The U.S. Tax Code: A Primer
In the US, every person who earns “income” must pay income tax and every person regardless of earnings must file a U.S. Income Tax Return. The individual earner usually has their payroll department deduct monthly withholding from paychecks throughout the year. The W-4 Form as completed by you determines the amount withheld. You should update your W-4 form whenever there is a change in your specific circumstances.
The U.S. tax year runs on a calendar basis from January 1 to December 31. At the end of the tax year, employers/organizations are required to create a summary statement of how much money each employee earned or was given (i.e. scholarship, grant, fellowship), and how much tax was withheld during the tax year. The most common types of summary statements are W-2 (for earned income), 1042-S (for scholarships and other types of income), and 1099-INT (for interest earned in bank or investment accounts). The W-2 and 1099 forms must be issued by your employer, bank or other funding organization by January 31 and you will begin receiving them in February, although they may arrive earlier. By law the 1042-S forms must be issued by March 15 and you should begin receiving this form shortly thereafter. It is then your responsibility to complete and file the correct income tax return forms.
Tax return forms act as a balance sheet, comparing how much you earned, how much was withheld, and determining how much tax is owed. The result may be that an individual owes additional tax or, as is the case of most international students, the international student is owed a refund for having too much tax withheld. Completed income tax returns are mailed to the US Internal Revenue Service (IRS), the government agency charged with overseeing taxation, no later than April 15. In the event this date falls on a weekend or holiday, the deadline is the following business day, as is the case in 2007 when the filing date is April 16, 2007. If and only if the only source of your income is reported on a 1042-S and you have no wages reported on another document your filing deadline is June 15.
Tax Obligations of International Students
There are many misunderstandings about taxes among international students. Below is a list of facts that many students and US citizens do not know about the tax obligations of non-US citizens:
- International students are not automatically exempt from paying income tax.
- All students paid on assistantships must pay taxes.
- Most scholarships and fellowships are taxable.
- Beginning in tax year 1992, federal law requires all F, J, M, and Q Visa holders, even those who earn no money in the US, to file income tax forms at the end of the tax year. This means that even F-2, M-2, and J-2 dependents, regardless of age, are expected to file tax returns annually in the United States, even if they have no income from a US source. In the case of F-2 and M-2 dependents (who cannot work in the United States), the completion of a tax form is simple. A J-2 dependent, who may get permission to work in the United States, is taxed on his or her earnings.
Some countries have tax treaties with the US, but this does not mean that taxes do not have to be paid. Each treaty is different, some say that a portion of the income will be exempt from taxes (not taxed). This benefit of a tax treaty is never stated on the W-4 form where it specifically asks if you are exempt from paying taxes. Instead, people who have tax treaty benefits may have to complete form 8233 at the same time as the W-4 form so that treaty benefits will be counted when monthly taxes are determined. Also, you will have to prove and explain your tax treaty benefits on form 1040 NR at the end of the tax year.
Employment and Scholarship Tax Paperwork - A W-4 form is given to each employee to complete before a paycheck can be received and to each US scholarship, grant or fellowship recipient. It tells the IRS how much tax to withhold from monthly paychecks or scholarship amounts. Never say that you are exempt on this form. It is a legal document and you will be held responsible for proving that what you write down is true. For non-residents, instructions for filling out form W-4 are located in Section 8 of IRS Publication 519, the US Tax Guide for Aliens, and also Form 8233 Instructions. Do not use the instructional worksheets on Form W-4 to determine your exemptions unless you are a US citizen, US permanent resident, or a "resident for tax purposes."
Nonresident and Resident Status - In general, most F-1 and J-1 students do not qualify for tax residency until they have been in the US more than five years. In their sixth year as a student, they must still be able to pass a "Substantial Presence Test" to see if they can be certified as a "resident for tax purposes." Those who pass this Substantial Presence Test must be treated as residents for tax purposes. The kind of tax return form filled out at the end of the tax year is different for nonresidents and residents for tax purposes. International students who are nonresident aliens for income tax purposes must complete a 1040NR or 1040NR-EZ. US citizens, US permanent residents and "residents for tax purposes" complete Form 1040, 1040A, or 1040EZ. Check IRS Publication 519 to obtain more information about tax residency and to determine your status.
Bank Interest - Non-residents do not have to pay tax on certain kinds of interest income at banks. You may be asked to fill out form W-8 at your bank to apply for this benefit. However, you will still have to explain this benefit on the 1040NR or 1040NR-EZ at the end of the tax year. Also, if you become a "resident for tax purposes," this benefit is no longer available.
Deductions - Scholarship, fellowship and grant recipients should save all receipts, check stubs, and papers showing payment for books, tuition and required fees and school supplies. Everyone should save evidence of costs for plane tickets, meals and hotel expenses to move to College Station, day care expenses for children; any thefts or losses; un-reimbursed employee expenses and any gifts to a US charity. If you are eligible to use them, some of these items will be useful as deductions on your income tax return form and will help you pay less tax. Further information about what items are deductible may be found in IRS Pub. 519.
When and Where to File
When do I file? Tax forms must be postmarked no later than the following dates, depending upon your specific situation:
|Type of Income||Filing Deadline|
|Individuals with employment income||April 15* of current year|
|Individuals with non-wage income||June 15* of current year|
Individuals who cannot file by the applicable deadline above can request a 6-month extension by filing Form 4868. Please note that while the extension is automatic you will still need to submit part or all of your estimated income tax by the April 15 deadline. Form 4868 must be postmarked by the original filing deadline that applies to you in order to be valid. Extensions are automatically granted if the proper form is postmarked by the deadline, you will not be notified. All IRS forms and publications are available in PDF format online at http://www.irs.gov.
