Becoming a United States citizen is a long and often complicated and expensive procedure. Further, immigration fees are not tax deductible for income tax purposes. If you are seeking citizenship, prepare to pay all related fees out of pocket without the option of deduction or reimbursement. While personal fees and legal expenses are not deductible, certain business expenses are deductible on an employee’s tax return. Such deductions don’t specifically help the immigrant, however.
Any costs associated with your immigration process will not be deductible on your federal tax return. This is due to the fact that the IRS only allows deductions on expenses which are either directly or indirectly related to the generation of income.
Understanding USCIS Fees
Fees for U.S. Citizen and Immigration Services applications and petitions rose significantly as of December 31, 2016, so if you were engaged in the citizenship application process during 2017, it’s even more costly than before. For example, filing a Form N-400, the application for U.S. citizenship, cost $640 in 2018, along with a $85 biometric fee for most applicants, for a total of $725. Biometrics simply refers to taking fingerprints, getting a photograph and putting an electronic signature on file. Prior to the end of 2016, the fee for filing the N-400 was $595. The biometric fee did not change.
Paying U.S. Taxes and Claiming Deductions
While you’re out of luck as far as taking a tax deduction for visa application fees or green card cost, most of the same deductions available to U.S. citizens are enjoyed by those with resident alien status. There’s one caveat: To claim these deductions, you must reside in the U.S. for the entire year. Because the U.S. requires the reporting of income earned globally, you must include income coming from outside of the country, including any rental or other income generated in your native land. Your income is subject to the same tax brackets and rates as U.S. citizens. Claim your deductions by itemizing on Schedule A of Form 1040. For 2017, the standard deduction is $6,350 for single filers and $12,700 for those married filing jointly. This standard deduction increases to $12,000 for single filers and $24,000 for married couples filing jointly as of 2018 due to recent tax reforms.
Note that you can take these deductions on Schedule A only if you choose to itemize deductions. If your standard deductions are more than your itemized deductions, then your best choice is to just use the standard deduction, and therefore pay less tax.
Identifying Eligible Deductions
Eligible deductions for all taxpayers (resident aliens and U.S. citizens) include:
- State and local income taxes
- Real estate taxes
- Mortgage interest
- Charitable contributions
- Unreimbursed medical and dental expenses exceeding 7.5 percent of your adjusted gross income (AGI) for tax years 2017 and 2018
- Miscellaneous deductions
Claiming Qualified Exemptions
The exemption rules for U.S. citizens and resident aliens are similar, as long as a resident alien’s spouse and other dependents all have their own Social Security numbers or individual taxpayer numbers. The IRS allows exemptions for spouses who have not been in the U.S. for the entire year, and even for those who have not yet arrived in this country. It's worth noting, that for tax years 2018 through 2025, the Tax Cuts and Jobs Act of 2017 has suspended personal exemptions. You can still, however, claim exceptions through tax year 2017.
Deducting Moving Expenses
Even though you can’t deduct your immigration expenses, there is one major expense related to your relocation to the U.S. that is deductible. That is the cost of moving to the U.S. from outside of the country because of your job. To qualify for a moving expense deduction, you must meet several tests. These include:
- Time relation – you can generally deduct moving expenses if they occur within one year from the time you initially reported to work.
- Distance – your new home must prove closer to your new work location than your prior home. For most immigrants, this is not an issue.
- Employment time – if you are an employee, you can satisfy the employment time test by working for at least 39 weeks within the first year at your new job. If you are self-employed, the time test is 78 weeks.
Moving expense deductions add up, so using them may end up as some consolation for the lack of deductions for immigration-related fees. Like personal exemptions, moving expense deductions were phased out for tax years 2018 through 2025, but you can deduct your moving expenses if they were incurred during the 2017 tax year or prior.
- IRS: Taxation of U.S. Resident Aliens
- IRS: Publication 519 (2017), U.S. Tax Guide for Aliens
- USCIS: Our Fees
- IRS: Moving Expenses to and from the United States
- IRS: 2017 Federal Tax Rates, Personal Exemptions, and Standard Deductions IRS Tax Brackets & Deduction Amounts for Tax Year 2017
- H&R Block: Tax Reform Eliminates the Moving Expense Deduction
- Forbes: IRS Announces 2018 Tax Rates, Standard Deductions, Exemption Amounts And More
- Internal Revenue Service. "Revenue Procedure 2018-57," Page 9. Accessed Nov. 27, 2019.
- Internal Revenue Service. "About Schedule A (Form 1040), Itemized Deductions." Accessed Nov. 27, 2019.
- Internal Revenue Service. "Topic No. 501: Should I Itemize?" Accessed Nov. 27, 2019.
- Internal Revenue Service. "Revenue Procedure 2018-57," Page 16. Accessed Nov. 27, 2019.
- Internal Revenue Service. "Publication 5307: Tax Reform Basics for Individuals and Families," Page 7. Accessed Nov. 27, 2019.
- Internal Revenue Service. "Publication 5307: Tax Reform Basics for Individuals and Families," Pages 8–10. Accessed Nov. 27, 2019.
- Internal Revenue Service. "Topic No. 419: Gambling Income and Losses." Accessed Nov. 27, 2019.
- Internal Revenue Service. "Topic No. 456: Student Loan Interest Deduction." Accessed Dec. 6, 2019.
- Internal Revenue Service. "Topic No. 458: Educator Expense Deduction." Accessed Nov. 27, 2019.
- Internal Revenue Service. "Publication 5307: Tax Reform Basics for Individuals and Families," Pages 8–12. Accessed Nov. 27, 2019.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including Sapling, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.