u.s. income tax seminar for foreign students
DESCRIPTION
U.S. Income Tax Seminar for Foreign Students. Rice University OISS Presents:. Andrew Lai attorney certified public accountant. February 26, 2009. Audience. Are you a F or J visa student? In U.S., 1 – 2 years? Over 2 years?. Introduction. Handout and Forms Outline - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/1.jpg)
1
U.S. Income Tax Seminar
for Foreign Students
Rice University OISS Presents:
Andrew Lai attorney certified public accountant
February 26, 2009
![Page 2: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/2.jpg)
2
Audience
Are you a F or J visa student?
In U.S., 1 – 2 years? Over 2 years?
![Page 3: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/3.jpg)
3
Introduction
Handout and Forms Outline Active Participation Ask Questions as we go Presentation – 1.5 hour
![Page 4: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/4.jpg)
4
Why Pay Tax ?
It’s the Law Break the law; it is a criminal
offense Adverse impact on future
immigration application
![Page 5: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/5.jpg)
5
Goals
Correct withholding Fill 1040NR-EZ by yourself Understand your tax return Know your treaty It’s YOUR responsibility
![Page 6: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/6.jpg)
6
Due Date
April 15th (Wed) One Extension to
October 15th - Form 4868
Extend to file, NOT pay
![Page 7: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/7.jpg)
7
Mail to:
Forms 1040, 1040EZ, 8843, 8840, 1040NR and 1040NR-EZ: Department of the Treasury Internal Revenue Service
Center Austin TX 73301 - 0215
![Page 8: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/8.jpg)
8
Resident/Non-Resident Taxpayer
Tax Law Resident alien or Nonresident alien
Immigration Law Permanent resident
![Page 9: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/9.jpg)
9
图表
![Page 10: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/10.jpg)
10
Exception A - Exempt Individual
F and J Visas Follow Visa’s requirements No need to count days for which
you are an exempt individual
![Page 11: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/11.jpg)
11
Follow Visa’s Requirements
Did not participate in activities Not allowed under the immigration laws Lead to loss of visa
F - 1 students Nature of work Meet the minimum credit hours per semester Do not break any law Have not intention to immigrate
![Page 12: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/12.jpg)
12
Follow Visa’s requirements
What’s expect of a student
Must file Form 8843 with Form 1040NR or 1040NR-EZ
![Page 13: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/13.jpg)
13
Exception B to Exception A
An exempt individual for 5 years for F-1, 2 years for J-1 (see Pub 519 App B)
No more exemption Resident Taxpayer
![Page 14: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/14.jpg)
14
Exception to Exception B
No intention to stay in U.S., and No violation of the visa’s
requirements Non-resident Taxpayer
![Page 15: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/15.jpg)
15
No Intention to Stay in U.S.
Keep close connection with foreign country
In U.S. < 183 days Tax home in foreign country
Did not file any of the following immigration forms:
Form I-508 Form I-485 Form I-130 Form I-140 Form ETA-750 Form DS-230
![Page 16: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/16.jpg)
16
No Intention to Stay in U.S.
File Form 8840 File with Form 1040NR or Form
1040NR-EZ
![Page 17: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/17.jpg)
17
Resident/Non-resident
File the right form Different tax amounts
Non-resident cannot claim spouse as a dependent
Cannot use standard deduction
![Page 18: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/18.jpg)
18
FORMS
To your employer W-4 Employee’s Withholding Allowance Certificate 8233 Exemption from Withholding on Compensation for
Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual
Social Security Number/Taxpayer ID Social Security Administration: Form SS-5 IRS: W-7 Application for IRS Individual Taxpayer ID
Number From your employer before January 31st
W-2 1042-S
![Page 19: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/19.jpg)
19
FORMS – file with the IRS
8843 Statement for Exempt Individuals 8840 Closer Connection Exception
Statement for Aliens, if necessary
1040NR U.S. Nonresident Alien Income Tax Return, or
1040NR-EZ U.S. Income Tax Return for Certain Nonresident Aliens with no Dependents
![Page 20: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/20.jpg)
20
Two Major Steps
1. Withholding Process Pay As You Earn
2. Filing Process Calculate the final tax amount Refund/Pay more
![Page 21: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/21.jpg)
21
1. Withholding
Pay as you earn W-2, 1099 or 1042S Attach W-2 to tax return
Your employer prepares the above based on your Form W-4 Form 8233
![Page 22: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/22.jpg)
22
Form W-4
All worker Non-resident, do NOT follow
instructions Only one exemption Can’t use standard deduction. Item 3 - “single” Item 5 - allowance “1” Item 7 - Don’t fill in “Exempt”
![Page 23: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/23.jpg)
23
Form 8233
Part I – Identification Part II – 11a: description of personal
services, e.g. “laboratory assistant, research assistant, …”
11b: total compensation, e.g. “$30,000” 12a: “U.S. Tax Treaty with People’s
Republic of China, Article 20(c)” 12b: “$5,000” 12c: People’s Republic of China
![Page 24: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/24.jpg)
24
Form 8233 – Item 13a
Noncompensatory Scholarship or fellowship income includes: Tuition Fees Books Supplies, and Equipment required by Rice
![Page 25: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/25.jpg)
25
Form 8233 Item 13 b&c
Item 13b: “U.S. Tax Treaty with _______, Article __(_)”
Item 13c: State the same income in Item 13a, i.e. scholarships are exempt up to $_____.
