Tax Basics

Income tax in the U.S.

Income taxes in the United States are imposed by the federal government (IRS) and most state governments. The income taxes due are determined by applying a tax rate to taxable income, which is the total income less allowable deductions.

How income taxes are paid

Often, your employer/institution will withhold a portion of your paycheck to pay the IRS the estimated taxes due on your behalf. Sometimes taxes are not withheld, so you will be required to pay any taxes due when you file your tax return.

Taxable income

Income that comes from employment, assistantships, fellowships, scholarships that cover more than tuition & fees, investments, awards, etc. are all examples of taxable income.

Who is required to file a tax return

Anyone who was present in the U.S. for any length of time in the given tax filing year must file at least one tax form, even if no income was received.

Tax Filing Year

January 1 – December 31; tax returns are due in April of the following year. Example: Tax filing year 2024 is January 1, 2024 – December 31, 2024. Taxes are due April 15, 2025.

Tax residency status

Tax residency is determined by the IRS Substantial Presence Test (or using a software like Sprintax). Determining your tax residency is very important, as it will determine which tax forms you are required to file. You must file the proper tax forms to be in legal compliance. Your tax status is different from your immigration status.

Nonresidents for tax purposes:

* Must file form 8843 to confirm status as a nonresident for tax purposes

• Taxed on U.S. income only
• If income was received during tax filing year, individual will also need to file form 1040NR or 1040NR-EZ
• Must use a specialized tax return software to assist with preparing tax return, like Sprintax, as IRS free file options are for residents only
• May NOT file joint return with nonresident spouse
• May NOT claim education tax credit (can be confusing if student receives form 1098-T from Rice, but it is not relevant for nonresidents)

Residents for tax purposes:

• Based on Substantial Presence Test determination
• Follow same rules as U.S. citizens
• Taxed on worldwide income
• If income was received during tax filing year, individual will need to file form 1040 or 1040EZ
• May use any U.S. income tax preparation software (http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free)
• May benefit from education tax credits and other tax deductions
• May claim dependents on tax return

IRS

The Internal Revenue Service (IRS) is the federal agency who applies and enforces U.S. federal tax laws (http://www.irs.gov).

Tax return

A tax return is a report you send to the IRS that indicates:

1. How much taxable income you received during the previous calendar year
2. How much tax you have already paid (tax withholding from your employer/school)
3. How much tax you are required to pay (whether you owe tax or are due a refund for overpayment)

Tax return deadline

April 15th.

Tax treaties

Tax treaties are agreements between the U.S. and 65 different countries. Each treaty is unique and the terms vary regarding benefits to foreign nationals residing in the United States. See http://www.irs.gov/publications/p901/ar01.html for more information.

If you believe you are eligible for a tax treaty benefit or want to double check if you are, you may consult with the Rice Controller's Office Tax Department (ForeignNationalTax@rice.edu). Through your Sprintax Calculus account at Rice, they can assist you in determining your eligibility and guide you on what is required to claim your tax treaty benefit. Please be sure to update your Sprintax Calculus account when you receive your SSN or ITIN tax number.

FAQ

I am a graduate student receiving a fellowship. Where can I learn more about the tax process?

Students who receive scholarship, fellowship, or other similar stipends paid through Rice University receive a tax document from the University each year. We want to alert you to how these payments are treated for U.S. federal tax purposes. Please read the following carefully.

https://graduate.rice.edu/tax-status-scholarships-fellowships-grants-and-stipends

I am a graduate student receiving a fellowship and my friend said we have to make quarterly payments to the IRS. Does that apply to me?

Students and fellows who receive fellowships or other payments paid through P2P where taxes are not automatically withheld may need to make estimated quarterly payments to the IRS if they anticipate their tax liability for the calendar year will be $1,000 or more. To learn more on whether this applies to you, please read guidelines here:

https://controller.rice.edu/sites/g/files/bxs3861/files/inline-files/Tax%20Status%20Information%20for%20Fellowships.pdf

Do I really have to file my taxes? What if I didn’t receive any income?

Yes! Anyone in the U.S. for any length of time last year is required to file a tax return this year to be legally compliant – whether you received U.S. funds or not. If you are a nonresident and did not receive any income last year, you still must file form 8843 to be compliant. You may use Sprintax to assist you with the 8843, or you may complete it on your own (https://www.irs.gov/pub/irs-pdf/f8843.pdf).

What happens if I don’t file?

Foreign nationals are required to comply with all U.S. laws and that includes tax filing obligations. Failure to comply can negatively impact future immigration benefits like applying for a change of status or applying for visa renewals. Failing to comply can also include fines, penalties, and interest if you owe the IRS money.

Where do I begin?

1. Attend our annual tax webinar (http://oiss.rice.edu/tax)

2. Choose your software: If you are nonresident for tax purposes, you can use Sprintax to assist you (discount code may be available through http://oiss.rice.edu/tax). If you are a resident for tax purposes, check out an IRS free file option (http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free). If you are not sure of your residency status, start with Sprintax to help you determine your status.

3. Collect your documents (do NOT start your return until you have received ALL your income documents):

• Income documents (W-2, 1042-S, 1099, etc.)
• Passport
• Visa documents (I-20/DS-2019, etc.)
• Entry and exit dates from U.S.
• SSN or ITIN

4. Complete the questionnaire provided by your tax software, as it will guide you and assist you in preparing your required tax forms for filing your return with the IRS.

