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Nonresident Alien Tax Workshop

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Presentation on theme: "Nonresident Alien Tax Workshop"— Presentation transcript:

1 Nonresident Alien Tax Workshop
Using GLACIER Tax Prep as a tool for self-preparation of Federal Tax Returns for Nonresident Alien Employees and Fellows/Scholars Controller’s Office, Payroll

2 General rule All withholding agents (UCSF) MUST withhold Federal income tax from all income payments made to or on behalf of a Nonresident Alien If the withholding agent does not withhold the appropriate amount of tax at the time of payment, the withholding agent will be liable for the tax, plus any penalties and interest, regardless of whether the individual pays the tax on his or her tax return All taxpayers must file a Federal tax return with the Internal Revenue Service to report their earnings for the calendar year

3 Overview of tax system US Tax System – Worldwide Income US Citizens
Lawful Permanent Residents (Green Card Holders) Resident Aliens for Tax Purposes Nonresident Alien Tax System – ONLY US Source Income Nonresident Aliens for Tax Purposes

4 Who is a Nonresident Alien?
Any individual who is NOT a US Citizen and has NOT passed the Green Card Test or Substantial Presence Test (SPT) Green Card Test A lawful permanent resident (green card or I-551 stamp in passport) Substantial Presence Test (Resident vs. Nonresident)* To meet the test, the individual must be physically present in the US on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting: All the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year *An individual’s residency status for tax purposes does not affect his or her immigration status

5 “Exempt Individual” concept and rules
Does not pertain to individual’s requirement to have federal or FICA tax withheld or to file a US income tax return A tax term that refers only to an individual's requirement that he/she does not need to include days of actual presence in the US when calculating the SPT F1/J1 Student – the first 5 calendar years of US presence J-1 Exchange Visitor – any 2 years of presence within a 6 year look back period not counting current year During this exempt period, the individuals will be Nonresident Aliens for tax purposes For all other visa types (H-1, TN), since there is no exempt rule, the SPT is applied immediately upon arrival in the US

6 Residency status for J professor and researcher visa holders
Was your U.S. date of entry PRIOR to 2013? No You are a Nonresident Alien for tax purposes and can use GLACIER Tax Prep You are a Resident Alien for tax purposes and cannot file using GLACIER Tax Prep Yes

7 Residency status for F and J student visa holders
Was your U.S. date of entry PRIOR to 2010? No You are a Nonresident Alien for tax purposes and can use GLACIER Tax Prep You are a Resident Alien for tax purposes and cannot file using GLACIER Tax Prep Yes

8 What forms should I have received?
Type of Income Situation W-2 Wages or Salary as an Employee You will receive Form W-2 to report the wages or salary on which you DID NOT claim a tax treaty exemption 1042-S (income code 18 or 19) You will receive Form 1042-S with income code 18 or 19 to report wages or salary on which you claimed a tax treaty exemption 1042-S (income code 15) Scholarship or Fellowship (no services performed) You will receive Form 1042-S with income code 15 to report scholarship or fellowship regardless of whether tax was deducted or you claimed a tax treaty exemption

9 What is Form 1042-S? Form 1042-S is similar in purpose to Form W-2 for reporting certain income paid to Nonresident Alien employees, fellows and scholars Nonresident alien employees might receive a 1042-S only, a W-2 only, or both a 1042-S and a W-2 There is no overlap for amounts reported on Form S and amounts reported on Form W-2. If you receive both, then information from both forms must be considered when completing Federal and state tax returns

10 What is Form 1042-S? Form 1042-S is used to report each payee’s
Type of income paid Applicable tax rate or reason for tax exemption Total amount of income tax withheld, if any Country of tax residence Other miscellaneous payee information

11 Who is eligible to receive Form 1042-S?
Employees (Income 18 or 19) who claimed “Tax with an amount in “Gross Income” and an amount in “Tax Treaty Exemption Claimed” will trigger a form Nonresident alien students/scholars who received a non-service scholarship/fellowship (Income code 15). An amount in “Gross amount paid” will trigger a form This includes Postdoc Paid Directs who pay imputed income on their health benefits

Used to determine how to properly withhold tax form payments to foreign national payees US residency status, tax treaty GLACIER Tax Prep “GTP” Used by Nonresident Aliens to complete their federal tax returns (Forms 1040NR, 1040NR-EZ, 8843, etc.)