* Even though the taxes deadline is April 15 or June 15, the actual filing deadline might be different depending on what day of the week the 15th falls on. Please check the IRS web site to find out the exact deadline for the current year.
Where do I file? Always make copies of the information you send to the IRS and save copies of tax returns and receipts for at least seven years. This information is not only important to the IRS but also to you as it may have an impact on your immigration status, under certain instances. Please note that electronic or e-filing is not an option for nonresident aliens for tax purposes at this time. Individuals filing as nonresidents for tax purposes should mail completed federal tax return forms and attachments to:
Residents for tax purposes should send the file to the applicable IRS Service Center as instructed in the Form 1040 Instructions.
FAILURE TO FILE A TAX RETURN, OR FILING IT INCORRECTLY, MAY RESULT IN SEVERE PENALTIES, INCLUDING FINES AND INTEREST ON UNPAID TAXES. ALSO, NOTE THAT AN INDIVIDUAL’S TAX FILING HISTORY IS TAKEN INTO CONSIDERATION DURING THE APPLICATION PROCESS FOR PERMANENT RESIDENCY.
Documents That May Be Sent to You
In order to complete your tax forms you will first need to gather certain documentation, including you immigration documents. Following is a description of some forms you may receive by mail and need in order to complete your tax return, depending on your particular situation:
• Form W-2 (Wage Statement) If you worked in the US during the tax year you are filing for, you will receive a W-2 from each employer. The W-2 states your income and tax withholdings, if any, while working for a particular employer during a tax year. You will use the W-2 to complete your tax forms, and attach the appropriate copy of the W-2 to the forms you submit to the IRS (Internal Revenue Service). If you did not work during the tax year, you will not receive, and do not need, any W-2 forms. W-2 forms are typically mailed by January 31. You will need to contact any employer from whom you do not receive a W-2. If you suspect a former employer does not have your current address, you will need to contact the employer's payroll office to provide this information.
• Form 1042-S (Scholarship/Fellowship Statement): If you were awarded a scholarship or fellowship by LSU or other US entity during the tax year, and that income was taxed, or if you claimed a tax treaty benefit for scholarship/fellowship or work income, you should expect to receive a 1042-S. If you believe you should receive a 1042-S, but do not, contact the payroll office of the institution or organization that granted the award. Please remember that if you were employed as a condition of a scholarship or fellowship, you will receive a W-2. 1042-S. For questions or more information, contact our Human Resources Office at firstname.lastname@example.org.
• 1099 (Dividend/Interest Statement): If you earned a dividend or interest income the tax year, you should receive a 1099 or some other type of tax form from your bank or investment company. You should receive such a form for each account you have such earnings from. Contact the appropriate company for further information on what forms you might receive and when they are mailed. These will all look different, but will usually have “1099” printed on them. Nonresident aliens for tax purposes are not required to report certain interest income (such as from a savings account) as wages, and may formally request their bank do not mail Form 1099-INT; follow-up with your particular banking institution regarding this request.
• 1098-E (Student Loan Interest Statement): If you received a loan from LSU during the tax year, you should receive a 1098-E from. This is useful because it will allow a deduction of interest income on your tax return. Questions regarding the 1098-E should be directed to Student Financial Services at email@example.com or 951.785.2175.
• 1098-T (Tuition Statement): You may receive a 1098-T, tuition statement. However, only individuals considered residents for tax purposes, US permanent residents and US citizens are eligible to use this form to claim tax credits. For nonresidents for tax purposes (those filing forms 1040NR or 1040NR-EZ), the 1098-T is only informational and is not used for filing the tax return.
Help From the IRS
IRS Publications for Nonresident Aliens: The IRS publishes all versions of their forms and publications annually so please look for the 2007 versions when visiting their web site at http://www.irs.gov/formspubs/index.html if you do not wish to wait for paper versions to arrive at locations near you.
• Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities
• Publication 519 US Tax Guide for Aliens
• Publication 901 US Tax Treaties
• Publication 970 Tax Benefits for Education
• Publication 1031 Guidelines for Determining Resident Status
• Publication 1040 Instructions for completing Form 1040/1040NR
IRS Online: The best place to start when you have a question about your tax return is the IRS web site (http://www.irs.gov). There is an extensive Frequently Asked Questions section and International Taxpayer section that may assist in answering your questions.
IRS by Phone: You may also call the IRS for live telephone assistance (800-829-1040, toll-free). Be sure to identify the type of form you are filing so the IRS can better respond to your question. Also, note for your tax records the time, date, name and number of the representative assisting you. http://www.irs.gov/help/article/0,,id=96730,00.html
IRS by Email: http://www.irs.gov/help/page/0,,id=133197,00.html
The OISS will conduct information sessions on tax filing procedures. There will be multiple sessions throughout the day, consisting of a presentation followed by time for questions. This is an excellent opportunity not to be missed! Representatives from LSU Payroll and SFS will also be on hand to explain some important issues and answer related questions.
Time | Location
Who Should Attend
|TBA||1040NR, 1040NREZ||International Students, Faculty and Staff|
|TBA||1040, 1040EZ, 1040A, Tax credits for education||Residents for tax purposes – First-time Filers|
|TBA||1040NR, 1040NREZ||International Students, Faculty and Staff|
See our Tax - Other Resources page.