answers Question 1:

  • Good morning Reyna.
  • On February 22, 2021, the United States Citizenship and Immigration Services (USCIS) announced that it will go back to the 2008 version of the naturalization test. This will begin on March 1, 2021.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 2:

Attorney, why did USCIS decide to revert to the 2008 U.S. Citizenship test?

Attorney Answers Question 2:

  • Well Reyna, this is due to an executive order that the Biden Administration released on February 02, 2021 titled “Restoring Faith in Our Legal Immigration Systems.” USCIS determined that the revised naturalization civics test that was implemented on December 1, 2020 may inadvertently create potential barriers to the naturalization process. Reverting back to the 2008 civics test will eliminate barriers and make the process more accessible to all eligible individuals.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Wow attorney, it’s good to see that these barriers will be eliminated by reverting back to the 2008 naturalization civics test!

Question 3:

Who can take this test, attorney?

Attorney Answers Question 3:

  • Reyna, the civics test is given to applicants that are applying for United States Citizenship, it is also a requirement for naturalizing.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • This test is incredibly important then, for those who wish to become naturalized US Citizens!

Question 4:

What sort of topics does the test contain?

Attorney Answers Question 4:

  • That’s a good question, Reyna!
  • The people taking the test must demonstrate knowledge and understanding of the fundamentals of the history, principles, and form of government of the United States.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 5:

Attorney, does USCIS provide any study guides or any assistance in helping applicants study for the test??

Attorney Answers Question 5:

  • Yes, test items and study guides can be found on the Citizenship Resource Center on WWW.USCIS.GOV/CITIZENSHIP

Interviewer:  Reyna Munoz, Immigration Legal Assistant

  • Thank you for sharing this helpful website!

Question 6:

Attorney, you’ve answered a lot of important questions! My final question is, what about the people that have been studying for the 2020 test? How will they be affected by this new order?

Attorney Answers Question 6:

  • Good question, Reyna
  • Those that filed their application for naturalization on or after December 1, 2020 and before March 1, 2021 will be given the option by USCIS to take either the 2020 civics test or the 2008 civics test. There will also be a transition period where both tests are being offered. On April 19, 2021, the 2020 test will be phased out for those taking the test for the first time and those applicants that are filing on or after March 1, 2021 will take the 2008 civics test.
  • Reyna, I hope this answered your question. Do you have any more questions?

Reyna Munoz’s Concluding Remarks:

  • That answered my question perfectly! Those are all my questions for now, Attorney, thank you! This information is incredibly helpful for those that are going to take the United States Citizenship test!
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. Everybody take care!  Follow us for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620 Dallas, Texas 75206.
  • English callers: 214-599-0431 | Spanish callers:  214-599-0432. Portuguese callers:  214-272-3100.

 Attorney’s Concluding Remarks:

THIS IS THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about “Immigration Matters You Ought to Know About: USCIS Reverting back to 2008 US Citizenship Test.” If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tuned! We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

Podcast – The United States Citizenship Act of 2021 | LEGAL THOUGHTS

Coleman Jackson, P.C. | Transcript of Legal Thoughts Podcast
Published February 25, 2021.

The United States Citizenship Act of 2021

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Reyna Munoz, Immigration Legal Assistant of Coleman Jackson, P.C.   The topic of discussion is “The United States Citizenship Act of 2021”.  You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:
ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Immigration Thoughts

  • My name is Coleman Jackson, and I am an attorney at Coleman Jackson, P.C., a taxation, litigation, and immigration law firm based in Dallas, Texas.
  • Our topic for today is: The United States Citizenship Act of 2021
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant; Reyna Munoz, Immigration Legal Assistant; and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our immigration legal assistant, Reyna Munoz, will be asking the questions and I will be providing the answers to the questions on this very important immigration topic: “The United States Citizenship Act of 2021.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 1:

Attorney, I have been hearing a lot about President Biden’s Immigration Bill proposal. Can you tell me what this is all about?

