SPRING 2014

Report
International Students
and Scholars Tax Seminar
#2
Note: This workshop will explain only the basic
rules of resident income tax filing.
Income Tax Workshop for
“Resident Aliens”
Please Note:
These guidelines are for students on
F-1 or J-1 visas who have been in the U.S. for 5+ years
These are also for scholars on
J-1 visas who have been in the U.S. for
2 +- years out of the last 6 years .
These are also for employees on H-1B visas.
SPRING 2014
Internal Revenue Service?
The taxation agency of the U.S.
Government to which you
- File your personal Income Tax Return
SPRING 2014
State Tax Departments
• The taxation agency of the State Government to
which you may need to
File your personal Income Tax Return
• If you resided in New York State in 2011, you may
need to file a NYS Income Tax Return.
• If you lived in another state, you may need to file
that State’s Income Tax Return.
• If you lived in two states, you may need to file two
State Income Tax Returns.
SPRING 2014
Basic Tax Vocabulary
Alien: generally, any person who is not a U.S. citizen
Student: person temporarily in the U.S. on an F, J, Q
or M visa.
Scholar: person who is not a student & who is
temporarily in the U.S. on a J or Q visa.
Resident or Non-Resident: refers only to one’s filing
status.
SPRING 2014
Basic Tax Vocabulary (contd.)
Income: wages, salaries, tips, interest, dividends,
some scholarship/fellowship grants.
IRS: Internal Revenue Service.
Income Tax Return: statement filed (submitted) by
individual taxpayer to the IRS.
SPRING 2014
Do I file as a Non-Resident
Or Resident?
SPRING 2014
Determination of
Residency Status
Do not confuse Federal Tax Residency with
Immigration Permanent Residency
or
New York State Residency requirements for
state tuition rates.
SPRING 2014
It is possible for an alien to have an immigration
residency status that is not the same as his/her
federal income tax residency status. It is also
possible for the alien to have a state income tax
residency that is different than his/her federal
income tax residency.
This lesson covers the determination of residency
status for federal income tax purposes.
SPRING 2014
Federal Tax Residency Rules
For Federal Tax purposes,
foreign nationals are classified as:
• Resident Aliens OR
• Nonresident Aliens
(anyone who is not a resident alien)
•Note: There are also “Dual Status” aliens, who are considered as
residents for part of the year and nonresidents for part of the year. This
topic will not be covered in the presentation.
SPRING 2014
Resident or Non-Resident?
The following determines whether you are a
resident or nonresident for federal tax purposes:
1. Green Card Test
2. Substantial Presence Test
3. Residency Through Marriage
SPRING 2014
Who is a Resident?
1. Green Card Test
• Lawful permanent resident of the U.S.
SPRING 2014
1. Green Card Test
Your residency starting date for tax purposes is
based on the date your status changed to Lawful
Permanent Resident.
Remember: There is no option. If you are a
Lawful Permanent Resident, you are a resident for
tax purposes.
SPRING 2014
2. “Substantial Presence” Test
Calculation that takes into consideration
presence during the current year and two
immediately preceding years.
31 days during the current year
and 183 days based on a calculation that
considers presence during the current year
and two preceding years.
SPRING 2014
Residency Rules SPT (2-part test)
A.
= ___days
B.
Current year days in U.S. x 1
Must have at least 31 days in current year
1st preceding year days in U.S. x 1/3
C.
2nd preceding year days in U.S. x 1/6
= ___days
D.
Total “Days in U.S.” A+B+C
= ___days
= ___days
If Line D equals or exceeds 183, 183-day test is passed.
Must pass both 31-day and 183-day tests.
SPRING 2014
Residency Rules SPT (2-part test)
• If Line A equals or exceeds 31 days and Line D
equals or exceeds 183 days, then you are a
Resident Alien for federal tax purposes.
• If not, then you are a Nonresident Alien for
federal tax purposes and do not need this
workshop.
SPRING 2014
Residency Rules SPT (2-part test)
Some individuals are exempt from counting days
toward the Substantial Presence Test.
• Days of an “EXEMPT” individual
• Commuter from Canada or Mexico
• Others (see Publication 519)
SPRING 2014
Who are exempt individuals?
•
F, J, M & Q students (who have been in U.S. for
less than 6 years)
•
J & Q Scholars (who have been in U.S. for less
than 3 years out of last 6 years)
Note: Not exempt from taxation
SPRING 2014
3. Residency through marriage
A nonresident spouse can be treated as a resident
for tax purposes
• You are required to file jointly with your U.S.
