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BancorpSouth Review: Checking, Savings, CD, Money Market and IRA Accounts

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

BancorpSouth’s checking account options

BancorpSouth My Way Checking

This entry-level checking account does not earn interest.
  • Minimum opening deposit: $50
  • Monthly account maintenance fee: $5 (waived if you meet specific requirements, detailed below)
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call the bank to ask about current costs associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

This checking doesn’t earn interest, but it’s relatively easy to avoid monthly fees. You can avoid the above-referenced service charge by meeting one these requirements during the statement cycle:

  • $100 minimum daily balance, or
  • Five debit card purchase transactions, or
  • At least one direct deposit of $100 or more

The My Way Checking account also comes with access to BudgetWi$e, the bank’s free online budgeting tool.

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BancorpSouth Performance Checking

This account lets you earn higher interest rates if you have a relationship with the bank.
APYMinimum Balance to Earn APY
0.10%$30,000+
1.76%$0.01 - $30,000
  • Minimum opening deposit: $50
  • Monthly account maintenance fee: $10 (waived if you meet certain requirements, detailed below)
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call the bank to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: The bank will refund their $2 ATM fee plus up to $2 in fees paid by the ATM owner for the first five non-BancorpSouth transactions if the account holder meets all three of the higher rate requirements listed below.
  • Overdraft fee: $36 per item

The standard interest rate for this checking account is pretty meager, but it may be easy for you to earn the bonus rate. The Bonus APY of 1.76% applies on balances of $30,000 or less if you meet these three requirements each statement period:

  • Must have at least one direct credit or debit, such as direct deposit or automatic bill payment
  • Must make at least 12 debit card purchase transactions
  • Must be enrolled to receive online statements

You’ll definitely want to make sure you meet the requirements to receive the bonus rate every month. Doing so will not only get you a higher APY, but you’ll also be able to avoid the $10 monthly service charge and get up to $10 in ATM fees refunded each month. You can also avoid the monthly service charge by maintaining a $1,000 minimum daily balance in your account.

The Performance Checking account also comes with access to BudgetWi$e, BancorpSouth’s free online budgeting tool.

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BancorpSouth Interest Plus Checking

This account lets you earn higher interest rates as you deposit more money in your account.
APY
Minimum Balance to Earn APY
0.10%$0.01 - $4,999.99
0.12%$5,000 - $9,999.99
0.15%$10,000 - $24,999.99
0.17%$25,000 - $49,999.99
0.20%$50,000 - $99,999.99
0.25%$100,000+
  • Minimum opening deposit: $1,000
  • Monthly account maintenance fee: $10 (waived if you maintain a $1,000 minimum daily balance)
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call BancorpSouth to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

The interest rates available for this checking account aren’t exactly generous. The highest rates available on this account are quite a bit lower than the bonus rate available through the Performing Checking account. However, since the bonus rate is available only on balances up to $30,000, this account might be a better option if you maintain a higher balance in your checking account.

And there’s one more benefit that might be appealing to people who prefer paper statements with imaged checks. This service is free for Interest Plus Checking account holders, whereas some of BancorpSouth’s other checking account options charge a fee.

The Interest Plus Checking account also comes with access to BudgetWi$e, BancorpSouth’s free online budgeting tool.

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BancorpSouth Heritage Checking

This account gives seniors age 62 and older the ability to earn travel and bonus rewards.
APYMinimum Balance to Earn APY
0.10%$0.01
  • Minimum opening deposit: $50
  • Monthly account maintenance fee: $8 (waived if you maintain a $500 minimum daily balance)
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call BancorpSouth to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

The interest rates available for this checking account are modest, but it offers some unique perks. Account holders receive:

  • One free box of checks per year
  • $100,000 common carrier Accidental Death and Dismemberment Insurance
  • A free Savers Club Book with discount offers at over 3,000 participating lodging properties, theme parks and car rental companies
  • The ability to receive discounts and earn cash rewards when they arrange travel through a third-party partner
  • Free copies of Sojourns magazine

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BancorpSouth Student Checking

This account doesn’t earn interest, but it makes free checking available to students age 24 and under with no minimum balance requirements.
  • Minimum opening deposit: $50
  • Monthly account maintenance fee: $0
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call BancorpSouth to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

This checking account doesn’t earn interest, but with no minimum monthly balance requirements and no monthly maintenance fee, it’s an affordable option for college students. Plus, it comes with a few nice features. Account holders receive their first box of 25 checks printed at no charge and have the option to upgrade to checks with their college’s logo.

