Will I be asking for trouble with the IRS?

Question

My husband is a Mexican immigrant and we were advised by an immigration atty to get a Tax ID # from the IRS for him so he could be claimed as a dependant on my tax return. However, I later found out that if I claim him with his Tax ID#, I will no longer be able to claim the Earned Income Credit, which I really depend on every year to get caught up on things with my 2 kids and their school expenses. So now I'm thinking I will just file as Head of Household as I have for years and not include him as a dependant. Do you think the IRS will look at this as fraud? My husband is here illegally so basically he is a non-person in the eyes of the government, so hopefully the IRS will not notice that I had filled out that form to get him the Tax ID # and now am not including him on my return. He did work for 4 mos. out of 2006 where they took out taxes & supposedly sent his portion to the IRS on his Tax ID# but now he is working for a restaurant for cash - no taxes taken out. I'm so confused

Thanks H&R Block lady!! When he got a paycheck, they did it under his Tax ID#, but it was for only 4 months & will come up to less than $5k for that total time. I have been real careful about keeping our finances separate so I don't think it will appear as though I am making more money. He makes a lot less than I do so his main contribution to us is food money - I can cover my bills on my own. We would love for him to become legal, but that is up to the US government - right now they would rather build a big fence than come up with a way for illegals already here in the States to become legal - so we wait - we do have a petition filed with INS so he is basically in line when & if they finally come up with a system - thank you everyone for your answers!

whaaa Mr. Taxman. This actually is happening to me because I DID try to get legitimate, but I've found out through this personal EIC debacle that it would have been better to continue to fly under the radar on everything than try to start the process of getting my husband legal. When we got married last spring, it seemed like the politicians would come up with a viable way for my husband to become a part of the "system" but when it stalled out, I'm starting to realize the financial ramifications I will encounter next spring when I loose out on a big chunk of change that I would otherwise have had to pay for all the things my daughter will need/want as she graduates from high school and I was just hoping/searching for a way for this EIC thing to work out at least one more year. Maybe this Q&A will help someone else considering applying for Tax ID# - it's not the pancea we were hoping for. His cash job is the biggest Chinese rest. in town - would hate to be person who shuts that down

Answer 1

Regardless whether the person to whom you marry is a citizen of the US or not, if you are married and your spouse lives with you at any time during the last half of the year, you can NOT file as Head of Household. As long as you are married as of December 31st, you can NOT file as single. So, legally, you have two choices:

1) File as Married Filing Separately

2) File as Married Filing Jointly with your spouse's name and tax ID number. If you don't have the number, leave the space blank and take the tax return to the IRS along with a copy of his birth certificate, marriage certificate, and a W-7 form. You may also be able to mail them all in. Regardless, do what your attorney says.

He will need to include his income as well as yours on the joint return. Even if he used someone else's SSN with his employer, he needs to cross out the SSN number on the W-2 and write in his ITIN.

Regardless if you include him or not, you will not get the EIC, but you will get the Child Tax Credit. I know you may depend on the EIC, but the moment you married someone who doesn't have a valid SSN, whether he works or not, you lost your ability to claim the EIC. The only way to claim it is if he does not live with you at all from July 1st through the end of the year. Then, you can claim Head of Household. Filing as Married Filing Separate negates EIC totally.

Good news though. If you do file as Married Filing Jointly and your spouse eventually does get a SSN, you an amend the last three year's tax returns and get the back EIC you missed out on.

The IRS is not the INS. They don't care that someone is not allowed to work in the US. They won't notify the INS or anybody else. They don't do this because they don't want people not doing their tax returns for fear of reprisal. But, it is definitely fraud and the IRS will come after you if you file as Head of Household when you lived with your spouse at any time from July 1st through December 31st. Your spouse is NOT a non-person through the eyes of the IRS.

Now that I reread your question, I see that you filed for a tax ID. So, your spouse already has an ITIN? An ITIN is 9 digits that begins with a 9. If he has it, he absolutely could NOT have used it to work. I bet a million dollars that it does NOT appear on his W-2. That would be illegal for his employer to accept an ITIN for work. Working for cash is also illegal. Do you realize all the illegal things you and your spouse are doing? You are living on the fringe of society breaking all the rules along the way and you want the IRS to pay you EIC on top of all of that? Please change your ways. Please become more legitimate. You could end up in big trouble. What will happen to your children if you end up in jail and your husband ends up deported?

OK, I don't want to scare you, but you are breaking a lot of laws. Don't make it worse by claiming EIC as Head of Household. Also, inform your husband of the dangers of working for cash. In fact, you may be able to report the employer to the IRS and get rewarded for it.

Whatever you do, go back to your attorney and discuss the ramification in detail. Print out this answer as a starting point. And good luck!

Answer 2

I think that you need to talk to the immigration lawyer about this because you do not want the IRS to get involved and keep your money. If he is your legal husband you should both be filing either jointly or separately, and since you're filing head of household and taking the EIC credit you could really be messing up big time. Since your husband has a Tax ID# he is now in the system so they will probably notice it. Please talk to the attorney before you end up owing the IRS a lot of money.

Answer 3

Since he has never filed a tax return, theres no reason to start now. If you do it the other way, your are more likely to land in trouble with the IRS.
However, filing head of household, and if you claim a lot of expenses, which you paid with his income and yours, and they add up to more than your income, it may look fishy but I wouldnt worry about it.
When he worked for a paycheck instead of cash, was he using his Tax ID? If he earned more than 5000$, and used his Tax ID, and not some stolen SSN, he will have to file by law a tax return. But if he earned less than 5000$ he doesnt have to, and you dont have to worry.
But for your sake, he should try to become legal. He will be able to earn more, and you wont be dependant on your Earned Income Credit anymore

Answer 4

You will not be held liable for their failure to disclose. You will be held liable for your own failure to disclose. If you are required to issue a W-2 or 1099 to the person and you don't, then you will be held liable for that. If you issue a W-2 or 1099 to the person and you don't give a copy to the IRS, then you will be held liable for that. If you are required to pay household employment taxes and you don't, then you will be held liable for that. Frankly, the other person's failure to disclose is the one thing for which you won't be held liable.

Answer 5

you need to check with a local accountant besides federal law and the irs local and state taxes can raise irs flags, an accountant in your state will best be able to answer your questions.

Answer 6

You need to talk to a tax attorney or you can email the IRS.