13 How to complete your tax return using GLACIER Tax Prep?
There are two methods of getting into GLACIER Tax Prep (GTP) Through the GLACIER portal Only for individuals who have a GLACIER login ID Through the GTP portal For individuals who have never used GLACIER Must use special Access Code

14 Using GTP via GLACIER Portal
Point your browser to the GLACIER portal. Click “Login Now” and enter your User ID and Password From the User Activities Menu, select “I am ready to complete my tax return using GTP” On the next screen, GLACIER will ask you to verify important information before it automatically directs you to the GTP site Verify that the information is complete & correct, edit the information (if necessary) on the GLACIER Information Update or Verification screen . If correct, select “Yes,” and click “Next”



17 Using GTP via GLACIER cont’d.
You will see the “Welcome to GLACIER Tax Prep” screen and you can now enter GTP to complete your U.S. income tax return GLACIER automatically transfers some of your information into GTP so you don’t need to enter all of your personal information again Please review this information carefully to ensure that it is accurate and up to date

18 Accessing GTP for those NOT in GLACIER
A Common Access Code has been generated for individuals not in GLACIER Please refer to ISSO handout for access code If you don’t have a GLACIER user ID, but you logged directly into GTP last year, you will need the user ID you previously established



21 -Review FAQ -More info sidebar contains information needed for each screen



24 - STEP 2: Completing income forms




28 - STEP 3: complete additional misc information

29 -ALL nonresidents are required to complete Form 8843
-This includes any dependents regardless of any US income source or age -GTP will generate a 8843 for your nonresident alien dependents -If your spouse and/or child has his/her own independent immigration status (J-1, F-1, etc), s/he is no longer your dependent

30 - STEP 4: Print and send tax return


32 Tax Filing for Residents for Tax Reporting Purposes with a Tax Treaty Exemption
Even with a tax treaty, individuals who become Residents for Tax purposes during 2014 cannot file using GTP An individual with a tax treaty who became a Resident for tax reporting purposes during 2014 should have received both a W-2 and a 1042-S Must file as a Resident Alien using Form 1040 (not Form 1040A or Form 1040-EZ) Complete all the income lines as applicable including any amount that is tax treaty exempt On Line 21 (Other Income), enter a negative number for the total amount of your tax treaty exempted income so that when Line 22 is totaled, the tax treaty exempt amount will in effect be subtracted Scenario 1

33 U.S. Treasury Department Internal Revenue Service Center
Tax Filing for Residents for Tax Reporting Purposes with a Tax Treaty Exemption (continued) In the box on Line 21, write “U.S-(country) tax treaty, Article (article number) Complete the rest of tax return accordingly Attach page 5 of Form 1040-NR to the back of Form On Page 5, write your name, SSN, and “Resident Alien with Tax Treaty exemption” written at the top and ONLY question L completed Attach Form 1042-S Copy C to the documents Mail the tax return and Page 5 of Form 1040-NR to U.S. Treasury Department Internal Revenue Service Center Austin, TX USA

34 Nonresident Aliens Eligible for a Tax Treaty Who Did Not Claim in 2014
Nonresident Aliens for tax purposes who may be eligible to claim a tax treaty but did not in 2014 are still eligible After filling in W-2 information, if eligible, GTP will ask whether individual wants to claim a tax treaty (Step 2) Scenario 2


36 Country without U.S. Treaty Agreement
Nonresident Alien employees from a country without a tax treaty should have received only a W-2 Nonresident Alien students/fellows/scholars (non-employees) should have received at least a S GTP is accessible for them to prepare a tax return Scenario 3

37 When to File? Do not file your tax return late!
Deadline is Wednesday, April 15, 2015 Tax Forms completed via GTP must be printed and mailed to the IRS (no E-File) Those who became “Residents for US tax purposes” during 2014 should consider using other tax software (refer to ISSO handout) or consulting a tax professional Nonresidents must file as individuals, and cannot file as “Married filing Jointly” Important reminders 37

38 Update your Records To prevent documents being sent to a wrong address, you must update personal information changes in GLACIER as well as At Your Service (employee self service). New home or mailing address and/or address Nonresident aliens going back to home country In GLACIER, click “individual does not live in the U.S.” box before you leave AYSO: 38

39 Who do I contact?* GTP system support:
Form 1042-S, GLACIER, tax treaty, residency status, W-2 questions, duplicate W-2 request : Controller’s Office – Payroll, Immigration questions, GTP access code: ISSO, *Please refer to the GTP FAQ and the Tax Workshop FAQ for general tax questions so you can find your answer as quickly as possible

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