When you apply for U.S. citizenship, you are going to be asked about your history of paying taxes in the United States. Specifically, on the N-400 Application for Naturalization, U.S. Citizenship and Immigration Services (USCIS) will ask “Do you owe any overdue federal, state, or local taxes?,” “Have you ever not filed a federal, state, or local tax return since you became a lawful permanent resident?,” and, if you didn’t file, “Did you consider yourself to be a non-U.S. resident?.”
USCIS asks these various tax questions as part of its test of your moral character. You must prove to USCIS that you have been a person of good moral character during the five years before you file your N-400, or three years if you will be filing under rule that allows spouses of U.S. citizens to apply after three years of permanent residency.
Anyone who has committed an “unlawful act” during the relevant period may be found to lack good moral character, and failure to file a tax return or pay taxes owed is considered to be an unlawful act, whether you were convicted of a crime because of it or not.
At your citizenship interview, USCIS might ask to see your tax returns, or a tax transcript, for the past five (or three) years to verify that you did file your returns. If you still owe unpaid taxes, you will have to show USCIS a signed repayment agreement from the Internal Revenue Service (IRS) and/or your state or local tax office and documentation showing the current status of your repayment program.
If you need to answer “yes” to any of the tax-related questions on the Form N-400, you should, before sending it in, attach a sheet explaining why you answered “yes.”
A “yes” answer to the overdue taxes question isn’t going to be a problem if you are in compliance with a repayment program, and a “yes” answer to the question asking whether you have ever not filed a tax return isn’t going to be a problem if you weren’t required to file a tax return that year. (You should verify your belief that you weren’t required to file a tax return with a tax specialist before applying for citizenship.) It also won’t be a problem if you file the tax return late, before applying for citizenship.
If you didn’t file a tax return because you considered yourself to be a non-U.S. resident, that’s going to be a problem, because as a lawful permanent resident you were supposed to be residing in the United States.
When USCIS looks at the tax returns you submitted, it might decide that you were trying to defraud the IRS or state or local government by avoiding taxes—even if the government accepted your return without a problem. What would make USCIS suspicious is differences in facts submitted on your N-400 and those on your tax return, such as marital status, number of children, and employment. Don’t try to avoid this problem by giving false information on your N-400 to match what was on a tax return—that’s a guaranteed way to have your citizenship application denied.
Even if USCIS finds that you have committed an unlawful tax-related act, it can still find that you have good moral character if you failed to file a return or pay taxes because of “extenuating circumstances.” This means something out of the ordinary that prevented you from complying with the law. For tax problems this is rare, but an example might be a situation where you could not make a payment on overdue taxes because of emergency medical bills. Make sure you explain any extenuating circumstances on your supplement sheet to the N-400.
