Federal Tax
Information
Session
For
International
Scholars
AGENDA
➢Tax Basics
➢Forms You RECEIVE
➢Forms You COMPLETE
➢Tax Residency Status
➢Tax Filing Information
for Non-residents
➢Tax Treaties
➢Filling out the Tax
“Returns”
➢Completing the
Process
➢State Tax Issues
➢Using the Sprintax
Software
TA X BASICS
DO I HAVE TO FILL OUT TAX FORMS? A AHHH!
No Matter What You Have Heard…
• All “tax non-residents” are required to file at least
one federal income tax form for each year they are in
the U.S. (by April of the following year); this year we
are doing 2019 taxes (if you weren’t in the US, in
2019 you don’t have to do this now!)
• Everyone should copy and keep files for 7 years (or
until you become a permanent resident, if applicable)
WHAT HAPPENS IF I DON’T?
➢ You may be overpaying your taxes (i.e., giving away your hard-earned money)
➢ Non-filing of taxes may affect a future application for U.S. Permanent Residency (i.e., “green card”)
➢ If you owe money, you could be subject to substantial monetary fines
➢ In extreme cases involving fraud, you could lose your legal immigration status in the U.S.
WHICH INCOME TAXES?
• Federal
• State
• Local (none for Albuquerque)
• If you have income you are normally responsible for completing tax forms for ALL relevant governments
• This presentation only covers FEDERAL (US) taxes collected by the Internal Revenue Service (IRS) with some state info at the end
3 THINGS TO REMEMBER:
1)This is NOT a conspiracy against you! (It’s just a pain for everyone!)
2)The rules are NOT logical!
3)YOU are responsible for doing it correctly and YOU suffer the consequences even if you were misinformed. This is more unfair for internationals as very few people know non-resident tax laws (including IRS)
WHO IS THIS PRESENTATION FOR?
➢International Scholars: Researchers, Teachers in J-1 Scholar status (may be students at home, but not full-time students here) – Presentation on GEO site tomorrow.
➢Dependents: J-2 status here with the scholar and had no income. Most dependents CANNOT be claimed, but if so will need an SSN or ITIN# (requires form W-7 and supporting documents – see Linda)
OTHER PRESENTATION INFORMATION
• For scholars with income typical at UNM.
• Otherwise seek professional tax advice from a qualified accountant or attorney
• Rules for students and scholars are different
WHAT IF I HAVE QUESTIONS LATER?
Come to the Tax Volunteer Site!
"Volunteers in Tax Assistance" (VITA) Site
Volunteers will be available to help you:
DATES: March 12, 13, 26, 27 and April 2, 3, 9, 10
TIMES: 1:00 – 4:00 pm
LOCATION: Student Union Building (SUB), Lobo Computer Lab, Lower Level
YOU CAN ALSO CONSULT
•Residents for Tax Purposes:
• UNM Dean of Student’s Office – CFC Volunteers
• CNM VITA Site
• Turbo taxDON’T WAIT UNTIL THE LAST MINUTE!!!
• Scholars may still be able to benefit from a treaty. Non-resident volunteers can show you form for treaty filing after you become a resident.
OVERVIEW OF TAX SYSTEM
• U.S. tax system = Employer “withholds” andindividual “reports” at end of year. Employer takes money out based on forms you complete when you start your job (W-4 for income, 8233 for treaty benefits) – you can update this information to change “withholding”
• At year end YOU need to do the accounting; if the calculation was incorrect then either you will owe money or you will get some back
FORMS YOU RECEIVE
C O P I E S M U S T B E S E N T TO I R S W I T H YO U R
TA X “ R E T U R N S ”
FORMS FROM EMPLOYER/SCHOOL
W-2: lists wage income and tax taken for federal, state, and
local governments (if any); must be sent to you by 1/31
1042S: lists scholarship, treaty and award income; must be
sent by 3/15 (UNM sent them the last week of February)
1098T: lists school tuition paid; cannot be used as deduction
by tax non-residents
This information is also sent to IRS
Box 1 = Wages
Box 2 = Federal Income Tax Withheld
Box 17 = State Income Tax Withheld
Non-residents should not have amounts taken in 5 &6
Money taken out of your pay
Gross Earned Income
Pan
Box 1 = Income Code/Type
19 = Teaching/Research income
Box 2 = Income exempt from tax
Box 7 = Federal Income tax withheld
Box 21 = State Income tax withheld
Income
Type (key
attached)
Gross
Income
Federal tax
already taken
State tax
taken
19
Pan
Employer # Federal
Employer # State
OTHER FORMS YOU MAY RECEIVE
1099-INT: Interest report (Bank sends to you if over $10)
1099-DIV, 1099-B: Dividend/stock report (Financial institution sends)
1099-MISC: Honoraria or contractor income
1095 (A, B, C): shows that you complied with the insurance requirements of the Affordable Care Act
(1095A shows Marketplace insurance subsidy that you must report –B and C just keep for your records)
1099-G: shows state tax refund for prior year
This information is also sent to IRS
FORMS YOU COMPLETE
M A K E C O P I E S F O R YO U R F I L E S !
