Who Am I for Tax Purposes?
The first step to find out what forms to fill out is to determine your filing status. This step is accomplished when you perform the substantial presence test. You can read more about in the IRS Publication 519.
Visa classification Length of time in U.S. Tax Status Forms to Complete
- F-1/J-1 student visa
- F-1/J-1 student visa
- J-1 researcher or visiting scholar
- J-1 researcher or visiting scholar
- H-1 B visa
- H-1 B visa
- Green card
In many parts of the world, employers automatically deduct the tax you owe from your income. The US government, on the other hand, places the responsibility of proper tax payment on the taxpayer, that is, on you. In order to fulfill your tax responsibility, you have to report your income annually and pay taxes to the US government. You have to fill out an income tax return by April 15 of each year for the previous calendar year. For example, if you have earned income in calendar year 2002, you have to report this income in year 2003. You will receive in the beginning of each calendar year the appropriate forms you need to be able to fill out your tax return. It is the individual's responsibility to file federal and state income tax forms; the University cannot do it for you.
- Form 1040 NR-EZ
- Form 1040 NR
- Form 8843
- Form 1040EZ
- Form 1040A
- Form 1040
- Form 8233
- Form W-8BEN
- Form 1040X
During 2002, Juan Flores received a $16,000 scholarship grant from the Rotary Club for tuition ($12,000) and housing ($4,000). Juan arrived in the US on September 1, 2002 as an F-1 student from Ecuador. Since there is no tax treaty between the US and Ecuador, the scholarship money in excess of the tuition (qualified scholarship) is subject to withholding.
Withholding tax rate on scholarships for F-1's: 14% included a personal exemption of $1,002.84 (Daily 2002 prorated personal exemption of $8.22 for 122 days). Tax withheld on non-qualified scholarship (housing) was a Housing scholarship of $4,000
Personal exemption: (1,002.84)
Tax Rate: .14
The total tax Juan will have to pay on his scholarship is: $419.60 He will receive a W-2 form at the end of the year stating his wages and a bill from the University, letting him know he owes taxes on his non-qualified scholarship.
During 2002, Lilia Frost received a $10,000 scholarship grant from the Athletics Department. Lilia arrived in the US on August 1, 2002 as an F-1 student from France. Since there is a tax treaty between the US and France, the room and board scholarship is tax exempt.
Because tuition scholarship is qualified scholarship, it is not subject to withholding. Lilia will need to fill the appropriate forms in the Budget Office as soon as she arrives in order for her to be exempt from withholding. It is her responsibility to apply for the tax treaty. She will also need a Social Security Number to claim tax treaty benefits.
All wage income from graduate assistantships is taxable as earned income if no tax treaty applies between your country and the US.
Dijana Karganoff, a student from Iceland, received $5,000 in compensation in 2002. She arrived in the US for the first time in July 1999 as an F-1 student, so she was a nonresident alien for 2002.
Mia filled out form 8233 to be able to claim an exemption under the US-Iceland tax treaty. The treaty exempts $2,000 each year for five calendar years for compensation.
Mia will be taxed on the difference between the $5,000 and $2,000 = $3,000.
Individual Tax Identification Number
Individuals who are not eligible for a Social Security Number can obtain an Individual Taxpayer Identification Number (ITIN). You must apply for the number filling out Form W-7 at any IRS office or at a designated acceptance agent. Any Individual who files a tax return or is claimed as a dependent on another's tax return and who is not eligible to be employed in the US must obtain an ITIN (Individual Taxpayer Identification Number).
Note: It takes approximately 6-8 weeks to receive your ITIN card in the mail.
FICA and State Tax
FICA tax is applicable to wages earned by an employee. If a scholarship or fellowship does not require the performance of a service, FICA is not applicable.
You are exempt from FICA tax if you are a:
- Nonresident alien
- In the US under an F, J, M, or Q visa
- Perform services in accordance with the issuance of the visa
- Present in the US for less than 5 years
- Income tax treaties do not generally serve to allow an exemption from FICA tax.
Note: An individual is not exempt from FICA tax indefinitely. To properly determine FICA tax exemption, a withholding agent must apply the substantial presence test.
Many states have a state income tax and you may be subject to state taxation. Tax laws vary by state, and the appropriate state tax authority should be consulted.
Frequently Asked Questions
I am a nonresident alien. Can I claim the standard deduction?
Nonresident aliens cannot claim the standard deduction. However, there is an exception to this rule. See Students and business apprentices from India, under Itemized Deductions in chapter 5 of Publication 519.
What paperwork will I need to start a job?
Generally you will need your passport, form W-2 from each employer you worked for during the year, and form 1042-S if you received taxable scholarship or a graduate assistantship. Forms W-2 and 1042-S should be mailed to you in January of each year.
What do I do if I have not received my W-2?
If you worked in the University, and you did not receive your form W-2, contact:
Parks Hall 310
If you are supposed to receive form 1042-S and did not receive it, contact:
Business & Finance Office
Parks Hall 204
What happens if I receive a scholarship and my country does not have a qualified tax treaty with the U.S.?
If you receive a scholarship and your country does not have a qualified tax treaty with the US exempting the following educational expenses: housing, living expenses, meals, etc. then the University must withhold 14% tax on the scholarship. At the end of the calendar year you will get a bill from the University stating how much you owe. According to the University's policy, if you don't pay the tax, your student account will be placed on hold and you won't be able to register for the following semester or your grades won't be released to you.
Do I pay taxes on interest income?
Interest income received by nonresident alien students and scholars is exempt from US tax. If the nonresident alien later becomes a resident for tax purposes, the interest income is taxable.
Does my country qualify for tax treaty benefits?
Non-resident aliens qualifying for tax treaty benefits on their salary or wages must have a social security number or tax payer identification number and fill form 8233 in the Budget Office (Parks Hall 204).
List of countries with tax-treaties (see copies) or copy either page 45 or pages 34-43 from publication 901 Tax Treaties http://www.irs.gov/pub/irs-pdf/p901.pdf
What if my country is not on the list?
If there is no employee-employer relationship and there is no tax treaty benefit between your country and the US, you must pay 30% tax. The latter applies if you are a guest-speaker or are paid a fee or honorarium for short-term services, such as lectures or consultations.
You must contact the International Education Center in advance of your arrival to make sure you fill out the necessary forms, have an Individual Taxpayer Identification Number or a Social Security Number if applicable, to make sure your payment is processed on time.
Note: It can take several months to obtain a Social Security Number of Individual Taxpayer Identification Number.
If you still have questions:
- Contact the IRS office in Macon, Georgia Monday-Friday 8:30 a.m.-4:30 p.m. at (478) 752.8243, or contact the IRS with tax questions 1-800-829-1040
- Contact the Tax Payer Advocate 1-877-777-4778
- Download Federal Income Tax forms
- Download IRS Publication 17: Your Federal Income Tax
- Download IRS Publication 519: US Tax Guide for Aliens
- Download IRS Publication 901: US Tax Treaties