Tax Information for International Students and Scholars. Contents

Transcription

1 MARCH 2011 Tax Information for International Students and Scholars Contents 1. Tax Information for International Students and Scholars 2. Tax Preparation Software: CINTAX and other programs 3. Tax Filing Requirements for Individuals in E, F, H, J, and TN Visa Status 4. Tax Publications, Resources, and Forms for Internationals 5. Social Security and Individual Taxpayer Identification Numbers (ITIN) Thanks are due to our colleagues at the International Students and Scholars Office at Massachusetts Institute of Technology for the format of this handout and information. 1

2 1. Tax Information for International Students and Scholars You should be aware that taxes may be deducted from salaries, stipends, and fellowships. Your available income after taxes may be lower than anticipated. The amount withheld from your paycheck is dependent upon your tax status which, in turn, is determined by your visa classification and the amount of time you have been in the United States. Income taxes, when applied, usually amount to about 14% of total income, but may be as high as 30%. H-1B and J-2 visa holders are also subject to social security and medicare taxes of approximately 7.65% of total income. All foreign scholars and spouses are required to report their annual income by filing a tax return between January 1 and April 18 of the following year (for the 2010 tax year, returns are filed between January 1 and April 18, 2011). According to current regulations, all individuals in F, J, M and Q categories must complete particular tax forms even if they had no United States source income. Please keep records of your income and expenditures to substantiate later claims on your tax returns, and keep copies of your income tax forms. Please keep in mind that many tax treaties exist between the United States and other countries, which may exempt you from paying federal income tax in the United States (IRS Publication 901). Information about treaties can be obtained from Karen Dhirapong in the Controllers Office, telephone (415) , Karen.Dhirapong@ucsf.edu. Please note: Because of legal restrictions on our capacity to advise you about tax liabilities, the ISSO staff is not able to answer individual questions regarding your tax situation. It is the responsibility of each international student and scholar to comply with US tax regulations. While ISSO offers information in the form of workshops and resources, ISSO is not trained to provide tax advice and disclaims all liability from the misinterpretation or misuse of these resources. 2

3 2. Tax Preparation Software: CINTAX and other programs CINTAX is an internet-based tax preparation system for nonresidents for federal tax purposes. ISSO makes this program available to international students and scholars at UCSF in March. There re two ways to access CINTAX. 1. UCSF students and scholars who have entered individuals records in GLACIER a. Access CINTAX via GLACIER tax.net/ b. Log into GLACIER with user name and Access Code c. Choose option I am ready to complete my tax return d. Website redirected to CINTAX 2. If you do not have a record in GLACIER a. Go to CINTAX directly b. Click Login Now c. Next page asks, Have you already created your User Account? d. Choose appropriate answer for your case e. Use access code to create a new account (contact visa@ucsf.edu for access code) CINTAX is available only to current and recent UCSF students and scholars. Keep this information to yourself. ***Note: CINTAX only supports WINDOWS 2000/XP/Vista (Internet Explorer and Firefox) or MAC OSX (Safari and Firefox). CINTAX does NOT support Internet Explorer on a MAC. JavaScript must be enabled on your internet browser. CINTAX is designed primarily for individuals in F, J, M or Q status. However, international scholars in H-1B, E, O or TN status may also be able to use the program, depending on their individual situations. We encourage you to use CINTAX to determine your resident or nonresident alien tax status even if you will not be able to prepare your tax return using this software. Disclaimer: ISSO is not trained to provide, nor allowed to provide tax advice and therefore disclaims all liability from the misinterpretation or misuse of CINTAX. We are offering this tax software as a convenience to our students and scholars. If you need further assistance or would like to request the handout please drop by the ISSO office or visa@ucsf.edu. Tips for Using CINTAX CINTAX is an online system. However, it does not file the tax return electronically. The IRS does not currently allow Forms 1040NR and 1040NR-EZ to be filed electronically. You must print, sign, and mail the tax return/forms generated by CINTAX. Have all documents regarding current and prior visits to the US available prior to accessing CINTAX: o All entry/exit dates to the US o Forms I-120 (F visa); DS-2019 (J visa); Form I-797 (H visa) o Passport o Form I-94 o Social Security Number or Individual Taxpayer Identification Number (ITIN) o Address information (i.e. current U.S. and foreign address) o A copy of your 2009 federal income tax return (Form 1040NR or 1040NR-EZ) if you filed a US federal income tax return last year o For Academic Institution or Host Sponsor Information for CINTAX use: 3

