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BASIC TAX INFORMATION FOR F1 VISA HOLDERS INTERNATIONAL STUDENTS TRINITY UNIVERSITY.

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Presentation on theme: "BASIC TAX INFORMATION FOR F1 VISA HOLDERS INTERNATIONAL STUDENTS TRINITY UNIVERSITY."— Presentation transcript:

1 BASIC TAX INFORMATION FOR F1 VISA HOLDERS INTERNATIONAL STUDENTS TRINITY UNIVERSITY

2 INTERNATIONAL STUDENTS TRINITY UNIVERSITY

3 WHY FILE A TAX RETURN  COMPLY WITH IRS REGULATIONS  REPORT ALL INCOME EARNED AND TAXES WITHHELD  ONLY WAY TO RECEIVE REFUND OF TAXES WITHHELD

4 HOW ARE RESIDENTS AND NON-RESIDENTS TAXED DIFFERENTLY? RESIDENTS:  TAXED ON WORLDWIDE INCOME  FILE SAME FORM AS U.S. CITIZENS NON-RESIDENTS:  TAXED ONLY ON U.S. SOURCE INCOME  ARE NOT REQUIRED TO PAY FICA TAX  USE NON- RESIDENT TAX FORM

5 FILING REQUIREMENTS  NON-RESIDENT ALIENS - $3800 FOR 2012  HOWEVER; STUDENTS MUST FILE IF: 1. THEY HAVE A TAXABLE SCHOLARSHIP 2. INCOME PARTIALLY OR TOTALLY EXEMPT BY TREATY 3. ANY OTHER INCOME TAXABLE BY IRS

6 FILING NOT REQUIRED IF  NON–RESIDENTS HAVE INCOME ONLY FROM FOREIGN SOURCES  INTEREST IS FROM A BANK OR CREDIT UNION  SCHOLARSHIP FUNDS ARE SPENT ONLY ON QUALIFED EXPENSES  RECEIVED ANY OTHER MONEY WHICH IS NONTAXABLE BY IRS.

7 DETERMINING TAX RESIDENCY STATUS SUBSTANTIAL PRESENCE TEST  IRS FORMULA TO DETERMINE WHEN NON-RESIDENT ALIENS FOR IMMIGRATION PURPOSES HAVE BEEN IN THE USA LONG ENOUGH TO BE CONSIDERED RESIDENTS FOR TAX PURPOSES  HOWEVER, EXEMPT INDIVIDUALS ARE AUTOMATICALLY NON–RESIDENTS ALIENS FOR TAX PURPOSES

8 WHO ARE EXEMPT INDIVIDUALS  F1 VISA HOLDERS ARE EXEMPT FROM SUBSTANTIAL PRESENCE TEST FOR ANY PART OF 5 OR FEWER CALENDAR YEARS  BUT STILL MAY BE REQUIRED TO FILE A U. S. TAX RETURN IF MEET FILING REQUIREMENT

9 TAXABLE INCOME FOR EXEMPT INDIVIDUALS GENERALLY REPORT ALL INC0ME YOU RECEIVE IN U.S.  EMPLOYMENT ON AND OFF CAMPUS  SCHOLARSHIP (MAYBE)  PRACTICAL OR ACADEMIC TRAINING  DIVIDEND INCOME  ETC. KEY- NON-RESIDENTS PAY INCOME TAX ONLY ON U.S. SOURCE INCOME

10 ARE SCHOLARSHIP FUNDS TAXABLE?  NON-RESIDENTS ARE NOT TAXED ON FOREIGN SOURCE SCHOLARSHIPS  NON-RESIDENT ALIENS ARE TAXED ON U.S. BASED SCHOLARSHIPS NOT USED FOR TUITION, REQUIRED FEES, BOOKS, SUPPLIES, AND EQUIPMENT  KEY POINT- MANY TAX TREATIES ALLOW AN EXEMPTION FOR SCHOLARSHIPS

