Lets talk about Tax Arizona State University 2018 · Tax year runs from 1st January to 31st...
Transcript of Lets talk about Tax Arizona State University 2018 · Tax year runs from 1st January to 31st...
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Lets talk about TaxArizona State University 2018
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I. Overview of tax for non-resident students and scholarsII. Student tax behavior in 2017III. Using Sprintax to prepare your tax returnsIV. Questions
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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
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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
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Hands up
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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
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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.
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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?
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Form 8843 is the minimum filing requirement for all non-residents
“Statement for Exempt Individuals and Individuals with a Medical Condition.”
Form 8843
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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
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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)
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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
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• 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?
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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
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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?
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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!
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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!
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I. Overview of tax for non-resident students and scholarsII. Student tax behavior in 2017III. Using Sprintax to prepare your tax returnIV. Questions
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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
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I. Overview of tax for non-resident students and scholarsII. Student tax behavior in 2017III. Using Sprintax to prepare your tax returnIV. Questions
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Email to Students
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Login Page
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Residency
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Income Forms
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Other Income
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State Taxes
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Order summary
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Your completed IRS Forms
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Al Capone
What did they eventually arrest him for?
Not reporting his TAXES!
Please do your taxes!
Americas most wanted criminal
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Questions?
Thank you!