4 Carrie Steere-Salazaar, Interim Director, International Students and Scholars Office, 1675 Owens Street, CC-290,, Box 0477, San Francisco, CA 94143, telephone (415) Have all payment documents available prior to accessing CINTAX o Form W-2. A copy is available online if you opted for this service from At Your Service Office website: Login to your account; go to Income and Taxes; click on W2 and download a copy. The W2 will be online beginning Feb 15, If this process does not work, call Michael Grove at (415) o Form 1042S (electronically posted on GLACIER, if available, and mailed out February 11, 2011 for individuals without a GLACIER record) o Forms 1099, if any o Scholarship/fellowship grant letter you may have received, if any Set aside about 30 minutes to complete the process CINTAX Security Concerns All information entered into CINTAX is encrypted and secured via SSL technology CINTAX will NOT use your address for any purpose other than to contact you if CINTAX finds an error has occurred ad they need to reach you in connection with your tax preparation. CINTAX pledges that all of the information is secure and will not be distributed or used by anyone other than CINTAX. Be sure to correctly enter the Password. Do not share this password with anyone outside of UCSF. Sharing the password is a serious violation of the CINTAX-UCSF licensing agreement and will jeopardize our ability to offer our UCSF students and scholars this service. If you experience problems, send an to the CINTAX Support Center at support@cintax.us. CINTAX will only answer questions via . Other Programs There are a variety of tax preparation programs available for individuals who are residents for federal tax purposes including Turbo Tax ( H & R Block ( or Complete Tax ( and many others. Note that these programs offer a state income tax return service as well as the federal service for a fee. The Free File Alliance, a partnership between the Internal Revenue Service (IRS) and 20 tax software companies, offer free software (usually their basic version) for preparing the federal tax return online. They also offer free electronic filing. The free offers do not apply to software that comes in a box. Each year in mid-january, alliance members post their free offers on the IRS website at or To access the free offers, individuals must link to the software companies websites from the IRS site. The Free File offers vary in terms of restrictions and criteria which must be met. Make sure to read every instruction thoroughly to determine whether you will be able to use any software package. 4

5 3. Tax Filing Requirements for Students and Scholars in F, J, and H Status Federal Requirements All taxpayers must file a tax return (form) each year with the Internal Revenue Service (IRS), the United States government agency which handles federal taxes, and may also be required to file with the state tax agencies. The United States tax system is based on the principle of selfassessment. Therefore, it is the individual's responsibility to understand the requirements. The IRS has federal tax filing requirements for individuals in nonimmigrant visa statuses and their dependents. The requirements vary according to whether the student, scholar, or dependent is considered a resident or a nonresident alien for federal tax purposes. You can use CINTAX to determine whether you are a resident or nonresident alien for federal tax purposes. Nonresident Aliens for Federal Tax Purposes Individuals in nonimmigrant visa statuses who are nonresident aliens for federal tax purposes may be required to complete and send tax forms to the IRS. This is called filing a tax return. This is true whether they received United States-source income in 2010 and/or are covered by a tax treaty and/or received no United States-source income in Those who received United States-source income and/or are covered by a tax treaty must file federal tax Form 8843 AND either Form 1040NR or Form 1040NR-EZ by April 15, 2011; they may also be required to file other federal forms as well as California state tax Form 540NR, Form 540, Form 540A or Form 540 2EZ. Those who received NO United States-source income other than bank interest must only file federal Form 8843 by June 15, Please note: Form 8843 must be completed by each individual at UCSF who is a nonresident alien for tax purposes. Mail completed Forms 8843 and/or Form 1040NR or 1040NR-EZ to: Department of the Treasury Internal Revenue Service Center Austin, TX Resident Aliens for Federal Tax Purposes Individuals in nonimmigrant visa statuses (e.g. E, F, H, J, TN, etc.) who are resident aliens for federal tax purposes are required to file Form 1040 (not 1040NR) and are NOT required to file Form Resident aliens for federal tax purposes are subject to taxation based on worldwide income, and tax treaty benefits may or may not apply. If dependents who are residents for federal tax purposes have any worldwide income, they may file either a joint or separate Form Please consult the instruction booklet of Form 1040 for the proper mailing address for your federal tax form if you are a resident for federal tax purposes. Other federal forms as well as California state tax Form 540NR, Form 540, Form 540A or Form 540 2EZ may also be required. Please note: UCSF employees who change immigration status and/or become resident aliens for federal tax purposes should notify Karen Dhirapong in the UCSF Controller s Office, and file a new Form W-4, if necessary. This is the responsibility of each scholar, not of UCSF. 5