5. Generate your tax return forms

6. Determine if you owe taxes or if you are due a refund from the IRS

7. Nonresidents for tax purposes – print, sign, assemble forms per instructions from software, make a copy for your records, and mail the hardcopy to the IRS address on your instructions. Sprintax may be able to also assist you in filing electronically. If you owe taxes, you will need to send payment with your tax return.
Residents for tax purposes – follow the directions given by your software. You may choose to electronically file your return. If you owe taxes, you will need to pay at the time of filing your return.

8. Be sure to complete the process by the tax filing deadline of April 15. If you are unable to do so, you may file an extension (https://www.irs.gov/pub/irs-pdf/f4868.pdf).

9. Be sure to also keep a copy for your records to prove that you completed and mailed your tax return.

10. If you are due a refund, you can always check the status here: https://www.irs.gov/refunds.

What do I do if I cannot file on time?

If you cannot complete your tax filing on time, you may request a 6-month extension. Please note that if you expect to owe taxes, you must still pay on time to avoid penalties.

To request an extension, you will need to file Form 4868 (https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return) by the April 15 deadline and submit any taxes you expect to owe. Always be sure to keep copies of any tax forms you file for your records.

If you are requesting an extension because you have not yet received your SSN or ITIN that you have applied for, you may file form 4868 and indicate "Applied For" in the SSN/ITIN box.

What if I am graduating or leaving the U.S.?

You are still required to complete your U.S. tax filing obligation, even if you have moved back home. Sprintax recently did a great blogpost with some tips on filing from abroad: Filing Your US Tax Returns from Abroad

What happens if I forgot to file in previous years? Is it too late?

If you failed to file your tax return in previous years, it is important to correct the problem so that you are in legal compliance. You are allowed to file for previous years at any time (not just tax time), you just need to make sure that you use the specific tax forms for that filing year.

If you are a nonresident, you can purchase Sprintax (www.sprintax.com) software for the specific tax filing year you are missing to assist you with completing the tax forms that you forgot or you may choose to download the forms directly from the IRS (https://www.irs.gov/forms-pubs-prior-search?search=1040nr).

If you are a resident, you may look into programs like Turbo Tax for that particular filing year or you may look up older tax forms on the IRS website (www.irs.gov).

What if I filed my forms incorrectly? What do I do now?

If you misfiled, you must fix it. Use form 1040X – Amended US Individual Income Tax Return to correct your mistake. Be sure to use form 1040X for the proper year you are correcting and follow the instructions. You may also use a program like Sprintax to assist you.

Do I need to file a state tax return?

It depends. If you lived/worked in a state that charges state income tax, you may need to file a state tax return as well. Texas does not have a state income tax.

If you lived in another U.S. state that does charge state income tax you will likely need to file a state tax return as well. See http://www.taxadmin.org/state-tax-forms) to learn more. You may use Sprintax (www.sprintax.com) to assist you with filing your state tax return if you are a nonresident.

How long does it take to get a tax refund?

If you are due a refund it can take between 6 weeks – 6 months to process. You can always check the status of your federal refund by visiting http://irs.gov/refunds.

What are all these tax documents: W-2, 1042-S, 1099, 1098-T, etc.?

These are tax documents that you will use to report how much income you have received and how much tax you have already paid to the US government. If you are missing any forms, please contact the Payroll office for your employer or educational institution to request a duplicate copy. These forms are a required part of your tax return. Be sure to follow the tax return instructions on which copy must be included as documentation in your tax filing submission.

Resources:
• https://bpb-us-e1.wpmucdn.com/blogs.rice.edu/dist/a/7351/files/2023/03/Rice-Payment-Reference-Guide.pdf
• https://controller.rice.edu/tax-home

Tax Documents

Tax Document	Income Source	Details
W-2	Employee wages or salary	Issued by your employer for wages earned (if paid by Rice, you may access your W-2 through the MyADP system, accessible through iO). Typically available by end of January.
1042-S	Scholarship/Fellowship income	Issued by the institution that provided you the award (if paid by Rice, you may access your form in your Sprintax Calculus account. If you do not have an account, please contact ForeignNationalTax@rice.edu). Typically available by mid March.
1099	Investment income, independent contractor sources	Issued by the paying entity (bank, employer, etc.). Typically available by March.
1098-T	Tuition Statement	Issued by your educational institution. **NOT APPLICABLE for nonresidents.

My friend received a refund, but I am being told I owe money. Did I do something wrong?

Taxes are based on individual circumstances, it will depend on sources of income, resident vs. nonresident status, tax treaties, eligible deductions, income levels, and whether the forms were completed correctly. Just be sure to double check your entries and ask your tax software support if you have specific questions/concerns.

I’m not eligible for a Social Security Number (SSN), what do I do?

Apply for an Individual Taxpayer Identification Number (ITIN) in order to file taxes. If using Sprintax, it will also guide you on the process. To learn more about the ITIN application process, see http://oiss.rice.edu/itin.

If you are on an F-1 or J-1 status at Rice, you are employed, and do not have a Social Security Number, contact OISS about making arrangements to apply for one as soon as possible. If you are on F-1 or J-1 student status and you do not have an on-campus job, you will need to apply for an ITIN.

I was asked to fill out a W-9 or W-8BEN. How do I do that?

Contact the institution who requested it directly (Bank/Payroll/Etc.) and reference the information below. The IRS has prepared two forms to identify foreign entities; the revised W-8BEN will be used exclusively by foreign individuals. The W-8BEN for individuals and instructions can be found on the IRS website. It should be used by individuals to document their foreign status and claim any applicable treaty benefits.

If requested by Rice, please consult with Payroll at payroll@rice.edu.

• IRS Form W-8BEN IRS
• Form W-8BEN Instructions [see for expiration]