FORMS YOU SEND TO IRS
8843: Must be completed by all F and J students,
scholars, and dependents who are “tax non-
residents” – if you have no income and no insurance
subsidies you ONLY complete this form.
This form is also called, “Statement for Exempt
Individuals and Individuals with a Medical Condition”
FORMS YOU SEND TO IRS (CONT’D)
1040NR: “U.S. Nonresident Alien Income Tax Return” – LONG FORM
OR
1040NREZ: “U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents” – SHORT FORM
These forms must be completed by tax non-residents with U.S. income. They are also called “Tax Returns” (“Return” you get money back)
IMPORTANT TAX TREATY FORM
8233: Must be completed and given to the UNM payroll office every year if you want to benefit from a tax treaty in advance (i.e., you don’t want them to take extra money from each paycheck)
You can still get the benefits of any treaty when you file your taxes even if you did not complete this form.
IRS INFORMATION/PUBLICATIONS
Publication 519: U.S. Tax Guide for Aliens
Publication 901: U.S. Tax Treaties
These publications have additional information for
those with unusual situations or for whom a tax
treaty exists between the U.S. and the country of
permanent residence
TA X RESIDENCY STATUS
I M P O R TA N T ! ! !
AM I A RESIDENT OR NON-RESIDENT FOR FEDERAL TAX PURPOSES?
• Tax residency determines your basic obligations under U.S. “federal” tax law (state is different)
• You CAN be a “tax resident,” even if you are not a "permanent resident" of the US (green card)
• If you are married to a resident for tax purposes you can choose to file jointly as residents
• If you are a resident taxpayer you must pay federal income tax on your worldwide income.
RESIDENT OR NON-RESIDENT FOR TAX PURPOSES? (CONT’D)
• If you are a nonresident taxpayer, you pay federal
income tax only on income you receive from U.S.
sources, but you must file an annual income tax
form, even if you had no income
• Most J scholars at UNM are “tax nonresidents”
• If you were in a status other than J since your
arrival, please see IRS pub 519, U.S. Tax Guide for Aliens you may be “Dual Status”
RESIDENCY TEST FOR SCHOLARSIN THE 6 YEARS PRIOR TO TA X YEAR 2019 (2013-2018), DURING HOW MANY CALENDAR YEARS WERE YOU PRESENT IN THE US ON A J OR Q VISA?(EVEN ONE DAY OF PRESENCE IN A YEAR COUNTS )
2 or fewer of the
previous 6 years
More than 2 of the
previous 6 years
You are probably a non-resident for
tax purposes
(If you entered the US for the first
time after 12/31/17 this is you)
You are probably a resident for tax
purposes
(If you entered the US for the first
time before 1/1/2018 in J status and
haven’t left this is probably you)
MORE INFO FOR SCHOLARS
• If you have only 3 yrs of presence and your foreign
employer paid all of your compensation, you may
still qualify to be a non-resident (you will need
form 8840 and you would have to leave the US by
June of the tax year)
• Even if you were a tax resident you may still be
able to benefit from a tax treaty for 2019 (see IRS
Publication 901)!
INFO FOR SCHOLARS NOT IN J STATUS
• If you are on an H-1B visa and arrived in the U.S. in
2019, or if you are here on any type of visa other than
H or J, please see the discussion of tax residency and
non-residency on pp. 4-11 of IRS Publication 519, U.S.
Tax Guide for Aliens
• Some H1Bs who become residents can still benefit
from a treaty
TAX RESIDENTS
• “Residents for tax purposes” will need to go
elsewhere for tax information
• You would file: Form 1040 and other forms
depending on your situation
• Get help from the resident volunteers at UNM
Dean of Students, CNM or use Turbo Tax
• You are subject to the Affordable Care Act
requirements of having health care all year!
TAX RESIDENTS
➢You have to report your worldwide income.
➢Tax residents can claim education credits for
tuition that you paid. To do so, you will need to
contact the UNM Bursar’s office to ask for a
1098-T form to get these credits on your
resident tax return.
FILING INFORMATION
FOR NON-RESIDENTS
W H I C H F O R M S ? ? ?