The Student Checking account is available for students through the age of 24. After age 24, the account will automatically be converted to another standard checking account.

The Student Checking account also comes with access to BudgetWi$e, BancorpSouth’s free online budgeting tool.

How to get BancorpSouth’s checking accounts

You’ll need to provide some basic personal information, such as your name, Social Security number, date of birth, address and driver’s license number. You’ll also need details for your current U.S. checking or savings account to fund your new account. If you don’t already have a U.S. checking or savings account, you’ll have to apply in person at a BancorpSouth location.

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How BancorpSouth’s checking accounts compare

This bank’s checking accounts offer modest interest rates compared with the best online checking accounts out there. Truly fee-free checking is only available to students, although it’s possible to avoid monthly service fees rather easily.

If you’re between the ages of 24 and 62 and don’t mind jumping through a few hoops to meet the requirements each month, you’ll earn a better rate with BancorpSouth’s Performance Checking than you will with their other accounts. However, you might be able to earn more by keeping less money in your checking and more in another interest-bearing account.

BancorpSouth’s savings account options

BancorpSouth My Goal Savings

A good beginner account focused on saving toward a goal.
APYMinimum Balance to Earn APY
0.15%$0.01
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: $0.01
  • Monthly account maintenance fee: $5 (waived if you maintain a minimum balance of $100)
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call BancorpSouth to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

This is BancorpSouth’s basic savings account, and an option if you’re looking for a simple, no-frills place to store your cash. This account does have a monthly fee, but you can easily avoid it by keeping a minimum of $100 in your account.

Per Regulation D, you’re allowed up to six certain withdrawals or transfers per month. After that, there’s a $5 fee for each transaction from the bank.

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BancorpSouth Performance Savings

Earn a higher rate of interest by making a minimum monthly deposit.

Account holders can earn a higher interest rate on balances of $100,000 or less by making a minimum of $50 in total deposits into the account through either online banking transfer or ACH deposit. If you don’t make the minimum deposit, your account will earn the standard rate of interest. Call BancorpSouth to learn about the current rates.

  • Minimum opening deposit: $50
  • Minimum balance to earn APY: $0.01
  • Monthly account maintenance fee: $2.50 (waived if you maintain a minimum balance of $50)
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call BancorpSouth to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

This savings account is an option if you plan to save at least $50 per month and can take advantage of the bonus interest rate. Even if you skip a month, the service fee is half that of the My Goal Savings account.

Again, watch out if you plan to make a lot of withdrawals each month. You’re allowed up to six certain withdrawals or transfers each month, per Federal Regulation D. After that, there’s a $5 fee for each transaction from the bank.

You cannot open a Performance Checking account online. Use BancorpSouth’s Find a Branch tool to locate a branch near you and sign up in person.

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BancorpSouth Select Savings

This account has a higher minimum balance requirement to open an account and avoid fees, but it also earns a higher interest rate.
APYMinimum Balance to Earn APY
0.25%$0.01
  • Minimum opening deposit: $1,000
  • Minimum balance to earn APY: $0.01
  • Quarterly account maintenance fee: $15 (waived if you maintain a minimum balance of $1,000)
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call BancorpSouth to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

For people with a little more money available to open an account, the Select Savings account pays a higher rate of interest than you’ll get from BancorpSouth’s My Goal Savings account. This account does have a quarterly maintenance fee, but you can avoid it by keeping a minimum of $1,000 in the account.