Citizen or U.S. Resident (for tax purposes)
spouse.
• You must report world-wide income.
SPRING 2014
Establishing a closer connection
If you want to remain a non-resident for tax
purposes by claiming a closer connection to your
country, you can if:
• You are present in the U.S. less than 183
days in the current year AND
• You have a tax home in a foreign country AND
• You file Form 8840
Note: There are other criteria. Please see Form 8840 instructions.
SPRING 2014
Residency Starting Date
Residency starting date under green card test
If you meet the green card test at any time during a
calendar year, but do not meet the substantial
presence test for that year, your residency starting
date is the first day in the calendar year on which
you were present in the U.S. as a Lawful
Permanent Resident.
SPRING 2014
Residency Starting Date
Residency starting date under SPT
Your residency starting date is generally the first
day you were present in the U.S. during that
calendar year.
SPRING 2014
Residency Starting Date
When both the Substantial Presence Test and
Green Card Test apply, use the earlier of the
two dates.
SPRING 2014
Tax Treatment of
Resident Aliens
SPRING 2014
Are you required to file a
U.S. Resident Tax Return?
SPRING 2014
Remember
Resident Aliens are taxed on worldwide
income, just as U.S. Citizens are.
Resident Aliens may not claim exclusions of
income based on Tax Treaties (with certain
exceptions stated in some tax treaties).
SPRING 2014
Wages, salaries and tips
• Amounts you receive from an employer.
• You should receive a Form W-2 at the end of
the year. It reports the annual amount of
wages you received.
SPRING 2014
Taxable Scholarship and
Fellowship
• Scholarship and fellowship grants are not
included in taxable income if used for tuition, fees,
books, supplies and equipment required for
courses AND if the student is pursuing a degree.
• Any portion of scholarship or fellowship received
for room & board or in exchange for teaching or
research is included in taxable income.
SPRING 2014
What is Taxable Scholarship
and Fellowship
You call it:
Internal Revenue calls it:
Tuition
Waiver
Non-taxable
Scholarship
(No work required)
SPRING 2014
What is Taxable Scholarship
and Fellowship
You call it:
Room &
Board
Waiver
SPRING 2014
Internal Revenue calls it:
Taxable
Scholarship
What is Taxable Scholarship
and Fellowship
You call it:
Teaching
Research asst.
Stipend
SPRING 2014
Internal Revenue calls it:
Taxable wages
Do you have to file?
• If your gross income is over the dollar amounts
listed on the chart, you must file a U.S. Federal
Income Tax Return.
• If you have overpaid taxes, you must file an
income tax return in order to receive an income
tax refund.
SPRING 2014
Filing Vocabulary
Single: not married
Married: married and file income together
Note: U.S. recognizes marriage from U.S. states and
other countries
Married filing Separate: married but files
income alone
SPRING 2014
Filing Vocabulary
Head of Household: single and pays for
maintenance of a home for a dependent
Note: Read the rules for this status carefully before claiming it.
(IRS Publication 17)
Qualifying widow(er) with dependent child:
able to claim this status for two years after the
death of the spouse
SPRING 2014
2011 Filing Requirements
SPRING 2014
Income Tax Forms
Resident aliens can file Forms
1040, 1040A or 1040-EZ
(See form instructions for any restrictions.)
SPRING 2014
More Tax Forms
W-2: Wage and Tax Statement
1040 or 1040A: U.S. Resident Alien Income Tax
Return
1040-EZ: U.S. Income Tax Return for certain
resident aliens who have no dependents
Note: See IRS Publication 17 to find the easiest form for you to file.
SPRING 2014
More Tax Vocabulary
Withholding:
U.S. income tax automatically taken
from your paycheck
Note: U.S. Social Security and Medicare are also taken from
your paycheck.
SPRING 2014
Forms W-2
• You could have one W-2 or more from different
employers.
• The form was prepared by your employer and
mailed to you.
• You do not write anything on this form.
• You use this form as a reference when you
prepare your income tax return.
• When finished, you attach this form to your
income tax return.
SPRING 2014
More Tax Vocabulary
• Standard Deduction: standard amount that
individuals may subtract from income before
calculating taxes owed.
• Itemized Deductions: allowable amounts that
individuals may subtract from income before
calculating taxes owed
Examples: charitable contributions, state & local taxes
withheld, etc.
Note: No one can have both a standard deduction and itemized
deductions. You have to choose one.
