my parents are new immigrants, income tax questions

Paying for College
1

<p>FAFSA 2011-2012
i have been living in USA for two years, my parents left me here and then they came back permanently this year. Obviously, they did not file the 2009 income tax, and they are planning to file the 2010 one, even though they have 0 income in america. what should i put in the parent finance section then? can i put they will file income tax 1040 for 2010, put all the income 0, and then skip the additional financial questions?</p>

<p>p.s. how do i know if they are eligible for 1040a or 1040ez???.,.,.,.</p>

2

<p>Did they file taxes or earn income in another country in 2010? If so, that income needs to be reported on the FAFSA. They would convert that income from the other country into U.S. dollars and enter that.</p>

<p>U.S. citizens working and earning an income abroad are required to file U.S. income tax returns in most cases. This doesn’t mean they would have paid…just that tney should have filed.</p>

<p>Are you a citizen or permanent resident? if not, you can’t complete the FAFSA.</p>

3

<p>If you are a citizen/permanent resident instead of a social security number you would put in all 0’s in the ssn section for your parents.</p>

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<p>everyone in my family are permanent residents. we all have ssn.</p>

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<p>why do i have to put 0s???</p>

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<p>If you are all permanent residents you use the SS number. If the student is a citizen/permanent resident and the parents are NOT citizens or are not permanent residents…then the parents use 0s where the SSN should go.</p>

<p>Regardless…your parents must report the income they earned in 2010 even if it was in another country.</p>

7

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<p>My Bad, brain going faster than fingers. what I meant to say was</p>

<p>If you are a citizen/permanent resident and your parents are not US citzens/PR instead of a social security number you would put in all 0’s in the ssn section for your parents.</p>

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<p>yes my parents do have income from my native country. but what if they file IRS 1040 with no income for 2010? in that case, can i not show 0s in my FAFSA?</p>

<p>if they have to show their income form foreign country, i have to convert the money to USD. but in that case, which tax form should they file? 1040 or the foreign tax?</p>

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<p>Your parents can NOT put $0 for income for 2010 if they EARNED income. It doesn’t matter that they earned it outside of this country. They are still required to put their amount of income converted into U.S. dollars on the FAFSA form.</p>

<p>I’m not a tax expert on international earnings…but they probably should be filing taxes in the country in which they resided and earned that money. </p>

<p>But the bottom line is…they MUST report their 2010 earnings on the financial aid application forms…no exceptions…and it doesn’t matter WHERE it was earned.</p>

<p>If they did not work in the United States, they probably are not required to file a return here at all.</p>

<p>You can’t just decide to file a U.S. tax form and put $0 for income on it…and then use that for your financial aid applications. If your parents had income ANYWHERE…that is the income you put on the financial aid forms.</p>

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<p>hmm… so i should just put their income from outside and indicate that they are going to filex tax for 2010?</p>

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<p>Yes…they do have income, they just may not have taxable income. I believe all US citizens and permanent residents are supposed to file with any foreign income…they may need to consult a US tax preparer in order to file correctly, which will enable you to file your FAFSA correctly.</p>

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<p>A little off topic…but if your parents are new immigrants, how is it that they already have permanent resident status?</p>

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It is very possible. Many immigrants enter the country with the permanent resident status (green card). Some possibilities are 1) their immediate relatives (US citizens) might have sponsored them for a green card or 2) they might have won the diversity visa lottery, etc.</p>

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<p>All US citizens and Permanent Residents are expected to file US federal tax returns. However, if they are living and working outside the US, it is quite possible that all of their income is foreign and so is not taxable in the US. </p>

<p>They would file Form 1040 with Form 1116 (Foreign Tax Credit) if they paid taxes in the foreign country, and Form 2555 (Foreign Earned Income) to report the foreign income.</p>

<p>Look for copies of the forms and instructions at [Internal</a> Revenue Service](<a href=“http://www.irs.gov%5DInternal”>http://www.irs.gov)</p>

<p>Since your parents are Permanent Residents, they need to use the “Physical Presence Test” for the Form 2555. Using the “Bona Fide Residence Test” could cause problems for their PR status.</p>

<p>It isn’t particularly difficult to do this paperwork, it just is a bit tedious. I’m not a trained tax expert, but I managed to file these things for the eight years that Happydad and I were living and working overseas.</p>