6 Dual Status in the Same Tax Year Those who have changed visa and/or tax status during the course of 2010 and individuals in H-1 or H-4 visa status who were in the United States fewer than 183 days in 2011 may have additional issues or filing requirements and should consult the IRS resource materials carefully (See IRS Publication 519). Social Security Number (SSN) and Individual Taxpayer Identification Numbers (ITIN) Individuals who receive United States-source income from employment must have a Social Security Number (SSN) to file a United States income tax return. Individuals who are not paid through a United States source but are in a visa status that permits certain types of employment (e.g. J-2 with EAD) are advised to obtain a SSN. Those who are not eligible to work (e.g. J-2 without work authorization, F-2, or H-4) should apply for an Individual Taxpayer Identification Number (ITIN) if they will be claimed as dependents on the principal s (scholar s) tax return. A SSN or ITIN is REQUIRED for Forms 1040NR or 1040NR-EZ. See the Social Security Administration website and the IRS website for more information and instructions for obtaining these numbers. California State Requirements If you are a nonresident for federal tax purposes, this does not necessarily mean you will be a nonresident for state tax purposes. An international scholar can be a resident for state tax purposes. To determine residency for California state tax purposes, see State of California Franchise Tax Board publication California residents for state tax purposes must file Form 540, Form 540A or Form 540 2EZ. Nonresidents for state tax purposes must file Form 540NR. They must report all income reported on their federal tax return. They must report only income earned within California. Where to Obtain Federal and State Tax Forms and Publications Download forms and instructions from the internet: Federal tax forms can be found at California state tax forms can be downloaded at Contact the IRS Forms Distribution Center at 1(800) [1(800) TAX-FORM] 6

7 4. Tax Publications, Resources, & Forms for International Students & Scholars San Francisco Local IRS Office 450 Golden Gate Avenue, San Francisco, CA telephone (415) Open Monday through Friday 8:30 am to 4:30 pm Low Income Taxpayer Clinic (LITC) English as a Second Language Serving English/Cantonese/Mandarin: Chinese Newcomers Service Center Telephone (415) extension 691 Serving English/Spanish/Hmong: Central California Legal Services LITC Telephone (559) or (800) Telephone numbers for tax services Inquiries from internationals concerning federal tax filing: 1 (267) Federal tax forms and publications: 1 (800) General federal tax information: 1 (800) California state forms and information: 1 (800) (within US); 1 (916) (outside of US) Helpful web sites Internal Revenue Service (IRS) IRS main page: Information for international taxpayers: Tax forms and publications: Help with general questions: How To e-file Your Taxes Online: Free File home page: California State Taxes Franchise Tax Board (ftb) California state tax main page: Tax forms: Contact California Franchise Tax Board: Tax preparation services for Resident Aliens and Nonresidents Volunteer Income Tax Assistance (VITA): H&R Block: Online Taxes: TaxBrain.com: Earn it! Keep It! Save it!: or 1 (800)

8 ...(continued) Tax preparation services TurboTax for the Web: WorldWideWeb Tax: TaxACT: UCSF contacts and resources Freddie Robinson, Student Accounts telephone (415) : Information about student and postdoctoral stipend payments; California Form 592B; From 1042S Karen Dhirapong, Tax Accountant telephone (415) ; Information about tax treaties; Optional Practical Training issues; Form 1042S Delia Cavizo, Payroll telephone (415) ; UCSF process for tax liability on imputed income Michael Grove, Controller s Office-Payroll telephone (415) ; michael.grove@ucsf.edu: Problems downloading Form W2 Tracy Lee, Controller s Office, Postdoc/Nonresident Tax Coordinator Telephone (415) , tracy.lee@ucsf.edu. Request copy of 1042-S. At Your Service Office website to download Form W2: Login to your account; Go to Income and Taxes; Click on W2; Download a copy UC Office of the President Tax information specific to tax issues for those paid by UC UC Tax Credit Reporting Service toll free telephone 1 (877) or (415) : Student scholarships and fee information on Form 1098T Other useful tax information websites The University of Texas, Austin This web site provides a guide to the forms and procedures for filing your Federal taxes. The site does not include information about California state taxes. Many thanks to the UT, Austin International Office for this resource! The Guide will help you to: Determine if you are required to file a tax return; Determine which form or forms you should file; Understand the filing instructions; and Prepare and submit your own federal tax forms. Windstar Technologies, Inc. This commercial site has useful articles and guidance for student and scholar tax responsibilities and tax filing. The articles on the linked page are free to the public. However, access to other resources on this website require a paid subscription. IRS publications, forms, reports, and resources Listed here are publications and forms that may be helpful to international students and scholars. The list does not include all IRS publications and forms. The forms and publications can be downloaded from the IRS website at or obtained by calling the IRS. Publication 17: Your Federal Income Tax A federal tax guide for individuals most useful for residents for tax purposes. 8

