1. US Taxation of Foreign Nationals
Young & Associates, LLC presents:
US Taxation of Foreign Nationals
Before you begin:
This training presentation is the last in a series of four that includes the Microsoft Office training presentations called, “SharePoint calendars I: Make the most of your team calendar”; “SharePoint calendars II: Connect a SharePoint calendar to Outlook”; and “SharePoint calendars III: Create your own calendar.”
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February 22, 2017

2. What We Will Cover Filing Requirements Residency Status/Taxation
Types of Income
Tax Forms
Completion of Tax Returns
Resources

3. Filing Requirements

4. Am I Required to File Anything?
YES NO
Present in the US in 2016 for any length of time
Exception for tourists
US source income
No days of presence in the US during 2016
No US source income

5. Residency Status

6. Residency Status Full Year Nonresident Alien Full Year Resident Alien
Dual Status (Part-year resident/part-year Nonresident)
Occurs in the year of arrival or departure

7. Residency Status Residency Tests: US Citizenship
Lawful Permanent Resident (Green Card Holder)
Substantial Presence Test (SPT)
Present in the US at least 31 days during the current year, and;
If the sum of:
100% of total current year days +
1/3 of first preceding year +
1/6 of second preceding year
>183 days = Resident Alien

8. Residency Status Exceptions to SPT
F or J students receive 5 “exempt” years. Not exempt from tax, but of counting physical days of presence in the US towards the SPT. So, for the first 5 years, the SPT total will be “0”.
J non-students receive 2 “exempt” years (of the past 6 years). Generally, for the first 2 years, the SPT will be “0” – unless individual has had previous entries to the US as an F, J, M or Q visa holder.
“Exempt” years are CALENDAR years, not years from date of arrival.

9. Are you an exempt individual?—Decision Tree
If you are temporarily present in the United States on an F, J, M, or Q visa, use this chart to determine if you are
an exempt individual for the Substantial Presence Test (SPT).
Student
F, J, M, or Q Visa
Teacher or Trainee
J Visa
Are you a full-time student?
Are you a student? No
Ye s
Ye s No
Are you in substantial compliance
with your visa?
Are you in substantial compliance
with your visa? No
Ye s
Ye s No
Have you been in the U.S. for
any part of more than 5 calendar
years?
You are
Have you been in the U.S. for
an exempt
individual for the
any part of 2 of the preceding 6
calendar years?
Ye s No No No
Ye s
Ye s 2

10. Presence Test Substantial No No No
Were you exempt as a teacher,
trainee, or student for any part of 3
(or fewer) of the 6 preceding years,
Do you choose to claim a Closer
Connection exception to the
Substantial Presence Test?
AND Did a foreign employer pay
all your compensation during the
tax year in question, AND Were you
present in the U.S. as a teacher or
trainee in any of the preceding 6
years, AND Did a foreign employer
pay all your compensation during
each of the preceding 6 years
you were present in the U.S. as a
teacher or trainee? No
Ye s
In order to claim the exception, all the
following must apply: A. B.
You do not intend to reside permanently in the US
You must have complied with your Visa.
C. You must not have taken steps to become a
Resident Alien. D.
You must have a closer connection to a foreign
country.
Ye s No No
Ye s
* You must apply the Substantial Presence Test
* Substantial Presence Test (SPT) You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for calendar year 2015.
To meet this test, you must be physically present in the United States on at least:
1. 31 days during 2015
days during the 3-year period that includes 2016, 2015, and 2014, counting:
a. All the days your were present in 2016 and
b. 1/3 of the days you were present in 2015, and
c. 1/6 of the days your were present in 2014. 3
Exempt
Individual

11. Nonresident Alien Taxation
Filing status: Single, MFS, or QW
Exemptions: Self
Exceptions: Resident of Canada, Mexico, or South Korea or U.S. National
Total exemptions cannot exceed the taxpayer’s US source Effectively Connected Income (ECI)

12. Resident Alien Taxation
Filing Status: Single, Married Filing Jointly (MFJ), Married Filing Separately (MFS), Head of Household (HOH), Qualified Widow (QW)
Exemptions: Self, Spouse, Qualifying Dependents
Income: worldwide income
Deductions: Above the line adjustments (Alimony paid, Expenses of Performing Artists, Tuition and Fees) & Sch A Itemized deductions
Credits: Foreign Tax Credit (FTC), Child Tax Credit (CTC), Earned Income Credit (EIC), Education Credits