Per Regulation D, you’re allowed up to six certain withdrawals or transfers each month. After that, there’s a $5 fee for each transaction from the bank.

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BancorpSouth Young Savers Savings

A low-fee alternative for teaching your children how to save.

Call BancorpSouth to learn about the current rates.

  • Minimum opening deposit: $25
  • Minimum balance to earn APY: $0.01
  • Monthly account maintenance fee: $0
  • ATM fee: No fee for using BancorpSouth ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call BancorpSouth to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

This account is only available to account holders below 17 years of age and requires a parent or guardian over 18 to be a joint account holder. Once the account holder reaches age 18, the account will convert to a My Goal Savings account.It’s a good account for teaching kids the value of savings because the minimum opening deposit is low, there’s no minimum balance requirement and no monthly service charge.

You’re allowed up to six certain withdrawals or transfer each month, per Regulation D. After that, there’s a $5 fee for each transaction imposed by the bank.

You cannot open a Young Savers Checking account online. Use BancorpSouth’s Find a Branch tool to locate a branch near you and sign up in person.

How to get a Bancop South savings account

You’ll need to provide some basic personal information, such as your name, Social Security number, date of birth, address and driver’s license number. You’ll also need details for your current U.S. checking or savings account to fund your new account. If you don’t already have a U.S. checking or savings account, you’ll have to apply in person at a BancorpSouth location.

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How BancorpSouth’s savings accounts compare

These savings accounts make it easy to avoid monthly or quarterly account maintenance fees, but their interest rates aren’t really that competitive. You’ll earn a better return on your money by opening one of these top online savings accounts.

BancorpSouth’s CD rates

BancorpSouth Certificate of Deposit

Earn a higher rate of return than a standard savings account.

Interest rates are determined at the time of purchase. Call BancorpSouth to discover current rates.

  • Minimum opening deposit: $1,000 – $5,000, depending on maturity
  • Minimum balance amount to earn APY: $1,000 – $5,000, depending on maturity
  • Early withdrawal penalty: Early withdrawal penalties apply. Call BancorpSouth to learn more.

If you want to earn a higher rate of interest and don’t mind tying up your money for anywhere from one to 60-plus months, consider a BancorpSouth CD. The longer the term, the higher the rate.

You can open a CD with BancorpSouth with as little as $1,000, so there’s a low barrier to entry.

You cannot open a BancorpSouth CD online. Use their Find a Branch tool to locate a branch near you and apply in person.

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How BancorpSouth’s CD rates compare

BancorpSouth doesn’t publish their CD rates online, so it’s impossible to know how they compare to the CDs that you can get elsewhere. However, we do like their low opening balance requirements and a variety of maturity terms.

BancorpSouth’s money market account options

BancorpSouth Money Market Select

Earn tiered interest rates based on your account balance.
APYMinimum Balance to Earn APY
0.10%$0.01 - $9,999.99
0.10%$10,000 - $24,999.99
0.15%$25,000 - $49,999.99
0.20%$50,000 - $99,999.99
0.25%$100,000 - $149,999.99
0.30%$150,000 - $499,999.99
0.50%$500,000+
  • Minimum opening deposit: $1,000
  • Minimum balance to earn APY: $0.01
  • Monthly account maintenance fee: $10 (waived if you maintain a $10,000 minimum monthly ledger balance)
  • ATM fee: No fee for using the bank’s ATMs. If you use an out-of-network ATM in the United States, you may be charged a fee by both BancorpSouth and the ATM’s owner. Call the bank to ask about current fees associated with out-of-network ATMs. If you use a foreign ATM, you’ll pay $2 per transaction, plus a 2% cross-border fee.
  • ATM fee refund: None
  • Overdraft fee: $36 per item

You’ll only need $1,000 to open a Money Market Select account, but you’ll need 10 times that amount to avoid the monthly fee mentioned above. If you can clear that hurdle, this is a way to earn a little more interest than you’d get from some of the bank’s checking account options. You’ll have access to unlimited over-the-counter and ATM transaction, but more than six withdrawals during any given month will hit you with a $10 fee per withdrawal.Keep in mind, though, you must have a BancorpSouth checking account to open a Money Market Select account.