11 NON-RESIDENT TAX FORMS  FORM STATEMENT FOR EXEMPT INDIVIDUALS FILE EVEN IF NON-RESIDENT HAS NO U.S. SOURCE INCOME - FILE BY JUNE 15 ONE FORM FOR EACH FAMILY MEMBER  PURPOSE- AN INFORMATIONAL FORM STATING EXEMPTION FROM COUNTING DAYS FOR SUBSTANTIAL PRESENCE TEST IF FILING BOTH FORM 8843 AND A TAX RETURN- MAIL TOGETHER BY APRIL 15

12 NON-RESIDENT TAX FORMS FORM 1040NR AND FORM 1040NR-EZ (INCLUDE FORM 8833 WITH TAX RETURN IF TAKE A TREATY BASED POSITION) FILE BY APRIL 15 NO STATE TAX ISSUES IN TEXAS IMPORTANT- DO NOT FILE A FORM 1040EZ

13 TAX TREATIES IMPACT OF TAX TREATIES DISCUSSED IN IRS PUB 901 EXAMPLES:  IN MANY COUNTRIES, SCHOLARSHIPS ARE NOT TAXABLE. (CHINA, KOREA, SPAIN)  ALSO, SOME INCOME IS NOT TAXABLE (CHINA - FIRST $5000; FRANCE - FIRST $8000)

14 SUPPORTING DOCUMENTS  W-2 FORM FROM EMPLOYER – REPORTS WAGES EARNED – MAILED BY JAN 31  FORM 1042s - FOREIGN PERSON WITH INCOME SUBJECT TO WITHHOLDING – MAILED BY MAR USED TO REPORT SCHOLARSHIP INCOME NOT EXCLUDED FROM GROSS INCOME AS A “ QUALIFIED SCHOLARSHIP” 2. FILE FORM W-8BEN WITH UNIVERSITY OFFICE IF SCHOLARSHIP IS EXEMPT FROM TAXATION 3. CAN BE USED TO REPORT WAGES EXEMPT UNDER A TAX TREATY

15 FAMILY ISSUES  - DEDUCTIONS FOR DEPENDENTS GENERALLY NOT ALLOWED  - EXCEPTIONS FOR NON-RESIDENTS FROM CANADA, INDIA, SOUTH KOREA, AND MEXICO  - MARRIED NON-RESIDENT CANNOT FILE JOINTLY WITH NON-RESIDENT SPOUSE  - MOST TAX CREDITS DO NOT APPLY  - STANDARD DEDUCTION NOT ALLOWED EXCEPT FOR STUDENT FROM INDIA

16 SPOUSE AND DEPENDENTS  - FORM 8843  - U.S. SOURCE INCOME MUST BE REPORTED

17 FILING STATUS AND DEPENDENTS MOST NON-RESIDENT ALIENS CANNOT CLAIM THEIR DEPENDENTS – EVEN IF THE DEPENDENT IS A U.S. CITIZEN

18 SOCIAL SECURITY TAX  NON-RESIDENTS WITH AN F1 VISA ARE EXEMPT FROM SOCIAL SECURITY AND MEDICARE TAXES  IF RESIDENT FOR TAX PURPOSES, USUALLY SUBJECT TO FICA TAXES

19 FICA REFUNDS WHEN WITHHELD IN ERROR  ASK EMPLOYER TO REFUND  IF NOT REFUNDED, USE IRS FORM 843 TO REQUEST A REFUND

20 DO I NEED A SSN OR ITIN  IF FILING ONLY FORM NO NUMBER REQUIRED  ANY 1040 TAX FORM – NEED A SOCIAL SECURITY NUMBER OR INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER(ITIN)  FILE FORM W-7 TO REQUEST AN ITIN  DEPENDENTS MUST ALSO HAVE SSN OR ITIN IF TAX CODE ALLOWS AN EXEMPTION

21 ADDITIONAL TAX RESOURCES  IRS PUBLICATIONS  PUB 519 TAX GUIDE FOR ALIENS  PUB 901 TAX TREATIES  TAX PREPARATION SPECIALISTS

22 ADDITIONAL QUESTIONS PLEASE CONTACT: LARRY BARKER ENROLLED AGENT & MASTER TAX ADVISOR


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