Presentation on theme: "International Students A basic overview of federal/state taxes"— Presentation transcript:
1 International Students A basic overview of federal/state taxes 2014 Tax Return FilingInternational StudentsA basic overview of federal/state taxes
2 Tax Terms Tax Year: January to December Tax Season: January 31 to April 15Reportable Income: Income required to be reported to IRS either by payer or individualCompensation: Money earned from workingInterest: Either paid or earned (loans, bank account)Tax Reporting Form: Form institution reports income onExample: W-2, 1099, 1098-TTax Return: Form you file your taxes onExample: 1040NR-EZ, 1040NRFiling Requirement: Amount used to determine if you need to file
3 Tax Return Filing Purpose You may earn reportable income from various sources during a tax yearWhen you work, you complete Form W-4 to indicate how taxes should be withheldNRAs have a mandatory Single, 1, NRA tax withholdingBy January 31 of following calendar year – tax reporting forms are filed by institutions and reported & sent to individuals via mail or electronicallyGeneral Rule: You either have too much tax withheld OR not enough which is why you file a tax returnIf you over paid = REFUNDIf you did not have enough tax withheld = you OWE $
4 Federal Tax Internal Revenue Service (IRS) – www.irs.gov There are 4 tax categories defined by IRS
5 Individual Tax StatusIf you are an international student working at TU, or received a travel award or scholarship, you need to determine if you are a:Nonresident Alien for tax purposes orResident Alien for tax purposesIf you are not sure, log into your Glacier to see:https://www.arcticintl.com/portal/login.aspIf you forgot your login, click on Forgot Login
7 Gather Tax FormsForm 1042-S (not everyone gets one) Is use for..
8 Federal – How to Begin Collect your tax forms! Form W2, 1042-S 2. Do I have to file a tax return?YES - If you earned more than $3,950 in 2014 and tax was withheld (Look at Box 2 on your W2 Form)NO - If you earned more than $3,950 in 2014 and tax was withheldEducate Yourself about How to FileIt’s your responsibility as F1/J1 student!Review IRS videos on YouTubeRead Publications & Instructions for FormsSocial Media Updates
9 Filing Requirements Check IRS Website! 8843 = EveryoneFor all F, J, M, and Q “exempt individuals”Spouse and children (F2/J2)Requirements may change each yearCurrently no need to file if total income < personal exemption and no tax was withheldIf tax was withheld should file for refundState tax returnSee state tax agency requirements discussed belowTRAINER NOTE: Look up filing requirements on IRS website for that particular tax year – and use to quiz participantsWHO NEEDS TO FILE?Effective with tax year 2006, Non-residents are no longer required to file a tax return if the total income from wages is less than the personal exemption and there has been no withholding.IF A PERSON NEEDS TO FILE:Participants need to verify their state laws. Some states do not require a return for state tax purposes.Form 8843.Must use form 1040NR or 1040NR-EZ.“Exempt individuals” in F, J, M, and Q status are still required to file the 8843, even if a tax return is not required (even if no income was received).WHEN MUST THE RETURN BE FILED? *Always check on IRS website! For example due to weekends and holidays the deadlines may be extended.June 15 (if only filing an 8843 – no reportable income)June 15 (outside the U.S.)April 15 (in the U.S.)WHERE MUST THE RETURN BE FILED?Always check the IRS website for any changesWHAT ARE THE PENALTIES FOR NON-COMPLIANCE?You are wearing both hats here. You will have students who will question why they need to bother, especially if they earned nothing or think they will owe money.Penalties for noncompliance with the filing requirement can include:Future requests for change of status (especially to permanent resident) may be denied;Fines and interest will be assessed when money is owed to the IRS. If more than 3 years late in filing the return, any refund owed will not be remitted by the IRS to the taxpayer.Visa renewals at American Consulates/Embassies may be denied;The IRS does not care how you earned the money, with work permission or not, they just want to be sure they are taxing you on it.The immigration service does not care if you were taxed on income or not, they just want to be sure you had permission to do this work.The immigration service is concerned that you will be a model compliant alien while in the US.The IRS will penalize you for tardiness either for late taxes paid, or prevent a refund if filing is too late.Did you follow the rules and file a return?NRA’s need to understand why they need to file a tax return!TRAINER NOTE: What you have covered so far are the main topics that will affect all non-resident aliens for tax purposes.The following topics in this particular subsection should be referred to and not greatly discussed. Participants need to be made aware of these “exceptions to the rules,” but no time and detail should be spent on this, as they are explained in the participant’s Workbook. This is done in the interest of time and to eliminate confusion at this learning stage. The participants should be encouraged to read and refer to the following unique circumstances when they have time.For example, a likely statement to lead you through this to the next subsection could be:To wrap up this discussion on “Filing Requirements” I will say that what we have covered so far affects all Non-Resident Aliens for Tax Purposes. Your Workbook does go into further detail into some topics that may affect certain individuals or populations at your institutions. Because they are unique in nature, I ask you to spend some time looking at the next few topics when you get a chance and be aware of them. But in the interest of time, and not putting you to sleep (stop and grin, here), we will move on to understanding what is needed to file a return.REVIEW: The instructor should review these topics (as they are outlined in the participants Workbook) prior to the workshop being presented so that one is familiar with the topic and what is being explained to the participants.BARBADOS, HUNGARY, JAMAICA – Tax treaty benefits allow them to be treated as residents for tax purposes, even if they are F-1 and just arrived in the U.S. for the first time.MARITAL STATUS AND CHILDREN for the most part, NRA’s cannot financially benefit from having a spouse or children in the U.S. UNLESS the child(ren) born in the U.S.E-FILING – never allowed for Non-resident aliensSTANDARD DEDUCTION –Only students from India students can claim the standard deductionEXTENSIONS – Apply to NRAsEvery other NRA can only itemizeSOCIAL SECURITY TAX (FICA) – There is a NRA FICA exemption. Once this has expired, then they may qualify for the student exemption.TAX TREATY BENEFITS – Provide them the resources to determine if there is one, if they qualify and how to claim benefit.FILE TAXES FOR A PREVIOUS YEAR (late return) – Encourage them to do so. If a return is never filed, the statute of limitations doesn’t apply and so a person can always be audited for that year!Show next slide – Which Tax Return Form to Use?