13. Residency Status Dual-Status Resident Alien Arrives January December
Nonresident prior to arrival, resident thereafter
Alien Departs
January
December
Resident until departure, Nonresident thereafter

14. Types of Income

15. Types of Income Wages/Employment/Compensation
Provide services to the University for payment– paid on a monthly, bi-weekly or casual basis
The University of Chicago employment taxes:
Federal – taxes are assessed by the Income Tax Withholding Table
IL State – 3.75%
FICA/OASDI – 6.20% (only applicable to residents for tax purposes)
Medicare – 1.45% (only applicable to residents for tax purposes)

16. Types of Income
Scholarship/Fellowship/Stipends: Funds given to support education/academic advancement or achievement
The University of Chicago scholarship/fellowship taxes:
Federal – Taxes are withheld at 14% for Nonresidents and 0% for residents. Residents may be required to make quarterly estimated tax payments.
Illinois State – Taxes are not withheld at source, but individuals may be required to pay quarterly estimated tax payments and/or pay taxes when filing a tax return.
FICA/OASDI & Medicare – Not applicable

17. Independent Contractor
Similar to Employment, but providing services independently for business under terms of a contract.
The University of Chicago independent contractor taxes:
Federal – Taxes are withheld at 30% for Nonresidents and 0% for residents. Residents may be required to pay quarterly estimated tax payments and/or pay taxes when filing a tax return.
Illinois State – Taxes are not withheld at source, but
individuals may be required to pay quarterly estimated tax payments and/or pay taxes when filing a tax return.
FICA/OASDI & Medicare – Not withheld

18. Tax Forms

19. Form W-2: Wage and Tax Statement
Mailed to home address no later than January 31st unless someone has requested to receive them online by logging into Workday
Wages
Salary
Compensation

20. SharePoint calendars IV: Tips and tricks

21. Form 1042-S: Foreign Person’s U. S
Form 1042-S: Foreign Person’s U.S. Source Income Subject to Withholding
Mailed to home address no later than March 15th. Reprints of forms available March 31st. Contact
Scholarships
Fellowships
Foreign Independent Contractor Services
Tax Treaty Benefits
Foreign Prize/Award/Miscellaneous foreign payments

22. SharePoint calendars IV: Tips and tricks

23. Form 1099-MISC: Miscellaneous Income
Received for payments totaling at least $600 in the following categories. Mailed to home address no later than January 31st. Reprints of forms available February10th. = contact Payroll Services
Rent
Royalties (minimum of $10)
Other Income
Services
Legal Fees
Prizes and Awards

24. SharePoint calendars IV: Tips and tricks

25. Requesting Duplicate Tax Forms
All active and terminated employees can download 2016 W-2 Forms in Workday. To access your 2016 W-2 form:
Log on to Workday using your CNET ID and password (if you need to reset your password, please view instructions here
Click on the Pay worklet
Click on “My Tax Documents”
Click on “View/Print”
Please note that it can take 1-2 minutes for the document to download
If you cannot access Workday after following the above instructions, please

26. Tax Filings

27. Tax Return Cycle Income Wages, Scholarships, Fellowships Tax Payments
Withholdings, Estimated Tax Payments
Tax Return
Form 1040, 1040NR, 1040NR-EZ, 8843

28. Sprintax Prep – For Nonresidents
Available through the Office of International Affairs’ website:
Please read all tax information on website before accessing
Sprintax Prep and have all necessary paperwork available
Sprintax Tax Prep Process:
Create individual log in
Determine U.S. Tax Residency Status
Which Tax Form to Use
Tax Treaty
Refund (Check or Direct Deposit)
Read all instructions
Download forms
Mail forms

29. Additional Nonresident Tax Details
Can use Sprintax Prep
Can also file on your own, or use a CPA (Certified Public Accountant), EA (Enrolled Agent), VITA (Volunteer Income Tax Assistance) or Tax Preparation Firm. Ensure that preparer has sufficient knowledge of Nonresident aliens/foreign tax matters.
File using Form 1040NR (Nonresident Alien Income Tax Return) or 1040NR-EZ and/or Form 8843 (Statement for Exempt Individuals)
Do you need to File? “Who Must File”
OIA Website:

30. Additional Nonresident Tax Details - Spouses
If spouse is working (J2): Will need to file own federal tax return, state tax return and Form 8843
If spouse is not working (F2, H4): Will only file Form Since no CNET ID is available, must download the Form 8843 from and complete by hand. Do not submit this form in the same envelope as spouse.