WHICH FEDERAL FORMS?Form # Who Completes this?
8843 ALL non-resident scholars and their dependents. If you did not have
any US income and you did not have government “Marketplace” insurance
subsidies you ONLY need to complete this form.
1040NR If you received money from a U.S. source, you MUST complete form
1040NR if:
• Your income was $100,000 or more, OR
• You had dividend, capital gains or other U.S. income that is not wage or
scholarship, OR
• You got subsidized insurance from a U.S. health insurance exchange (Info
sent to you on form 1095A - you also need to complete form 8962)
You may also WANT to complete Form 1040NR if:
• You can claim a credit for a U.S. born child (you can claim a credit
ONLY if your child is a citizen of the US, Mexico or Canada AND you
are from Canada, Mexico or Korea or a STUDENT from India)
• You contributed money to a U.S. or Canadian charity or had capital
losses
1040NREZ If you received money from a US Source and none of the conditions
for 1040NR above apply, fill out this EZ form with 8843
8843
E V E RY TA X N O N - R E S I D E N T F I L L S O U T T H I S
F O R M , E V E N D E P E N D E N T S I F YO U U S E T H E
S O F T WA R E T H I S W I L L P R I N T AT E N D
8843 Scholar Sample
SSN or ITIN otherwise write “None”
Number of days
you were in
Scholar status
Sign here if no tax return needed
NO INCOME?
• If you had no US income and no Marketplace
insurance subsidies in 2019 and you are a non-resident
you are DONE!
• Make a copy for your files and mail before June 15
• If you are leaving the US you can find this form in
January next year at www.irs.gov under form 8843!
MAILING ADDRESS
Internal Revenue Service Center
Austin, Texas
73301-0215
MARKETPLACE INSURANCE?
• If you or your dependents bought Marketplace
insurance in 2019 and you are a non-resident you
still have to complete form 1040NR
• You will also need to complete form 8962
• We will help with both of these forms at the tax
volunteer site
DEDUCTIONS AND EXEMPTIONS TO INCOME
• Very few for Non-residents (charity, state
and local taxes, student loan interest)
• Remember that non-residents will never
get back more than they paid in tax!
INCOME TYPES FOR SCHOLARS:
• Wages from any U.S. job, on-campus or off-campus, that you had in 2019 (Included in this category is all income that your employer(s) reported to you on Form
W-2 or 1042S)
• Bank interest (Not considered U.S. source income for nonresidents so nontaxable)
OTHER INCOME TYPES(THESE ARE ALSO SUBJECT TO TAX)
• Dividends or capital gains from U.S. mutual
funds, stocks or bonds
• Any other income (such as rent, royalties,
gambling/prizes, copyright earnings) from
U.S. sources
• If you had these types of income you may
want to seek professional advice in
preparing your return
TREAT Y INFORMATION
O N LY A P P L I E S TO S P E C I F I C C O U N T R I E S
GENERAL TREATY INFORMATION
• Some countries have tax treaties with the U.S. that save you money on your federal income tax. You can get the treaty benefit even if you did not complete the 8233 at payroll in 2019
• Treaty benefits depend on country of last tax residence, not citizenship
• Benefits are different for each country and depend on your U.S. activity (e.g., teaching or research) and type of income
SCHOLAR TREATY INFORMATION
• For scholars, most treaties allow you to exclude
the entire University salary from federal
taxation for a period of 2 or 3 years from the
date of arrival in the U.S.
• Different definition of “year” than for residency
rule!
• If you have a treaty you will likely have a year
where your income is exempt up until the
anniversary of your arrival and then you pay full
tax after that.