Attorney Answers Question 1:

  • Yes, Reyna. On January 20, 2021, the Biden Administration released a statement that states his immigration bill named the United States Citizenship Act of 2021 has been sent to Congress. This immigration bill creates a road map to citizenship for undocumented people, it keeps families together, embraces diversity, promotes immigrant and refugee integration and citizenship. Not only that, but it also includes growing the economy, it protects workers from exploitation and improves the employment verifications process.
  • This immigration bill also discusses border protection by supplementing existing border resources with technology and infrastructure, manages the border and protects border communities, cracks down on criminal organizations, addresses the root cause of migration, improves immigration courts, and supports asylum seekers and other vulnerable populations.
  • We are not sure if this bill will get through Congress, but we believe it is important to educate the public on the contents of this immigration bill proposal.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 2:

Attorney, if this bill passes, who benefits from it?

Attorney Answers Question 2:

  • If this bill passes undocumented people will be able to apply for temporary legal status. After five years, if they pass a criminal and National security background check and pay their taxes, they will be able to apply for a green card.
  • Furthermore, dreamers, TPS holders, and immigrant farmworkers who meet specific requirements are eligible for green cards immediately under this legislation.
  • Keep in mind that this is an administration proposal. It must be negotiated and approved by both the U.S. House of Representatives and the U.S. Senate and signed by the President in order to become law.  There could be many modifications and compromises along the way.  And this comprehensive immigration proposal may never become law.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 3:

Attorney, what about US citizenship? Will undocumented people be able to apply for citizenship at any point?

Attorney Answers Question 3:

  • Yes, Reyna. As a matter of fact, all green card holders who pass additional background checks and demonstrate knowledge of English and U.S. civics can apply to become United States citizens.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

That is amazing news!

Question 4:

What about the people that have an approved family-sponsorship petition outside of the United States?

Attorney Answers Question 4:

  • This comprehensive immigration bill proposal provides a section on keeping families together. Those that have an approved family-sponsorship petition will be allowed to join their family in the United States on a temporary basis while they wait for green card to become available.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 5:

Attorney, does the bill state anything on integration for immigrants and refugees?

Attorney Answers Question 5:

  • Yes, the bill provides funding for state and local governments, private organizations, educational institutions,community-based organizations, and not for profit organizations. This funding is to expand programs and promote integrations and inclusion. It will also increase English-language instructions and provide assistance to individuals seeking to become citizens.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

That is great to hear, attorney!

Question 6:

How will this immigration bill help grow the United States economy?

Attorney Answers Question 6:

  • This bill will give the Department of Homeland Security the authority to adjust green cards based on macroeconomic conditions and it will incentivize higher wages for non-immigrant, high-skilled visas to prevent unfair competition with American workers. It will also provide dependents of H-1B visa holders work authorizations and children will be prevented from aging out of the system.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 7:

How will this immigration bill protect undocumented people in the workplace?

Attorney Answers Question 7:

  • This bill will protect migrant and seasonal workers by increasing the penalties for employers who violate labor laws. It also grants greater access for U-Visa for workers who suffer serious labor violations and cooperate with worker protection agencies.
  • Also, DHS and the Department of Labor will be required to establish a commission involving labor, employer, and civil rights organization to make recommendations for improving the employment verification process.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 8:

Attorney, if this bill passes it will be very helpful for the undocumented community that meet certain requirements. However, what does this bill have to say in regards to border security and crime?

Attorney Answers Question 8:

  • Reyna, you are right. If this bill passes it will be a great help for a lot of undocumented people. However, it will also provide more robust border security. This bill will provide funding for training and continuing education to promote agent and officer safety and professionalism. It will also provide budget to deploy technology to expedite screening and enhance the ability to identify narcotics and other contraband at every land, air, and seaport of entry. This bill also gives the ability to prosecute individuals that are involved in smuggling and trafficking networks.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 9:

It’s good to hear that this bill also addresses border security and targets criminal activity. Does the bill say anything about finding the root source of migration?

Attorney Answers Question 9:

  • Yes Reyna. This immigration bill will also dedicate funds to find the underlying cause of migration. It will also increase assistance to El Salvador, Guatemala, and Honduras. It will also re-establish the Central American Minors program which will reunite children with U.S. relatives.

Interviewer:  Reyna Munoz, Immigration Legal Assistant

Question 10:

Thank you, Attorney, for that information. What else does the bill say about protecting vulnerable individuals that are undocumented?

