Prisoners who have been in the system for longer than a year typically do not make much income. In fact, they may not even make enough to be required to file taxes. If you’ve thought about filing a tax return in order to take advantage of your low prison wages and the Earned Income Tax Credit (EITC), well that’s not really an option either as all income earned as a prisoner is excluded from counting towards the earned income needed in order to qualify for this refundable credit.
So why would you need to file a tax return while in prison? For one, you may be receiving other forms of income from investments, income earned before you were incarcerated, filing a tax return with a spouse who is still earning income for the household, you may qualify for the EITC due to your spouse’s income, etc.
Income Earned While in Prison
Prisoners in federal prisons all must work unless they medically are not able to. According to the Federal Bureau of Prisons, the typical pay is between 12¢ and 40¢ per hour for unskilled, institutional work (work in food service, a warehouse, or work as an inmate orderly, plumber, painter, or groundskeeper) and between 23¢ and $1.15 per hour for skilled work in Federal Prison Industries (FPI) factories. To get skilled work, or work above entry level, you must have a high school diploma or a General Educational Development (GED) equivalent. Generally speaking, 50% of inmate earnings must be put into the Inmate Financial Responsibility Program (IFRP). Funds from this program go towards the Crime Victims’ fund, as well as to fund state crime victim programs. Prisoners also must pay towards their legal obligations, such as restitution to victims and child support.
As you can see, there are not many earnings available to prisoners, so the likelihood of having to file a tax return is much lower than in the general population. That is, unless you qualify for some of the events that were discussed above. If a prisoner is required to file a tax return, their tax bracket is typically lower.
Important Tax Help for Prisoners
If you still find yourself having to fill out a tax form, then you have a few options to consider. Before figuring out which is best for you, you need to take the following into consideration: do you have someone you can trust with your financial information, how long will you be incarcerated, and what are the services provided to you within your institution.
- File for a Tax Extension: Perhaps your prison term is temporary, meaning that you merely need an extension so that you can file your own income taxes. If this is the case, then you will want to consider filing for an income tax extension so that you do not need to fill the forms out by tax deadline. Use form 4868: Application for Automatic Extension of Time to File U.S. Individual Income Tax Return will give you an automatic six month filing extension (until October 15th). The deadline to file this form is the same as the tax deadline: April 15th.
- In-house Inmate Services:You will want to check with any free in-house tax or lawyer services that may be offered to you to help with filing tax forms. For example, did you know that if you are incarcerated in a state where you are not a resident, you may have to file two state income tax returns? (Requirements vary by state for nonresidents and part-year residents). Most prisons will at least supply basic tax forms to you, or give you access to the internet for limited amounts of time.
- Grant Power of Attorney to Someone Trusted: If you are incarcerated for an extended period of time that you need someone that you trust to be able to fill out your tax forms for you. If you are filing status is a joint return, then you could fill out your portion of it and email it to your spouse (if these services are available to you). Otherwise, you could have your spouse file the tax forms and then bring them to you to sign (or have the forms mailed to you to sign and send back). Otherwise, you can fill out the paperwork needed to designate someone as your Power of Attorney in your financial matters. There are forms to fill out by the inmate, and the forms must also be signed in the presence of a notary public and notarized. The forms will need to be filed at the County Clerk’s office, and fees typically range between $10 and $20.