When a person enters prison, some rights are suspended temporarily or permanently. Throughout the United States prison inmates lose the right to participate in elections while incarcerated, however many rights remain firmly in place. Like all Americans, prison inmates retain the all important "right" to pay taxes.
Like anyone else, prison inmates are responsible for paying federal income tax on all taxable income. The threshold amount, before taxes must be paid, is determined by the inmate's marital status, but, in general, the rate paid by a inmate who receives only income from a prison job would be 15 percent. In the federal prison system in the United States, all prison inmates who are physically able to work are required to do so. However, in private and state run prisons, inmates are given opportunities to gain marketable skills and earn money while incarcerated.
Although prisoners have no right to be paid for their work, when inmates earn money, they are required to file a tax return and pay any taxes owed by April 15th. Because of being incarcerated, the prisoner may file an extension, but federal law clearly indicates that when taxes are owed, they must be paid by the April 15 deadline, even if an individual receives an extension for filing the actual forms.
Prison inmates often make as little as $.12 per hour. Despite this low rate of pay, prison inmates are not eligible to file for the Earned Income Tax Credit available to low income workers. Any income that was earned in a halfway house or work release job is also ineligible for the Earned Income Tax Credit.