9 Publication 513: Tax Information for Visitors to the United States Overview of the U.S. tax system and regulations applicable to internationals. Publication 514: Foreign Tax Credit for Individuals Describes the foreign tax credit allowed from income taxes paid to a foreign government on income taxed by both the U.S. and the foreign country. Publication 515: Withholding of Tax on Nonresident Aliens and Foreign Corporations Describes withholding for U.S. employers required to withhold taxes on the income of nonresident aliens. Publication 519: US Tax Guide for Aliens How to determine resident or nonresident status for tax purposes, what kinds of income are taxed, the effect of tax treaties on tax liability, how to claim exemptions by tax treaties, etc. CINTAX can help you determine resident or nonresident status as well. Publication 970: Scholars and Fellowships Describes the types of scholarship and fellowship income that is either taxable or tax exempt. Publication 597: Information on the US-Canada Income Tax Treaty The treaty itself and a brief description of some tax difficulties encountered by Canadian residents working temporarily in the US. Publication 686: Certification for Reduced Tax Rates in Treaty Countries Reviews procedures if you pay US taxes and wish to avoid paying taxes on the same income at home. Publication 901: US Tax Treaties Lists treaties in effect as of April CINTAX can help you in this area as well. IRS Tax Forms You will not need many of the forms listed below. Forms commonly required by the average international student or scholar are marked with an *. * Form W-2 Your US employer uses this form to report the income earned and tax withheld during the tax year. The UCSF Controller s Office-Payroll will mail Form W-2 on March 6, There are four copies of the W-2. You must attach a copy of your W-2 to your Federal and State tax returns. * Form W-4 This form should be completed with the UCSF Controller s Accounting Office-Payroll to indicate federal and state taxation rates. Resident or nonresident status for tax purposes should be determined before completing this form. Please note that if you change the number of exemptions for dependents and/or change your marital status, you must file a new Form W-4. Form W-7 Used to obtain an Individual Taxpayer Identification Number (ITIN). This form must be completed by those who are not eligible for work authorization and therefore not eligible for Social Security Numbers. * Form 1040, 1040EZ, 1040A, and 1040C US Individual Income Tax Return and Instruction forms used for filing as residents for tax purposes. The 1040EZ is for single and joint filers with no dependents. The 1040A is used to claim certain adjustments. The 1040C, US Departing Alien Income Tax Return is also called a Certificate of Compliance or Sailing Permit. H-1B visa holders are required to file Form 1040C before departing the US. It is generally not necessary for individuals in F, J, or M status to file Form 1040C before departing the US. * Form 1040NR and 1040NR-EZ US Individual Income Tax Return and Instructions. Income tax forms used by those filing as nonresidents for tax purposes. Both forms must be accompanied by Form Schedule A Used for itemizing deductions. Please note that there are separate Schedule As for resident (1040) and nonresident (1040NR) forms. Schedule B and Schedule 1 Both forms are used to report interest and dividends received. Schedule B is used if the total received of either is greater than $400. For residents, bank interest is not subject to income tax. Schedule 1 is used by individuals filing Form 1040A. 9

10 * Form 1042S Used to report grants received from government funds, such as Fulbright grants. Form 1078 Certificate of Alien Claiming residence in the US. Used to claim residence in the US for income tax purposes only. This form is filed with the UCSF Accounting Office, not the IRS. Forms 1099 DIV, 1099 INT, and 1099 MISC Reports you receive for dividend (DIV), interest (INT), or other miscellaneous (MISC) income paid to you. Form 1116 Used to figure your foreign tax credit if you paid or accrued foreign taxes for the tax year. Form 4868 Used to request an extension for filing your tax return from April 15 to August 15. You can only request an extension for filing the tax forms. If you owe any taxes, you must include a check to the IRS when you submit the extension request (with interest). * Form 8233 See Karen Dhirapong in the UCSF Controller s Office-Payroll to see whether you are eligible to file this form showing you are exempt from withholding of taxes if there is a tax treaty between your country s government and the US. Form 8833 Treaty-Based Return Position Disclosure. Must be filed with Form 1040NR and Form 8843 is you claim a tax treaty. * Form 8840 Used by people who qualify as residents for tax purposes and meet the substantial presence test to show a closer connection to a home country that would allow continued nonresident status. * Form 8843 Must be completed by each student or scholar at UCSF who is a nonresident alien for tax purposes. 10