32. SharePoint calendars IV: Tips and tricks

34. Resident Alien Tax Details
Cannot use Sprintax Prep
Can use any avenue for filing such Tax Filing Software, CPA, EA, Tax Preparation Firm, IRS Free File, VITA
File using 1040; 1040-EZ; 1040A –Due date of April 18, 2017
Do you need to file?
Can file jointly with a spouse and claim dependents (children)
As residents for tax, generally able to claim any deduction/allowance/benefit available to U.S. Citizens
OIA Website:

35. Resident Alien Tax Details
Resident tax forms do not specifically address claiming tax treaties as residents for tax. However, you should do the following:
A residents for tax must complete form 1040
Enter ALL wage income on line 7
On line 21 indicate the amount of tax treaty benefit in parenthesis (which indicates subtraction)
On the dotted line 21 indicate the treaty article (e.g. US-China Article 19)
On line 22 you will subtract the amount from line 21 from the rest of your income to claim the treaty benefits
Complete and attach Form 8833 (to include details of treaty used)

36. Resident Alien Tax Details
Claiming a Spouse and/or dependents that do not have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
Individuals who are not working are not eligible for an SSN, so you must apply for an ITIN
Complete Form W-7 (Application for ITIN) and attach appropriate documents per instructions for each individual who needs an ITIN
Complete federal tax return
Must mail completed W-7 applications and completed tax return to the W-7 address. ITIN applications will be processed first, then the federal tax return will be forwarded for processing.
Processing of tax return will take 8-12 weeks (4-6 for ITINs to be assigned)
For Illinois state tax filing:
Wait for the ITINs to be assigned (may need to file an Illinois tax filing extension)
Dependents must qualify to be claimed

37. SharePoint calendars IV: Tips and tricks

38. SharePoint calendars IV: Tips and tricks

39. Illinois State Tax Filings

40. Illinois State Tax Filings
Do you need to File? See Illinois State Website for filing requirements
Lived/worked in IL and another state
A part-year resident taxpayer must file Form IL-1040 and Schedule NR if:
- you earned income from any source while you were a resident
- you earned income from Illinois sources while you were not a resident, or you want a refund of any Illinois Income Tax withheld.
Start with IL-1040 – Begin the IL-1040 with the adjusted gross income created on the federal tax return

41. Illinois State Tax Filings
Nonresident
Generally, individuals who spend less than 183 days in Illinois during the year
Not domiciled in Illinois
Received income from Illinois sources
If Illinois taxes withheld in error, must file return and attach a letter of explanation from your employer (must be on employer’s letterhead).
If you were in Illinois (as a Nonresident) and did not have any income from Illinois sources, you may not have an Illinois filing requirement
April 18, 2017 due date

42. SharePoint calendars IV: Tips and tricks

43. SharePoint calendars IV: Tips and tricks

44. Quality Review Checklist

45. Quality Review Checklist
Was residency status for tax purposes properly determined?
Double-check names, address, and phone numbers are correct
Are all allowable dependents properly listed (Canada, Mexico, South Korea)?
Are all income and deduction items correctly listed?
Have the returns been signed?
Have the correct documents (W-2, 1042-S) been attached?
Has the proper treaty article been cited and reported?

46. Resources

47. Resources for Federal Tax Returns
IRS:
(800)
IRS - Chicago Office:
John C. Kluczynski Federal Building
230 S. Dearborn St. Chicago, IL 60604
(312)
Monday-Friday - 8:30 a.m.-4:30 p.m.
Taxpayer Advocate:
(312)  or (877)

48. Resources for Illinois Tax Returns
Illinois State Revenue Office
(217)
Chicago Office:
James R. Thompson Center
Concourse Level
100 West Randolph Street
Chicago, Illinois
(800)
Hours: 8:30 a.m. to 5:00 p.m.

49. Resources for University Payroll Questions
Liz Fox
Payroll
(773)
6054 S. Drexel Ave, Suite 300
Chicago IL 60637

50. Resources for Tax Questions

51. Questions???