Attorney Answers Question 10:

  • Well Reyna, this bill will reduce immigration court backlogs and will expand training for immigration judges. It will also restore fairness and balance to the immigration system. The bill will also eliminate one year deadline for filing asylum claims and will raise the cap on visas from 10,000 to 30,000.
  • The U.S. Citizenship Act of 2021 sent to Congress by the President is in the first steps of the legislative process. Again, in order for this bill to become law, it must be passed by the U.S. House of Representatives and the U.S. Senate.  There might be many changes along the way as this bill goes through the legislative process. Its fate in the legislative process is unknown.  People should stay tune for further updates.
  • Reyna, do you have any additional questions regarding the United States Citizenship Act of 2021 proposed by President Biden?

Reyna Munoz’s Concluding Remarks:

  • No, I think those are all my questions for now Attorney. Thank you for explaining this important bill that if passed will change the lives of so many people that are undocumented.
  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever they listen to their podcast. Everybody take care!  Follow us for more taxation, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., which is located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620 Dallas, Texas 75206.
  • English callers: 214-599-0431 | Spanish callers:  214-599-0432. Portuguese callers:  214-272-3100.

 Attorney’s Concluding Remarks:

THIS IS THE END OF “LEGAL THOUGHTS” FOR NOW

  • Thanks for giving us the opportunity to inform you about “The United States Citizenship Act of 2021.”If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tuned! We are here in Dallas, Texas and want to inform, educate, and encourage our communities on topics dealing with taxation, litigation, and immigration.  Until next time, take care.

Podcast – Did Your Families ITINs Expire In 2019? | LEGAL THOUGHTS

Published July 14, 2020

Did Your Families ITINs Expire In 2019

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses and agencies from around the world in taxation, litigation and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Mayra Torres, the Public Relations Associate of Coleman Jackson, P.C.

The topic of discussion is “Potentially Over 2 Million ITINs Expired at the End of 2019:  Did your families ITINs expire in 2019.”  You can listen to this podcast here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or where ever you may listen to your podcast.

TRANSCRIPT:

ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Potentially Over 2 Million ITINs Expired at the End of 2019: Did your families ITINs expire in 2019.”
  • On this “Legal Thoughts” podcast our public relations associate, Mayra Torres will be asking the questions and I will be responding to her questions on this important tax topic: “Potentially Over 2 Million ITINs Expired at the End of 2019: Did your families ITINs expire?”

Interviewer:  Mayra Torres, Public Relations Associate

Question 1:

What is an ITIN and who uses an ITIN?

Attorney Answers Question 1:

  1. Individual Taxpayer Identification Numbers or ITINs are used by people who have federal tax filing or federal tax payment obligations under U.S. federal tax law who are not eligible for a Social Security number.
  2. ITINs are used by many Texans who are not authorized to work in the United States because they do not have work authorizations issued by the Department of Homeland Security; therefore, these workers cannot obtain a Social Security number from the Social Security Administration. I point out that an ITIN cannot be used for work authorization purposes; it is solely to be used for tax compliance purposes.
  3. Many undocumented individuals who live and work in the United States use ITINs which are issued by the United States Treasury for tax purposes. Whole families quite often use ITINs to fulfill their tax obligations and many undocumented children also use ITIN’s so that their parents can take the child tax credit, earned income credit and other benefits offered to taxpayers in the Internal Revenue Code.

Interviewer:  Mayra, Public Relations Associate

Question No. 2

  • Oh, I see; thanks for giving me a full answer to my questions.
  • I have a few more questions…: Are ITINs like a Social Security Number; I mean Social Security Numbers issued by the Social Security Administration are assigned to a person for life, right?  How about the ITIN issued by the U.S. Department of Treasury?  Is an ITIN issued to a person for life too?