How to get BancorpSouth’s Money Market Select account

You’ll need to provide some basic personal information, such as your name, Social Security number, date of birth, address and driver’s license number. You’ll also need details for your current U.S. checking or savings account to fund your new account. If you don’t already have a U.S. checking or savings account, you’ll have to apply in person at a BancorpSouth location.

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How BancorpSouth’s money market accounts compare

This account has a low opening deposit requirement, but the interest rates are low, too. You could potentially earn a better rate of return with a money market account from an internet bank.

BancorpSouth’s IRA account options

IRA

BancorpSouth’s IRA lets you save for retirement with flexible contribution options.

Call BancorpSouth the learn the current rates.

  • Minimum opening deposit: Call the bank to learn more
  • Minimum balance to earn APY: Call the bank to learn more
  • Monthly account maintenance fee: None

If you’re under age 70½, you can contribute to an IRA and take advantage of potential tax savings. BancorpSouth’s IRA does not charge a monthly service fee, however, if you need to withdraw funds early, those withdrawals may be taxed as earned income and incur an early withdrawal penalty.

You’ll have to call the bank to learn more about interest rates associated with this account and how to open the account.

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How BancorpSouth’s IRA accounts compare

We don’t know how BancorpSouth’s IRA CDs compare because the bank chooses not to advertise its rates. You’ll have to call to find out. If you do, be sure to compare the rates they’re paying to our list of the top IRA CD rates.

Overall review of BancorpSouth’s banking products

BancorpSouth does offer a wide variety of account options for checking and savings, and while many of their accounts to charge a monthly or quarterly service fee, they make it easy to avoid the fees by maintaining relatively low minimum balances, using your debit card, or using direct deposit.

But if you’re like most people, you probably want to put your money where it will earn the best interest rate. If that’s the case, BancorpSouth might not be the best option for you because their interest rates just aren’t competitive with those offered by other banks. With many of its rates not published online, the bank doesn’t make it easy for you to shop around.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Janet Berry-Johnson
Janet Berry-Johnson |

Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here

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How to get an ITIN

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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If you’ve ever looked at Form 1040, the one individuals use to file a U.S. federal income tax return, you may have noticed that one of the first pieces of information requested is a Social Security number (SSN). The IRS asks for this number from the taxpayer, spouse and any dependents listed on the return.

Despite the seemingly straightforward fields on the form, you don’t need an SSN to file a U.S. tax return. The IRS provides individual taxpayer identification numbers (ITINs) for people who don’t qualify for an SSN but need to file a return. If you’re in that group, read on to learn more about how to get an ITIN.

Why do you need an ITIN?

U.S. citizens aren’t the only ones required to file tax returns. Nonresident aliens, U.S. resident aliens, and their dependents or spouses may be required to file. Typically, the IRS uses an SSN to process tax returns and account for tax payments. But not all taxpayers are eligible for an SSN.

According to the Social Security Administration (SSA), only noncitizens authorized to work in the U.S. can get an SSN. You’ll need to either apply in your home country before coming to the U.S., or visit a Social Security office in person once you arrive in the U.S. If you visit an SSA office in person, you’ll need to show documentation to prove your identity and work-authorized immigration status.

So, if you are required to file a return but aren’t eligible for an SSN, you need an ITIN.

Who needs an ITIN?

The IRS Instructions for Form 1040NR include detailed information on the filing requirements for nonresident aliens. This generally consists of all nonresident aliens who:

  • Do business in the U.S. or have earnings from self-employment
  • Received income from U.S. sources and did not have all of the tax they owe withheld from that income
  • Owe special taxes, such as the alternative minimum tax, additional tax on an IRA or another tax-favored account, household employment taxes, Social Security or Medicare taxes on tips
  • Received a distribution from a health savings account (HSA), Archer medical savings account (MSA) or Advantage MSA account
  • Received an advanced payment of the premium tax credit or health coverage tax credit

IRS Publication 501 includes more information on filing requirements for resident aliens, which are based on filing status, age and gross income.