SCHOLAR TREATY INFORMATION
• But beware!: some treaties provide no
benefit at all if you stay in the U.S. more
than two years and back taxes may be
applicable (India, Lux, NL, Thailand, UK)
SCHOLAR TREATY INFORMATION
• The numbers or Roman numerals in the third
column identify the relevant treaty article and
paragraph numbers (you will need these for
your income tax return)
• Also note any letters next to the name of your
countries; there is a key at the end of the chart
SCHOLAR TAX TREATY SUMMARY
Country Maximum Presence Amount Article # Special Restrictions* see below
Armenia 2 yrs. No limit VI(1) b, d
Azerbaijan 2 yrs. No limit VI(1) b, d
Bangladesh 2 yrs. No limit 21(1)
Belarus 2 yrs. No limit VI(1) b, d
Belgium 2 yrs. No limit 19(2) b, e
Canada No limit $10,000 XV f
China (PRC) 3 yrs. No limit 19 b, e
Czech Republic 2 yrs. No limit 21(5) b, c, d
Egypt 2 yrs. No limit 22 b, e
France 2 yrs. No limit 20 b, c
Georgia 2 yrs. No limit VI(1) b, d
Germany 2 yrs. No limit 20(1) b, e
Greece 3 yrs. No limit XII
Hungary 2 yrs. No limit 17 b
SCHOLAR TAX TREATY SUMMARY
India 2 yrs. No limit 22 a, b
Indonesia 2 yrs. No limit 20 b, c
Israel 2 yrs. No limit 23 b, e
Italy 2 yrs. No limit 20 b
Jamaica 2 yrs. No limit 22 b, c
Japan 2 yrs. No limit 20 b, d
Korea 2 yrs. No limit 20 b, d
Kyrgyzstan 2 yrs. No limit VI(1) b, d
Luxembourg 2 yrs. No limit 21(2) a, b
Moldova 2 yrs. No limit VI(1) b, d
Netherlands 2 yrs. No limit 21(1) a, b, e
Norway 2 yrs. No limit 15 b, d
Pakistan 2 yrs. No limit XII
SCHOLAR TAX TREATY SUMMARYPhilippines 2 yrs. No limit 21 b, e
Poland 2 yrs. No limit 17 b, e
Portugal 2 yrs. No limit 22 b, c
Romania 2 yrs. No limit 19 b, e
Slovak Republic 2 yrs. No limit 21(5) b, c, e
Slovenia 2 yrs. No limit 20 (3) b, d
Tajikistan 2 yrs. No limit VI(1) b, d
Thailand 2 yrs. No limit 23 a, b, e
Trinidad/Tobago 2 yrs. No limit 18 b, d
Turkey 2 yrs. No limit 20 (2)
Turkmenistan 2 yrs. No limit VI(1) b, d
Uzbekistan 2 yrs. No limit VI(1) d, e
United Kingdom 2 yrs. No limit 20A a, b
Venezuela 2 yrs. No limit 21(3) b
Special Restrictions
a tax is retroactive if the scholar remains past 2 years
b If within the treaty time limit, the scholar may claim tax treaty benefits even if he/she qualifies as a resident for
tax purposes. Not applicable for permanent resident or immigrant status
c may only claim treaty exemption once in a lifetime
d if claiming back-to-back student/scholar, 5 year total limit on treaty benefits
e student & teacher benefits may not be claimed back-to-back without re-establishing home country residency
f scholar is taxable on full amount if income is over $10,000
FILLING OUT THE TA X
RETURNS
COMPLETING THE “TAX RETURNS”
• You can come to the VITA site to complete the forms
or do it on your own using the software (for those
with Marketplace insurance, please come to the site)
• If you don’t understand the question on the software,
please ask!
EARNINGS INFORMATION
• If you have any questions about what is on
these forms (for UNM) contact:
– Wage income: [email protected]
– Scholarship income [email protected]
Both of these offices are at the UNM Business
Center (Lomas and University Blvd)
EARNINGS INFORMATION
• Look carefully at all W-2 and 1042S forms: is all
your income included here?
• If your country has a treaty: has all of the treaty-
exempt income been listed on the 1042S? (if not,
you will need to subtract some income from your
W-2 - some will be wages and some will be treaty
exempt)
EARNINGS INFORMATION
• Add all of your earnings income together from these
forms (interest and dividend income are separate)
• Subtract all of the income that should have been
covered by the treaty (research and teaching income
only)
• For scholars, if you were covered by a treaty for the
whole year, your taxable earnings income should have
been “0”; if you were covered for part of the year, your
income will only be the part earned after the treaty end
date (anniversary of your arrival in the US)
Box 1 = Wages
Box 2 = Federal Tax Withheld
Box 17 = State Tax Withheld
Non-residents should not have amounts taken in 5 &6
Money taken out of your pay
Gross Earned Income
UNM Employer #
Pan 3333
Box 1 = Income Code/Type
19 = Teaching/Research income
Box 2 = Income exempt from tax
Box 7 = Federal Income tax withheld
Box 21 = State Income tax withheld
Income Type
(key
attached)
Gross
Income
Federal
tax taken
State tax
taken
Pan
19
QUESTIONS ON THE FORMS
T H E S O F T WA R E W I L L A S K YO U Q U E S T I O N S A N D T H E N P R I N T T H E S E O N T H E F O R M S
T H AT YO U P R I N T AT T H E E N D
1040NREZ Scholar Sample
Use a US address unless you won’t be here through June
1040NREZ Scholar Sample
1040NREZ Scholar Sample
1040NREZ Scholar Sample
4
4
4
4
1040NREZ Scholar Sample
1040NREZ Scholar Sample
This will be filled in by the software
OTHER DOCUMENTS/QUESTIONS
• Wage income (you will pay tax on what is not
covered by a treaty)
• State tax return information from the prior tax year
(you need to know if you got a refund in 2019 from
your 2018 STATE taxes)
• Treaty information on 1042S (code 19 for scholar
income)
OTHER DOCUMENTS/QUESTIONS
• What is the amount of state tax you paid in 2019 (on
your W2s and 1042S)?
