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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.
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 2019 is January 1, 2019 – December 31, 2019. Taxes are due April 15, 2020.
Tax residency status
Tax residency is determined by the IRS Substantial Presence Test (or using a software like Glacier Tax Prep-GTP or 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
Residents for tax purposes:
The Internal Revenue Service (IRS) is the federal agency who applies and enforces U.S. federal tax laws (http://www.irs.gov).
A tax return is a report you send to the IRS that indicates:
Tax return deadline
Tax treaties are agreements between the US and 65 different countries. Each treaty is unique and the terms vary regarding benefits to foreign nationals residing in the U.S. See http://www.irs.gov/publications/p901/ar01.html for more information.
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 Glacier Tax Prep 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?
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) and submit any taxes you expect to owe. Always be sure to keep copies of any tax forms you file for your records.
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 proper forms for that filing year. If you are a nonresident, you can purchase GTP (www.glaciertax.com) or Sprintax (www.sprintax.com) software to assist you with completing the tax forms that you forgot. 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.
|Tax Document||Income Source||Details|
Employee wages or salary
Issued by your employer for wages earned (if paid by Rice, you may access your W-2 in your ESTHER account).
Typically available by end of January.
Issued by the institution that provided you the award (if paid by Rice, you may access your form in your FNIS account. If you do not have an account, please contact Payroll).
Typically available by mid March.
Investment income, independent contractor sources
Issued by the paying entity (bank, employer, etc.).
Typically available by March.
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 GTP, it will also guide you on the process. To learn more about the ITIN application process, see http://oiss.rice.edu/ssn.
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.