As the tax season approaches in the United States, every citizen above the age of 18 must file their taxes, including prison inmates. The United States has the highest number of incarcerated individuals globally, with almost one percent of the adult population confined to prisons and jails. This adds up to roughly 2.3 million people, a considerable number of whom are required to file their tax returns.
Inmates who earn wages through work programs or work-release may have to file a tax return if their earnings meet the requirements. Additionally, some inmates held paying jobs before being incarcerated or have spouses with a reportable income, requiring a joint filing.
The process of filing a tax return can be challenging for individuals in the free world, let alone for those behind bars. Inmates must navigate complex tax laws, collect necessary documents, and find a way to mail their tax returns to the Internal Revenue Service (IRS). Furthermore, limited access to the internet, legal assistance, or tax preparers makes filing taxes a daunting task for incarcerated individuals.
Filing taxes in prison is a challenging and complicated process that requires significant effort from both the inmates and the prison staff. Despite these challenges, it is essential for incarcerated individuals to comply with tax laws and file their returns accurately to avoid legal consequences.
In this blog post, I will cover the following topics:
- Tax filing requirements
- There are no deductions for ‘charitable’ contributions to an inmate
- Most prisons supply basic tax forms
- Inmates are exempt from ACA requirements
- The Recovery Rebate Credit
- Inmates do not qualify for the Earned Income Tax Credit
- Consult a tax professional
Tax filing requirements
In terms of tax filing requirements, prison inmates are subject to the same regulations as individuals in the free world. However, due to the meager income earned by many inmates, they may not meet the income threshold required for tax filing.
Gross income requirements for each filing status are:
Single filing status:
- $12,550 if under age 65
- $14,250 if age 65 or older
Married filing jointly:
- $25,100 if both spouses under age 65
- $26,450 if one spouse under age 65 and one age 65 or older
- $27,800 if both spouses age 65 or older
Married filing separately — $5 for all ages
Head of household:
- $18,800 if under age 65
- $20,500 if age 65 or older
Qualifying widow(er) with dependent child:
- $25,100 if under age 65
- $26,450 if age 65 or older
There are no deductions for ‘charitable’ contributions to an inmate
Sending money to an incarcerated loved one on a regular basis or donating to fundraisers to help them is not considered a charitable donation under tax laws. This also applies to donations made to aid wrongfully convicted inmates in paying for their appeals.
In general, charitable donations are only tax-deductible when made to qualified organizations that meet the criteria set by the Internal Revenue Service (IRS). The donation must be made for charitable purposes and not for personal reasons, such as providing financial support to an incarcerated friend or family member.
Most prisons supply basic tax forms
During tax season, incarcerated individuals who lack assistance from family or friends outside can still access tax forms in most prisons. These forms include basic federal and state tax forms. Some prisons may also offer access to volunteer tax programs, which provide additional support for tax preparation.
Since most inmates do not have access to the internet, filing tax returns online is not an option. However, inmates filing joint returns must sign the forms. To overcome this challenge, some facilities may allow visitors to bring legal forms for signatures during a visit, or the inmate’s caseworker can assist in the process.
In situations where an inmate cannot complete the required tax returns online or provide all the necessary information to a tax preparer, they can appoint someone to have power of attorney for tax matters. This means that the appointed individual can represent the inmate before the IRS. To appoint someone, the inmate must file IRS Form 2848, which authorizes a representative to act on their behalf for tax matters.
Despite these options, filing taxes in prison can still be a challenging and complicated process. Incarcerated individuals must navigate the tax laws and gather all necessary documents while dealing with limited resources and access to assistance. It is crucial for prisons to provide necessary support to help inmates file their taxes correctly and avoid potential legal consequences.
Inmates are exempt from ACA requirements
According to the provisions of the Affordable Care Act (ACA), every American must have minimum essential health insurance coverage. However, this requirement does not apply to incarcerated individuals.
The ACA mandates that Americans obtain health insurance coverage to ensure that everyone has access to healthcare services. The law imposes a penalty on individuals who fail to obtain coverage, except in certain circumstances, such as for incarcerated individuals.
The Recovery Rebate Credit
Incarcerated individuals who did not receive their Economic Impact Payments (EIPs) during the COVID-19 pandemic can claim them as a Recovery Rebate Credit. This applies to all three rounds of stimulus payments.
To claim the credit, inmates can request a blank Form 1040 from their case manager. The case manager will then write the inmate’s name and Department of Corrections (DOC) ID on the form before giving it to the inmate. Previously, inmates had to call an 800 number to resolve this issue. However, the Internal Revenue Service (IRS) has now developed a process for state departments of corrections to assist inmates in claiming their Recovery Rebate Credit.
The process allows inmates to file their tax returns and claim the credit even if they have no income or are not required to file a tax return. The credit will be included in any refund owed to the inmate or will be used to offset any taxes owed.
Inmates do not qualify for the earned income tax credit
Earnings received by inmates during their incarceration are not classified as “earned income” for the purpose of the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC). This means that inmates cannot claim these tax credits based on their prison earnings.
Furthermore, wages paid for work done while in a work release program or living in a halfway house are also not eligible for the EITC or CTC. These wages do not count towards the income requirements for the tax credits, as they are considered to be earned while the individual is in custody or under supervised release.
Consult a tax professional
The topic of inmates filing taxes is a complex issue, and we strongly recommend seeking the advice of a tax professional if you have a loved one in prison who needs to file a tax return. As non-CPAs and non-attorneys, we are not qualified to provide specific tax advice.
Although the tax filing requirements for inmates are the same as for those outside of prison, the process can be challenging due to limited access to tax forms, envelopes, and stamps. Inmates cannot file taxes online and may need assistance obtaining the necessary forms and tools for filing.
Frequently Asked Questions
Do inmates have to file taxes?
Yes, if an inmate had income or if someone claimed them as a dependent, they may need to file taxes.
How do inmates file taxes while in prison?
Inmates can file taxes by mail or electronically using a tax preparation software or online service. They may also have access to tax preparation assistance through the prison.
What if an inmate has no income?
If an inmate had no income, they may not be required to file taxes. However, if they had taxes withheld from any income they did earn, they may need to file a tax return to receive a refund.
Can an inmate receive a tax refund while in prison?
Yes, an inmate can receive a tax refund while in prison. However, the refund may be delayed if the IRS needs to verify their identity or if the prison has restrictions on the types of payments inmates can receive.
Can an inmate receive help with tax preparation?
Yes, some prisons offer tax preparation assistance to inmates. Additionally, there are organizations that provide free tax assistance to incarcerated individuals and their families.
Can an inmate claim dependents on their tax return?
If an inmate has dependents, they may be able to claim them on their tax return. However, there are specific rules and requirements that must be met, and it may depend on the circumstances of the inmate’s incarceration.
Can an inmate file taxes jointly with their spouse?
If an inmate is married, they may be able to file a joint tax return with their spouse. However, there are specific requirements that must be met, and it may depend on the circumstances of the inmate’s incarceration.
Conclusion
Inmates have the same tax obligations as anyone else and can file taxes by mail or electronically. If they had no income, they may not be required to file taxes, but if they had taxes withheld from any income they did earn, they may need to file a tax return to receive a refund. Inmates can receive tax preparation assistance through the prison or from organizations that provide free tax assistance to incarcerated individuals and their families. It’s important for inmates to stay informed about their tax obligations and seek assistance if needed to ensure that they are filing their taxes correctly.
