Lets talk about TaxArizona State University 2018

I. Overview of tax for non-resident students and scholarsII. Student tax behavior in 2017III. Using Sprintax to prepare your tax returnsIV. Questions

Disclaimer: The aim of this presentation is to provide you with a general understanding of tax principles as they apply to international students and as such is for information purposes only. Each individual has a unique tax position and is responsible for his or her own tax determination and compliance.

www.sprintax.com

Topics:

Who must file a 2017 US tax return?

What tax forms should I receive?

Forms you need to complete and send to IRS

No income received- what form do I need to file?

Nonresidents for Tax – Spouses (J2, F2, H4)

What is FICA?

What is ITIN?

What is a 1098-T?

State Tax Returns

What happen if I don’t file my US tax form(s)?

Items you need to prepare your Federal and State tax returns

Hands up

Important dates for 2018

Tax year runs from 1st January to 31st December

2017 tax filing season is for income from

1st January – 31st December 2016

Filing deadline is Tuesday 17th April 2018

Independent of visa/immigration status

Resident or Non-resident for tax?

Generally, most international students who are on F, J, M or Q visas are considered non-resident for tax purposes.

International students on J1 & F1 visas are automatically considered non-resident for their first 5 calendar years in the US

Scholars/Researchers (and their dependents) on J visas are automatically considered non-residents for 2 out of the last 6 calendar years in the US

If you’ve been in the US for longer than the 5 or 2 year periods, the Substantial Presence Test will determine your tax residency.

If you had no earnings/income in the U.S. – you are still required to declare your non-resident status by completing Form 8843

If you received taxable earnings or income over the personal exemption - $4,050 for 2017 tax year from U.S. sources

Everyone has an IRS filing obligation

Who must file in 2018?

Form 8843 is the minimum filing requirement for all non-residents

“Statement for Exempt Individuals and Individuals with a Medical Condition.”

Form 8843

Withholding tax

As a non resident a ‘withholding tax’ may be applied to some or all payments made to you at a rate of 30%

65 tax treaties in place to reduce this or to exempt that income

Opportunity to claim refund via year end tax return

US Source Income Above $4,050 for 2017 tax year

Wages

Taxable Stipend, Grant, Scholarship, Award

Interest, rental, royalty or other income

Optional filing Any level of income

Claiming a refund

Only opportunity to reclaim overpaid tax, is by filing a return

Requirements for Federal tax filing (Form 1040NR/EZ)

Scholarship for tuition and related expenses

Scholarship received from outside the US

Money transferred from parents/relatives overseas

Income ‘earned’ in their home country (investment income,

rent, job before moving to US, etc.)

Interest on regular savings account

Gift of money from someone in the US*

Income which does not trigger a filing requirement

• Wages, Salary, Compensation (Employment earnings)W2

• Royalty Payments

• Scholarship Stipend/Non-Degree Aid

• Independent Contractor Services

• Prize/Award

1042-S

• Rent

• Investment Income

• Commissions

• Other income

1099 Series• State Refunds• Settlements• Fees• Services

What tax (income)documents do students receive?

Income documents

Passport

Visa - I-20, DS-2019, etc.

Entry and exit dates

Social security / ITIN

4 c’s

– A comfortable Chair

– Clear desk/table space

– A strong cup of Coffee

– Chocolate bar!

Save the Cocktail until you’re finished!

Items needed when preparing a return

Federal tax

1040 NR: “U.S. Nonresident Alien Income Tax Return”

or

1040 NR EZ:

“U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents”

State tax

• Income tax return for each state where student resided/earned income during 2017

Tip: They are referred to as “Tax Returns”, because they are used to getting money back!

Income tax forms to be completed

Same requirements as visa holder

No joint returns for Nonresidents

Same filing obligations as visa holder Minimum is Form 8843

1040NR/EZ if applicable

Each dependent should mail them in separate envelopes

Nonresident can elect to file as resident – when married to a tax resident

Nonresident Spouse & Dependent(s) filing obligations

Non-resident international students and scholars (J1 & F1) should not be paying FICA

H-1B, J-2 and TN visa-holders, are subject to FICA taxes from their first day of employment.

Usually only applied to off campus employment

However resident, graduates and on campus OPT do pay

Opportunity to claim back

Form 843 & Form 8316

FICA Taxes

Required when filing Federal return

Most common among scholarship recipients (athletes)

Not needed on Form 8843

Application process is tricky!

