Prisoners don't get very many rights other than the proverbial "three hots and a cot," but they do get the same opportunities to pay income taxes as every other American. While the responsibilities are the same, prisoners lose some of the benefits available to other taxpayers, like the ability to collect the earned-income tax credit.
Responsibility to File
Every American has to file a tax return if they make enough money to meet the income threshold. For a single person under age 65, the threshold is equal to the combination of the standard deduction and a personal exemption. As of 2013, a prisoner wouldn't have to file a return if he made less than $9,750 a year. Given that the highest rate of pay offered by the Federal Bureau Prisons is $1.15 per hour, even an inmate working eight hours a day would be thousands of dollars away from reaching the threshold.
The timelines for tax filing don't stop when an inmate goes into prison. While an inmate probably won't have to pay taxes on prison income, every other rule stays in place. If someone has a tax debt when entering prison, the Internal Revenue Service may stop collection efforts but may continue allowing interest and penalties to accrue. The IRS also won't let a prisoner file a return more than three years after it is due for collection of a refund.
Earned Income Tax Credit
While prison wages are below the income limit to qualify for the earned-income tax credit, inmates are banned from claiming the credit. As of 2013, a single person outside of prison earning $14,340 or less qualifies for the credit even if he has no children. Married people or people with children can earn more.
While a prisoner may be able to spend his time behind bars without filing any tax returns, his spouse will probably have to. An inmate's spouse has the same tax responsibilities as anyone else. To make tax filings easier for their spouses, prisoners can use IRS Form 2848 to give their spouses the power of attorney to file and sign a joint return on their behalf.
- Forbes: A Beginner's Guide to Taxes ...
- Federal Bureau of Prisons: Work Programs
- Federal Interagency Reentry Council: Reentry MythBusters: On Federal Taxes
- IRS: Publication 4924, Get Right With Your Taxes
- IRS: Preview of 2013 EITC Income Limits ...
- IRS: Form 2848: Power of Attorney and Declaration of Representative
- Prison Policy Initiative. “Mass Incarceration: The Whole Pie 2020.” Accessed August 11, 2020.
- U.S. Department of Justice. “Measuring Recidivism.” Accessed August 11, 2020.
- The Sentencing Project. “Capitalizing on Mass Incarceration: U.S. Growth in Private Prisons.” Accessed August 11, 2020.
- The Brookings Institution. “THE ECONOMICS OF PRIVATE PRISONS,” Pages 4-5. Accessed August 11, 2020.
- Associated Press. “Audit: private prisons cost more than state-run prisons.” Accessed August 11, 2020.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.