BASIC TAX INFORMATION FOR F1 VISA HOLDERS · 2016-07-20 · usa long enough to be considered...

BASIC TAX INFORMATION FOR F1 VISA HOLDERS

INTERNATIONAL STUDENTS TRINITY UNIVERSITY

INTERNATIONAL STUDENTS TRINITY UNIVERSITY

WHY FILE A TAX RETURN

� COMPLY WITH IRS REGULATIONS � REPORT ALL INCOME EARNED AND TAXES WITHHELD � ONLY WAY TO RECEIVE REFUND OF TAXES WITHHELD

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

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

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.

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

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

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

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

NON-RESIDENT TAX FORMS �  FORM 8843 - 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

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

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)

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 15

1.  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

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

SPOUSE AND DEPENDENTS

� - FORM 8843

� - U.S. SOURCE INCOME MUST BE REPORTED

FILING STATUS AND DEPENDENTS

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

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

FICA REFUNDS

WHEN WITHHELD IN ERROR

�  ASK EMPLOYER TO REFUND �  IF NOT REFUNDED, USE IRS FORM 843 TO REQUEST A REFUND

DO I NEED A SSN OR ITIN �  IF FILING ONLY FORM 8843 - 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

ADDITIONAL TAX RESOURCES

� IRS PUBLICATIONS

� PUB 519 TAX GUIDE FOR ALIENS

� PUB 901 TAX TREATIES

� TAX PREPARATION SPECIALISTS

ADDITIONAL QUESTIONS PLEASE CONTACT:

LARRY BARKER ENROLLED AGENT & MASTER TAX ADVISOR

LARRY.BARKER@TAX.HRBLOCK.COM 210-653-6507