See Pages 32-37 of Handout.
![Page 26: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/26.jpg)
26
Form 8233 Item 14
See Pages 30-31 of Handout for examples
![Page 27: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/27.jpg)
27
2. Filing Process
Forms 1040, 1040NR and 1040NR-EZ
Worldwide + U.S. Income Dependents Exemption Standard deduction
![Page 28: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/28.jpg)
28
Basic Terms
Total Effectively Connected Income (TECI)
Exclusions Adjusted Gross Income. TECI – Exclusions = AGI.
![Page 29: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/29.jpg)
29
Itemized deductions
State tax Charitable contribution Accident and theft losses Job and tax expenses Others
![Page 30: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/30.jpg)
30
Basic Terms
Exemption AGI – Itemized Deductions –
Exemption =Taxable Income (TI) TI < $8,025, 10% tax rate TI $8,026 - $32,550, 15% TI $32,551 - $78,850, 25%
![Page 31: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/31.jpg)
31
Common Items for Non-resident Taxpayer
To You: Tuition Waiver Room and Board
Waiver Teaching or
Research Assistant Stipend (recipient performs work)
To IRS: Non-Taxable
Scholarship Taxable Scholarship
Taxable Wages
![Page 32: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/32.jpg)
32
Wages
Do not include non-U.S. wages Form W-2 Box 1 Tax Treaty Form 8233 Reduced by the exempt amount -
$5,000 Incorrect, ask for a revised Form Explain to IRS
![Page 33: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/33.jpg)
33
Scholarship - Fellowship
Tax treaties Up to all scholarship/fellowship
exempt File Form 8843 with tax return
![Page 34: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/34.jpg)
34
Interest
Tax Law: Interest earned by Non-resident taxpayer is non-U.S. source
No tax is due Investment income – not covered
here
![Page 35: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/35.jpg)
35
Form 1040NR or Form 1040NR-EZ
Non-resident taxpayers
Form 8843 2008 income < $3,500
no need to file
![Page 36: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/36.jpg)
36
Form 1040NR & 1040NR-EZ Important notes
Cannot claim dependents No exemption for spouse Cannot be claimed as dependent Cannot use standard deduction
![Page 37: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/37.jpg)
37
1040NR-EZ
All U.S. income is from wages, tips and scholarship/fellowship
Income < $100,000 Only exclusion – student loan
![Page 38: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/38.jpg)
38
Special Note #1
Indian students are eligible for a Standard Deduction and a Personal Exemption.
Unless you are an Indian student, you are only eligible for some Itemized Deductions and a Personal Exemption.
![Page 39: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/39.jpg)
39
Special Note #2: Exemption
Spousal Exemptions available for some Non-Residents
Married individuals from Canada, Mexico, Japan or the Republic of South Korea
Married individuals who are students and are from India
![Page 40: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/40.jpg)
40
Special Note #3 on Exemption
Dependent Exemptions For some Non-Residents
Only individuals from Canada, Mexico, Japan or the Republic of South Korea can claim children who live with them as dependents.
Individuals from Canada and Mexico can also claim children who don’t live with them as dependents.
Students from India may be able to claim exemptions for children. Please call the IRS International Hotline for further information.
![Page 41: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/41.jpg)
41
Form 1040NR-EZ Example
Box 3 : reduced by $5,000 Box 5 : always zero Box 6 : total scholarship/fellowship Box 8 : always zero Box 13 : always $3,500 (2008)
![Page 42: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/42.jpg)
42
Example
Box 15 : use IRS table ONLY Box 18 :
W-2 Box 2 1042-S Box 7 both
Box 24 : bank account information Box 25 : Owe tax, make check
payable to “U.S. Treasury”
![Page 43: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/43.jpg)
43
Example
Sign! Attach Form W-2 to tax return Page 2
If say “yes” to B, F, K – find a CPA, tax lawyer
Item J, put in name of country and details$xxx scholarship under Article xx of Treaty$yyy wages under Article yy of Treaty
![Page 44: U.S. Income Tax Seminar for Foreign Students](https://reader033.vdocuments.net/reader033/viewer/2022061500/56812b59550346895d8f7b8f/html5/thumbnails/44.jpg)
44
Social Security Taxes
7.65% No employer should withhold SST from
you If withhold erroneously
Talk to employer File Form 843 , Claim for Refund and Request
for Abatement, Form 8316 , Information Regarding Request
for Refund of Social Security Tax Erroneously Withheld on Wages Received by a Nonresident Alien on an F, J, or M Type