SPRING 2014
Standard Deduction Amount
For most people under age 65
• Single
• Married Filing Joint
• Married Filing Separate
• Head of Household
• Qualifying Widow(er)
with Dependent Child
SPRING 2014
$ 5,800
$11,600
$ 5,800
$ 8,500
$11,600
More Tax Vocabulary (cont.)
Personal Exemption: amount deducted
from income for yourself and/or your
dependents
For 2011, the amount is $3,700.
SPRING 2014
Which residents can use
Form 1040-EZ
Individuals
• who do not claim any dependents
• whose taxable income is less than $100,000
• who do not claim any itemized deductions
• who had only wages, taxable scholarship or
fellowship grants, and whose taxable interest
was not over $1,500
• Miscellaneous other reasons
(see Form 1040-EZ instructions)
SPRING 2014
Let’s look at the steps for
completing
Form 1040-EZ
SPRING 2014
Form W2
011-00-0110
16-6000000
10,000
State University
345 University St
Collegetown, NY 00000
KUMAR DALI
123 UNIVERSITY LANE
COLLEGETOWN, NY 00000
NY
16-6000000
SPRING 2014
10,000
240
964
Form 1040-EZ
Box 1 from all W-2(s)
SPRING 2014
Form 1040-EZ
Add all amounts in
box 2 of W-2(s)
SPRING 2014
Form 1040-EZ
Read instructions to see if you qualify
(http://www.irs.gov/pub/irs-pdf/i1040ez.pdf)
SPRING 2014
From Tax Table
(See next page)
2011 tax table
SPRING 2014
Form 1040-EZ
SPRING 2014
When do I file a resident
income tax return?
The filing deadline is
April 17, 2012
SPRING 2014
Where do I file a Resident
income tax return?
Refund Due
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999-0014
SPRING 2014
Social Security. Do I pay or
am I exempt?
It depends.
SPRING 2014
You don’t pay Social
Security Tax if•
•
•
You are a nonresident alien for income tax
purposes
You are present in the U.S on an F-1, J-1,
M-1 or Q-1 visa, AND
You perform services that are consistent
with your U.S. visa status
SPRING 2014
You pay Social Security Tax
when-
•You are a Resident Alien for income tax purposes.
•You are an F-1 student who has been in the U .S.
for 5+ years or a J-1 scholar who has been in the
U.S. for 2+ years.
•You hold an H1-B or TN visa.
Note: You will always be subject to Social Security and Medicare
Taxes (FICA) from the date of arrival.
SPRING 2014
Exceptions to this rule
If you are a student who would otherwise be subject to
Social Security and Medicare Taxes (FICA), you will be
exempt from paying it if you are working at the school
as a full-time student.
(This exemption may start and stop periodically due to the individual’s
enrollment status )
SPRING 2014
The exception does not apply
in these cases
•
Resident aliens who are participating in full-time
Optional Practical Training should pay Social
Security and Medicare Taxes (FICA) throughout
their OPT work authorization period, and
•
Students who are resident aliens and are not
enrolled in 6 or more credits during summer break
should pay Social Security and Medicare Taxes
(FICA) during summer break.
SPRING 2014
For more information,
call 1-800-829-1040 OR www.irs.gov
For help in person, visit an IRS office
The closest one to Pratt is:
625 Fulton St.
http://www.irs.gov/localcontacts/article/0,,id=98318,00.html
SPRING 2014
Web links, Forms and Publications
New York State Department of taxation and finance: http://www.tax.ny.gov/
NY State form IT 203: http://www.tax.ny.gov/pdf/current_forms/it/it203_fill_in.pdf
Instructions: http://www.tax.ny.gov/pdf/2011/inc/it203i_2011.pdf
New Jersey State Department of Treasury: http://www.state.nj.us/treasury/taxation/
NJ State form 1040:
http://www.state.nj.us/treasury/taxation/pdf/current/1040.pdf
Instructions:
http://www.state.nj.us/treasury/taxation/pdf/other_forms/tgi-ee/2011/10_1040.pdf
Connecticut State department of Revenue Services:
http://www.ct.gov/drs/taxonomy/drs_taxonomy.asp
Connecticut State form CT 1040:
http://www.ct.gov/drs/lib/drs/forms/2011forms/incometax/ct-1040.pdf
Instructions:
http://www.ct.gov/drs/lib/drs/forms/2011forms/incometax/ct-1040booklet.pdf
SPRING 2014
Thank You
SPRING 2014

similar documents