CAA may now certify dependents

(Certifying Acceptance Agent)

ITIN - Individual Taxpayer Identification Number

Tuition Statement

Mostly used to claim education tax credit

Significant cause of mis-filing

Not relevant for nonresidents

Often all students with an SSN on file with school will get one –even nonresidents, so it causes lots of confusion!

1098-T

Tax scams

Use caution and common sense

IRS would never ask for personal details without proper communication

IRS not seeking to penalize anyone – just want to make sure the fair and correct taxes are paid on time

Same format (internationally!) Money owed

‘Instant’ payment will make problem go away

Voucher/prepaid credit card reference preferred payment option

State taxes

Resident, part-year resident and nonresident status

If a student has to file a Federal, they most likely will be filing a State return too

Forms and rules vary from state to state

www.taxadmin.org/state-tax-forms

Resident VS Non-resident - Who is an Arizona resident for Arizona income tax purposes?

The term "resident" includes:

(a) Every individual who is in Arizona for other than a temporary or transitory purpose.

(b) Every individual domiciled in Arizona who is outside Arizona for a temporary or transitory purpose.

(c) Every individual who spends, in the aggregate, more than nine months of the taxable year within Arizona is presumed to be a resident.

For Arizona income tax purposes, the term "non-resident" means every individual other than a resident.

Resident v Non-resident for AZ State Tax

Do I need to file an AZ State Tax Return?

Taxpayers must file an Arizona income tax return if:

- The gross income amount for 2017 is $15,000 or more

- Arizona adjusted gross income is $5,500 or more for single, head of household, or married filing a separate return taxpayers (or $11,000 or more if married filing a joint return)

Forms:

- Resident: Form 140/140A/140EZ

- Non-resident: Form 140NR

Optional Filing

Arizona State Tax Return

1095-A B and C series

Form 1095-A:

Healthcare coverage purchased through Health Insurance Marketplace –‘ObamaCare’

Generally not applicable to international students & scholars

Can be used on a ‘resident’ tax return, in limited circumstances

Form 1095-B:

Healthcare coverage provided through insurance provider or self-insured employer

You do not need 1095-B for your non-resident return

Form 1095-C:

Healthcare provided through employer (generally more than 50 employees)

You do not need 1095-C for your non-resident return

Wages

Summary

ITIN

Applications

Request from

Employer/Payer for

your ITIN or SSN

Document that

proves you are a

non resident and

eligible for a

certain tax treaty

Given to an

employer so they

can tax you

correctly (mostly

for residents)

(BEN)

Timelines for a refund

Federal

6 weeks - 6 months

Contact IRS to follow up

Tracking your refund

‘Where’s my refund’

Httpss://irs.gov/refunds

Missed a year filed as resident by mistake

Don’t panic - but do set the record straight

Misfiled:

1040X - Amended U.S. Individual Income Tax Return

Simple form, similar to 1040

Never filed

Catch up

Can back file at any stage

Can only claim a refund for previous 3 years

FAKE NEWS about taxes

I didn’t have a job – I don’t need to file any tax forms - WRONG

I am not from the US – I don’t need to file any tax forms - WRONG

My country has a tax treaty with the US, I don’t need to file any forms- WRONG

If I don’t bother doing anything, the IRS will never find out- Do you want to test them, and take that risk?

Tax Tips

Never received the income documents – follow up now

Keep copies of everything you send

Use a tracked mail service

Have the refund paid electronically into a bank account

Don’t copy what your friend did!

Implications of not filing

International students are required to comply with all US laws, including IRS

Filing tax forms (even if only 8843) is part of maintaining visa status in US

Not filing could affect future immigration status (like H1B, LPR)

Fines, penalties, interest can accrue if funds are owed

If you don’t owe, claim a refund!

I. Overview of tax for non-resident students and scholarsII. Student tax behavior in 2017III. Using Sprintax to prepare your tax returnIV. Questions

Federal Refund State Refund

91%Received Refund

Average Refund

$1,507

66%Received Refund

Average Refund

$502

$54m in Federal Tax Refunds

$13m in State Tax Refunds

I. Overview of tax for non-resident students and scholarsII. Student tax behavior in 2017III. Using Sprintax to prepare your tax returnIV. Questions

Email to Students

Login Page

Residency

Income Forms

Other Income

State Taxes

Order summary

Your completed IRS Forms

Al Capone

What did they eventually arrest him for?

Not reporting his TAXES!

Please do your taxes!

Americas most wanted criminal

Questions?

Thank you!