11 5. Social Security and Individual Taxpayer Identification Numbers A Social Security number (SSN) is a taxpayer identification number issued by the Social Security Administration. It does not represent permission to work and it is not proof of U.S. citizenship or permanent residence. Individuals who are paid in the U.S. must have a SSN to file an income tax return. Once obtained, a SSN remains valid and therefore may be used during future visits. Only individuals receiving funding from the U.S. are eligible to apply for a SSN. To determine if an international student or scholar is eligible to apply for a SSN and to verify the required documentation, contact UCSF International Students and Scholars. To obtain a SSN, you must apply in person at a local Social Security Administration office (see area locations below). Normally, it takes approximately three to six weeks from the date of application for the Social Security card to arrive. Notify your human resources representative in your department of your SSN. Because the Social Security Administration must check the validity of your visa documents using the U.S. Department of Homeland Security s SAVE database, you must first check-in with ISSO and may want to wait at least days after your entry into the U.S. before applying for your SSN, to allow time for your information to be entered into the database. Otherwise, your application may be delayed. Individuals employed in the U.S. pay a 7.65% F.I.C.A. tax, which includes the Social Security and Medicare taxes. Employers automatically withhold this tax from their employees paychecks. There are some exemptions related to immigration and tax status (see IRS Publication 519 for details). Some generalizations follow: J-1 and F-1 students should not have the Social Security or Medicare taxes withheld if they have been in the U.S. for five calendar years or less. J-1 scholars are exempt from the Social Security and Medicare tax withholdings if they have been in the U.S. for two years or less during the preceding five calendar years. Consultants who are not paid from a regular payroll system will not have this tax withheld from their payments but may be subject to the payment of this tax when they file their tax returns, if they are required to file as resident aliens. Social Security Administration contact information or call toll free 1 (800) Social Security Administration offices in San Francisco 1098 Valencia Street (Between 21 st and 22 nd Streets) 560 Kearny Street (Between Sacramento and California Streets) 90 7 th Street, Annex First Floor (at Mission and 7 th ) 11

12 Individual Taxpayer Identification Numbers (ITIN) Individuals without employment authorization from U.S. Citizenship and Immigration Services (CIS) and/or who have no taxable income (e.g. dependents in F-2, J-2 without EAD, H-4, or O-3 visa status) are not eligible for a SSN. They will, however, need an official identification number to complete an income tax return. ITINs are intended for tax use only and can be obtained by filing Form W-7 with the Internal Revenue Service (IRS). An ITIN does not represent permission to work and is not proof of U.S. citizenship or permanent residence. Examples of individuals who need to apply for an ITIN: Nonresident aliens not eligible for a SSN who are required to file a U.S. tax return or who are filing a tax return only to claim a refund. Alien spouses and dependents who are claimed as exemptions on U.S. tax returns but who are not eligible to obtain a SSN. Do not apply for an ITIN if you have a SSN or are eligible for a SSN. If you obtain an ITIN and subsequently are granted work authorization from CIS, you will need to apply for a SSN. Use the SSN on all future tax returns, and notify the IRS so they can retire your ITIN. ITIN application forms (Form W-7) may be downloaded from the IRS website at To apply for an ITIN for yourself and/or a family member: Complete Form W-7. Don t forget to sign it and date it. Include the original, completed tax return for which the ITIN is needed. If you are applying for more than one ITIN for the same tax form (for example, for a spouse and a child), attach all Forms W-7 to the same tax form. Get certified copies of all immigration documents for each applicant, including the identification page(s) of the passport, the entry visa stamp, the front and back of the Form I-94 (white card stapled into passports), and any other appropriate documentation (Form DS-2019, I-20, I-797, etc.). Do not send original immigration documents to the IRS. Mail these items to: Internal Revenue Service Austin Service Center -- ITIN Operation P.O. Box Austin, TX Do not mail these items to the mailing address listed in the instructions for your tax form. More information about Social Security numbers and ITINs can be found on the Social Security Administration and IRS websites. 12