How to get an ITIN

Once you’ve determined that you need to file a tax return but aren’t eligible for an SSN, there are two ways to apply for an ITIN: by mail or in person.

The application

The first step in applying for an ITIN is to complete Form W-7, Application for IRS Individual Taxpayer Identification Number.

In addition to Form W-7, you’ll need to provide documentation to prove your identity and foreign status. The instructions for Form W-7 include a list of acceptable documents, including:

  • Passport
  • U.S. Citizenship and Immigration Services photo ID
  • Visa issued by the U.S. Department of State
  • U.S. driver’s license
  • U.S. military ID card
  • Foreign driver’s license
  • Foreign military ID card
  • National ID card containing your name, photograph, address, date of birth and an expiration date
  • U.S. state identification card
  • Foreign voter’s registration card
  • Civil birth certificate
  • Medical records (for dependents under age 6)
  • School records (for dependents under age 18, if a student)

If you plan on mailing your application, the instructions say you can include either original or certified copies of the above documents, and your paperwork will be returned to you at the mailing address listed on your ITIN application within 60 days. However, you risk having your original documents lost in the mail. For that reason, it’s a good idea to either get certified copies of your original documents or apply in person.

If this is your first time applying for an ITIN, you will submit your application with your tax return. You won’t be able to file your tax return electronically without an SSN or ITIN, so simply attach Form W-7 to the front of your ITIN and leave the SSN area blank for anyone on the return who is applying for an ITIN (such as a spouse or dependent).

There are a few exceptions to the requirement to apply for an ITIN with your tax return:

  • You get third-party withholding on passive income
  • You receive salary, wages, honoraria payments, gambling winnings or other compensation that is exempt due to a tax treaty
  • A third party reports your mortgage interest
  • You’ve profited from the sale of property within the U.S.
  • You have reporting obligations under Treasury Decision 9363

These exceptions, and the additional documentation you must submit with your ITIN application, are explained in greater detail in the Exceptions Tables in the IRS Instructions for Form W-7.

Submitting the application

Once you’ve completed Form W-7 and collected the required documentation, you can apply via the following methods:

To apply by mail:

Mail Form W-7, your tax return (unless one of the above exceptions applies), and other required documents to:

Internal Revenue Service
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

To apply in person:

There are two ways to apply in person. You can use the services of an IRS-authorized Acceptance Agent or make an appointment at an IRS Taxpayer Assistance Center. The IRS maintains a list of Acceptance Agents on its website.

The IRS also maintains a list of Taxpayer Assistance Center (TAC) locations on its website. Assistance at a TAC is by appointment only, so call to schedule an appointment before showing up.

How long does it take to get an ITIN?

Once you submit your completed application and supporting documents, the IRS website states you should receive a letter assigning your ITIN within seven weeks. However, it may take longer during certain times of the year.

Most ITIN applications are filed with tax returns, so they are typically submitted during the peak processing times of January through April. During these months, IRS services often take longer, so the National Immigration Law Center cautions that it can take eight to 10 weeks to receive an ITIN during this time.

After your ITIN is approved, the IRS will process the tax return submitted with your application within six to eight weeks. If you have trouble getting a response from the IRS or believe the IRS is not respecting your taxpayer rights, you may be able to get help from the fee Taxpayer Advocate Service.

Does an ITIN expire?

ITINs remain valid as long as you file a federal return at least once every three years. If you don’t use your ITIN (or you have an ITIN issued before 2013 with middle digits of 83, 84, 85, 86 or 87), your ITIN may expire before you need it to file your tax return.

To renew your ITIN, you’ll use the same Form W-7 used to apply for a new number, but check the box for “Renew an Existing ITIN” in the upper right-hand corner of the first page. You will need to include all required documentation with your application, but you do not need to submit a tax return.