• What is the amount of federal tax you paid in 2019 (on
your W2s and 1042S)?
• What is the Employer ID number for federal and state
OTHER DOCUMENTS/QUESTIONS
• Did you pay any student loan interest in 2019 that
you were required to pay?
• Did you pay any other income tax to the government
outside of your employer withholding (doesn’t count
sales tax)
• What is the Routing number and Account Number
for your bank?
Amount to
be refunded
Amount Owed
We will enter Site ID#
COMPLETING THE PROCESS• Make sure you have a copy of all documents for
your files
• Mail Together:
– 8843
– 1040NREZ or 1040NR (and 8962 if you had marketplace insurance)
– Copy of W2 (if you have one)
– Copy of 1042s (if you have one)
– Copy of any other earnings forms
– Any payment you owe
MAILING ADDRESSIf you do NOT need to pay any additional federal tax, mail to:
• Department of the Treasury
• Internal Revenue Service
• Austin, TX 73301-0215
If you DO NEED to pay additional federal tax mail with
payment to you can pay by check/autodebit/card
• Internal Revenue Service
• P.O. Box 1303
• Charlotte, NC 28201-1303
GETTING HELPCome to the volunteer hours:
• For scholars with dependents from Canada, Mexico you will need to apply for ITIN numbers if you can get credits for kids (only possible if kids are US)
• For scholars with income more than $100,000 you need to go elsewhere
NM STATE TAX
• You CAN’T COMPLETE state tax forms until you do
your federal forms
• You will need the “Adjusted gross income” and
“Itemized deduction” amounts from the federal tax
forms (see GEO handout or get help from a
volunteer)
• Forms and instructions are on the website:
http://www.tax.newmexico.gov/Individuals
/personal-income-tax-forms.aspx
NM STATE TAX• People who reside in New Mexico for more than
185 days are residents for state tax
• You can only e-file if you have a New Mexico
Driver’s License or State ID AND:
– Have filed before (you have to have an account) OR
– You did not have a treaty, OR
– If you did have a treaty and all of your income was listed
on the 1042S (you aren’t going to list it on the state form
if it was not taxed)
NM STATE TAX
• If all your income was exempt by treaty and
was on a 1042S (not a W2) you do NOT need
to file state forms
• If some of the treaty-exempt income was on
the W2 you WILL need to file the state forms
NM STATE TAX
• If you will file state tax forms, and you have a
treaty, you should include copies of the federal
forms and attachments with your state tax
forms
• Also include a letter stating that you are a
federal tax non-resident and that your income
is not taxable because of the treaty (it is a good
idea to include the relevant text from the
treaty - available at www.irs.gov)
PREPARING YOUR FINAL TAX RETURNSCome to the Tax Volunteer Site!
"Volunteers in Tax Assistance" (VITA) Site
Volunteers will be available to help you:
DATES: March 12, 13, 26, 27 and April 2, 3, 9, 10
TIMES: 1:00 – 4:00 pm
LOCATION: Student Union Building (SUB), Lobo Computer Lab, Lower Level
BRING: All immigration and all tax related documents and SSN; prior year tax return
SOFTWARE PROGRAM
OR:
• Sprintax.com/University-of-New-Mexico-Main-Campus
• Access Code: SpTx2019UNINM601F
• You will need to set up an account first
• Make sure to record your password
• UNM has paid for federal filing only (if you have
income)
HTTPS://WWW.SPRINTAX.COM/UNIVERSITY-OF-NEW-MEXICO
SOFTWARE PROGRAM• Read the instructions on each page!!!
• Once you have completed the information, you
will be taken to a pdf with many pages of
instructions, and two copies of all of the forms
you must file
• You may want to only print some of these
forms.
• Save the copies for your records!!!
SOFTWARE PROGRAM• Don’t forget to attach your earnings statements
(W-2, 1042s, etc.)
• Make copies for your records!!!
AND
• Mail to the correct IRS address as listed on the
instruction sheet (mail state forms to the correct
state address on the paper)
If you have issues, come to the VITA SITE!