Attorney Answers Question No. 2

  • Those are extremely good questions, Mayra.
  • A Social Security Number issued to a person by the Social Security Administration is issued to them for life. That means a person receives only one social security number that they use their entire lives.  Most social security numbers are assigned when U.S. citizens are children.  They keep that number for life.
  • No, the ITIN is not issued for the life of the recipient. The U.S. Congress passed a law called “Protecting Americans from Tax Hikes Act of 2015 (PATH Act) which became law on December 18, 2015.
  • The PATH Act modified U.S. Tax law, 26 U.S.C. Section 6109 as it pertains to ITINs in two major ways:
  • Number 1: ITINs that have not been used on a tax return for 3 tax periods expire.  For example, ITINs not used on a tax return in 2014, 2015, or 2016 expired December 31, 2017.  ITINs not used on a tax return for 2015, 2016 or 2017 expired December 31, 2018.  And ITINs not used on a tax return for 2016, 2017, and 2018 expired on December 31, 2019.
  • WARNING: Filing delinquent tax returns are extremely problematic because household ITINs expire by 3 years of none use automatically.  This is a major development regarding ITINs since the PATH Act became law in the United States.
  • Now, let me discuss the second major change to tax law by enactment of the PATH Act:
  • The PATH Act of 2015 authorized the Internal Revenue Service to develop and implement an annual rolling middle digit expiration schedule for all ITINs in circulation.
  • Under this rolling middle digit expiration schedule, the IRS makes an annual announcement listing the middle digits of ITINs which will expire end of that calendar year. This list of expiring ITINs is usually posted on IRS.gov and possibly in financial newspapers.
  • Since publishing the list of expiring ITINs over the years since the PATH Act, the IRS has announced that the following middle digit ITINs would expire if not properly renewed by the holder of the ITIN:
  • All ITINs with middle digits of 70, 71, 72 or 80 expired on December 31, 2017 if not properly renewed.
  • All ITINs with middle digits of 73, 74, 75, 76, 77, 81, or 82 expired on December 31, 2018.
  • All ITINs with middle digits of 83, 84, 85, 86 or 87 expired on December 31, 2019.
  • Let me just say that the IRS announced on October 10, 2019 that these ITINs can be renewed if the holder files a Form W-7 with the proper paperwork. Moreover, the IRS also said that ITINs with middle digits of 70 through 82 that expired in 2016, 2017 and 2018 can also be renewed if the proper paperwork is filed.  So people should understand that they can renew an expired ITIN.

Interviewer:  Mayra, Public Relations Associate

Question 3:

Wow that is a lot!  It’s good to know that ITIN users can renew their expiring and expired ITINs.  So how are ITINs renewed?  I mean what does an ITIN user have to do to renew their ITIN?

Attorney Answers Question No. 3 

  • Those are good questions, Mayra.
  • The ITIN holder should have received an IRS Notice CP-48 alerting them to the fact that their ITIN was about to expire. This notice would have given them detailed instructions as to how to renew their ITIN.  This Notice however could have been sent to the address where they lived at the time they originally applied for their ITIN.
  • If they did not receive the notice and instructions, they can still renew their ITIN by filing IRS Form W-7 and complying with all the instructions listed in the W-7 Instructions.
  • I might add that ITIN users should check all of the ITINs used by the members of their household and renew all the ITINs in the household even though only one or two of them have expired. The renewal can be filed for all ITINs in a household; and what I mean about household, is mom, dad and minor children who all use ITINs because they are not eligible for social security numbers.

Interviewer:  Mayra, Public Relations Associate

Question No. 4:

  • This has been informative. One last question Attorney:
  • What can happen if an ITIN expires and is not timely renewed?

Attorney Answers Question No. 4:

  • Bad things are all but certain to happen:
  • Tax Refunds could very likely to be delayed
  • The family could be denied the child tax credit with all the potential year-after-year tax difficulties that could arise from falsely claiming the child tax credit
  • The earned income credit could be denied with all the potential long term implications from falsely claiming the earned income credit
  • Accuracy Penalties and interest could be assessed by the IRS for filing inaccurate tax returns.
  • To summarize: A taxpayers failing to renew an ITIN could lead to all kinds of difficulties with the Internal Revenue Service’s Exam Unit and Collections division. Taxpayers who use these ITINs must remain vigilant annually and check to see whether any of the ITINs used in their households are set to expire either because of expiration under the 3 year of none use rule or expiration under the IRS rolling middle digit expiration schedule.

Attorney’s Concluding Remarks:

This is the end of Legal Thoughts for now!

  • Thanks for giving us the opportunity to inform you about expiration of ITINs: It’s time to check Your ITINs because they might be expired or expiring soon.  If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C.  Subscribe on Apple Podcast, Google Podcast, Spotify or wherever you listen to your podcast.  Stay tune!  We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.