The IRS recommends applying for your ITIN renewal as soon as possible if your ITIN will expire by the end of the year and you anticipate needing to file a return. Renewing your ITIN outside of peak processing times will allow your application to be processed quickly, and having a valid ITIN at tax time may make your return eligible for electronic filing, which the IRS says is “faster, safer and more accurate than mailing your tax return.”

The bottom line

Navigating the forms and documentation requirements for getting an ITIN can be daunting. If you need help, apply in person with the help of an IRS-authorized Assistance Agent or by making an appointment at a Taxpayer Assistance Center. By getting help to ensure you have the right supporting documents and taking time to double check that all of the information on your application is correct, you’ll reduce the chance of having your application rejected by the IRS.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Janet Berry-Johnson
Janet Berry-Johnson |

Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here

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How to File Taxes as an Immigrant

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Two recurring themes have dominated the news cycle over the past few years: immigration and taxes. While these may seem like entirely separate issues at first glance, immigrants do pay federal income taxes — and face a variety of unique challenges in the process, including dealing with language barriers and learning to file for the first time.

To help make filing your taxes as an immigrant a little easier, here’s an overview of who needs to file, how to file for the first time and where you can turn for help.

Who files taxes?

Citizens aren’t the only ones who pay taxes in the U.S. Immigrants who are authorized to work in this country are required to pay the same federal and state income taxes that citizens do, and undocumented immigrants pay billions of dollars in taxes each year — often for public benefit programs that they are unable to use.

Filing requirements depend on whether you are considered a nonresident alien or a resident alien.

Resident aliens

A resident alien must meet one of two tests:

  • Green card test. The U.S. Citizenship and Immigration Services issued you an alien registration card, also known as a “green card,” which allows you to permanently live in the U.S. as an immigrant.
  • Substantial presence test. You must be physically present in the U.S. for at least:
    • 31 days during the current year, and
    • 183 days during the three-year period that includes the current year and the two years immediately before that. (You can read more about how days of presence are determined here.)

Resident aliens follow the same filing requirements as U.S. citizens.

Nonresident aliens

If you are not a U.S. citizen and don’t meet either of the tests to be considered a resident alien, you are considered a nonresident alien.

As a nonresident alien, you must file a tax return if you own a business in the U.S. or have U.S. income and did not have enough tax withheld by your employer. You may also want to file an income tax return to receive a refund of tax withheld.

What’s a W-4?

If you work in the U.S., your employer should ask you to complete Form W-4, which is used to determine the correct amount of tax to withhold from your pay.

Form W-4 includes worksheets to help you determine how many “allowances” you should claim. Each allowance reduces the amount held from your paycheck. You get one allowance for yourself, one for your spouse, and one for each dependent you claim on your tax return.

You can complete a new Form W-4 at any time, and it’s a good idea to submit a new one to your employer anytime your tax situation changes, such as if you get married or divorced or have a new baby. Adjusting your withholding can help prevent having too much or too little tax withheld.

Rather than relying on the worksheets included with Form W-4, you may want to use the IRS’s Withholding Calculator.

How to pay U.S. taxes

In some countries, the government withholds tax from your paycheck, and that’s the end of your tax filing requirements. In the U.S., it’s more complicated. Here’s an overview of what you’ll need to file a tax return.

SSN or ITIN

To pay taxes in the U.S., you will either need a Social Security number (SSN) or an individual taxpayer identification number (ITIN).

Noncitizens authorized to work in the U.S. by the Department of Homeland Security can apply for a Social Security number in their home country before coming to the U.S. or by visiting a Social Security office in person. You will need to complete Form SS-5, Application for a Social Security Card, and provide documentation to prove your identity, work-authorized immigration status and age. You can learn more about the acceptable documentation here.

If you are not eligible for an SSN, you can apply for an ITIN by filling out Form W-7, Application for IRS Individual Taxpayer Identification Number and submitting it to the IRS along with documentation proving your identity and foreign status. The Instructions for Form W-7 include a list of acceptable documents and instructions for submitting your application.