10 Rules for Signing & Due Date Form 8843F, J, M, QAll individualsRules for Signing & Due DateIf submitting with tax return, no need to signDue April 15th of each year (or required date)______________________________If no tax return required, sign and mail to address in instructionsDue June 15th of each year (or required date)Things to Note:Put January – December of yearIf no Tax ID #, leave blankFollow instructions for name & addressAll individuals complete Part 1Teachers/Trainees go on to complete Part IIStudents complete Part IIILeave Part IV & V blank (page 2)RAs not required to completeHandout copies of last year’s form – (you should have 2-sided copies enough for everyone)Tell them you are going to give them basic information about the formEXPLAIN: Why Start With 8843? Because all people in F1/F2 and J1/J2 (and M/Q) status need to complete – REGARDLESS IF THEY EARNED INCOME OR NOT!HighlightWhich sections to complete based on their primary purpose (teacher/trainer or student) and information on slideShow next slide – Form 8843 – p. 2
11 Signing when not required is not a problem Form 8843 – p. 2Signing when not required is not a problemHighlightIf only filing 8843 – sign the form.If submitting with tax return, no need to sign the form (no problem if do).Show next slide – Form 1040NR-EZ, p. 1Sign if filing alone (no tax return)Don’t sign if submitting with tax return
12 Form 1040NR-EZ Page 1 Tips: Reminder - Current Rule: Tips:Collect all tax reporting forms first! (W2, 1099)Always file federal first, state secondLine 3 = Add total wages for all jobs in past yearLine 5 = Scholarship income (1042-S)Line 6 = Total amount exempt by treaty (same amount as on p. 2)Students from India may take standard deductions; others cannotTreaty Information:Line 7: Do the math!Tax Table located in InstructionsLine 8 & 9: N/AReminder - Current Rule:If person earns less than personal exemption amount AND no tax withheld (Box 2 of W2)Then no need to file tax return (just Form 8843)If tax was withheld, should file to get full/partial refundIf earned over personal exemption amount, must fileTRAINER NOTE: Make copies of current year’s form (2-sided) to handout to participantsEXPLAIN:Form in participant workbook is from a former year, but the form is the same for current tax year (only difference is date of tax year)First review the forms along with basic guidelines; these will be followed by case studiesHighlightTotaling income from all sources.Including treaty exemption (which they will list on p. 2 and on Form 8233).Most NRAs cannot take standard deduction; only personal exemption.That they either get a refund or owe $. (If they owe, suggest they do a new Form W-4 to have more tax withheld).Show next slide – Form 1040NR-EZ – p. 2
13 Determining Taxable Income Source: Congressional Research Review
14 Form 1040NR-EZ Page 2 Tips: Line B Tips:Line BWhere were they living (not visiting) prior to coming to USLine EF, J, M or Q statusLine F (for current visit)Ex: J1 to F1Lines G & HOK to estimateLine IWhat type of tax return filed in previous yearLine JOnly those who are eligible for treaty benefits (refer to country list by searching on IRS website)HighlightTotaling income from all sources.Including treaty exemption (which they will list on p. 2 and on Form 8233).Most NRAs cannot take standard deduction; only personal exemption.That they either get a refund or owe $. (If they owe, suggest they do a new Form W-4 to have more tax withheld).Show next slide – Form 1040NR – p. 1
15 NRA Tax Filing: Resources Internal Revenue Service – NRA VITA SitesIRS Link & Learn for Foreign StudentsIRS Non Resident Alien ToolkitIRS Publication 901 – US Tax TreatiesIRS Publication 519 – US Tax Guide for AliensGlacier TaxPrep – Software for NRA Tax Filing! (Arctic International)https://www.arcticintl.com/gtp.aspTRAINER NOTE: Review the information on the slide.Show next slide – Additional Practice
16 Tax Agencies: State Comptroller of Maryland – www.marylandtaxes.com State of Maryland has different definitions forNonresident AlienResident Alien – where were you living at end of yearMD does not recognize tax treaties
17 State Taxes: iFile www.marylandtaxes.com Do I need to file a state return? Yes - if taxes were withheld and:Single: Under 65 and you earned > $10,000Head of Household: < 65 and > $12,850Married (Jointly): < 65 and > $20,000Married (Separately): No age and > $3,900
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