Which tax forms to file

The tax forms you’ll use to file your tax return depend on whether you are a resident alien or a nonresident alien.

Resident aliens use the same tax form as citizens: Form 1040, U.S. Individual Income Tax Return. Generally, Form 1040 is due on April 15 of the following year. However, if you are living and working outside of the U.S. on April 15, you are given an automatic extension to June 15. You can request a longer extension, until Oct. 15, by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

Nonresident aliens file using Form 1040-NR, U.S. Nonresident Alien Income Tax Return. Form 1040-NR is also due on April 15 of the following year, but taxpayers who are not living and working in the U.S. on that date have until June 15 to file. You can request an extension to October 15 by submitting Form 4868 by the due date of your return.

Reporting income earned outside the US

Many resident aliens and nonresident aliens continue to receive income from outside of the U.S. even after they begin working in the country. Resident aliens are required to report income from all sources within and outside of the U.S. on their tax returns, whether they are living in the U.S. or abroad.

However, you may qualify to exclude a portion of your foreign earnings from your taxable income — the amount you can exclude changes each year. You can determine your eligibility and the exclusion amount using Form 2555, Foreign Earned Income. You can also use the IRS’s Interactive Tax Assistant Tool to help determine whether the income you earned in a foreign country can be excluded.

What to do if you’re undocumented?

According to the Pew Research Center, there were roughly 10.5 million undocumented immigrants in the U.S in 2017, and 7.6 million of them are a part of the U.S. workforce.

Whether undocumented immigrants work legally under Deferred Action for Childhood Arrivals (DACA) protections or work illegally with falsified or nonexistent documentation, they are required to pay taxes on any income earned in the U.S.

Many undocumented immigrants face barriers to complying with U.S. tax laws due to language barriers, difficulty understanding complex tax laws or fears that the IRS will pass their information along to immigration enforcement.

Later, this article will cover resources where immigrants can find help with tax filing. As for immigration enforcement fears, you generally do not have to fear that the IRS will share your application for an ITIN or tax information with immigration enforcement officials. The IRS is not allowed to release taxpayer information to other government agencies, except for providing information to the Treasury Department for tax compliance investigations or under a court order related to a non-tax criminal investigation.

Benefits of paying taxes

Filing a tax return and paying taxes to the U.S. does not entitle nonresident aliens or undocumented workers to claim Social Security benefits, but there are other benefits to filing tax returns. According to the National Immigration Law Center, paying taxes:

  • Demonstrates compliance with federal tax laws
  • Gives immigrants who want to legalize their immigration status and become a citizen an opportunity to prove they have “good moral character”
  • Document work history and physical presence in the U.S.
  • Claim certain tax benefits, such as the Child Tax Credit
  • Claim insurance premium tax credits for children who are U.S. citizens

Where to find help

The IRS’s Volunteer Income Tax Assistance (VITA) program helps taxpayers who cannot afford traditional tax preparation service, need translation assistance or need help applying for an ITIN. The IRS trains and certifies volunteers to provide free basic tax return assistance to individuals.

You can locate a VITA site by visiting http://irs.treasury.gov/freetaxprep/ and entering your ZIP code. Before visiting a VITA site, you may want to review Publication 3676-B (available in English and Spanish) to verify the services provided by VITA and check out the IRS’s What to Bring page to ensure you have all of the required documents and information volunteers will need to help prepare your return and apply for an ITIN, if necessary.

If you prefer to handle tax filing on your own, check out our recommendations for tax filing software.

The bottom line

Working through the forms required to apply for an ITIN and prepare a tax return can be daunting, but seeking help and overcoming the barriers to complying with U.S. tax law is important. If you plan to seek citizenship down the road or someday appear in front of an immigration judge, the fact that you’ve dutifully filed income tax returns while you lived and worked in the country can help make a stronger case for you to remain in the country.

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Janet Berry-Johnson
Janet Berry-Johnson |

Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here