Introduction to Nonresident Taxes for F and J Visa and using SprintaxAn introduction to Federal and Oregon State income taxes as it relates to the F and J Visa holder

This presentation can be viewed at https://goo.gl/o71FnP

Two Big Questions

1. Status: Am I a resident alien or nonresident alien?2. Income: Did I earn money during the tax year (Jan 1 - Dec 31) that I need

to report on a federal or state income tax return.

*Why is it called a “return?” The term evolved from the legal usage of "return". The government is asking you a question: did you have taxable income? You are “returning” an answer.

Status - Resident or Nonresident Alien

Does the U.S. Federal government consider you a resident? That is, regardless of what country you are a citizen, are you living in the United States?

If the U.S. Federal government considers you a resident, you pay taxes on your worldwide income.

If the U.S. Federal government considers you a nonresident, you only pay taxes on your U.S. source income (money earned for work in the U. S.).

Tax Year = Calendar Year

The calendar year goes from Jan 1 to Dec 31.

For personal tax forms, international students and scholars will report their tax-related information based upon the calendar year.

Your tax year is the calendar year.

In the Winter/Spring of 2019, we are completing forms to report on the 2018 tax year (Jan 1-Dec 31, 2018)

How to determine federal status?

In general,

F or J visa students: once you have been present in the U.S. as a student on an F or J visa any days in a Jan 1 - Dec 31 period for more than five calendar years, the U.S. federal government considers you a resident.

J visa exchange visitors (teachers, visiting scholars, researchers): After you have been present in the U.S. during more than two years in a six calendar year period (Jan 1 - Dec 31), the U.S. federal government considers you a resident.

Complicating factors

For most international students, it is not very complicated to determine your federal residency. But if you have been to the U.S. before on various visas, it can get quite complicated.

Use Sprintax to assist you. See “How Sprintax Works” video (4 minutes)

After you create an account, you will enter in all your trips to the U.S. (entrance and exit dates along with visa type). Sprintax will determine your residency status.

IRS Forms 8843, 1040NR(EZ); Oregon formsIf your U.S. federal residency status is nonresident alien:

You must file IRS Form 8843.If you also had income for services you performed (working on campus or

off campus whether authorized or not authorized):You must report your income to the U.S. federal government on either

IRS Form 1040NREZ (short form) or 1040NR (long form). See IRS Pub 4011, page 15 (2018) regarding which form you may need.

You must report your income to each state in which it is taxable: In Oregon, 40, 40P or 40N - See discussion about Oregon residency

Should I use Turbo Tax?

● If your status is nonresident alien for the tax year, then you must file a nonresident federal return (1040NR or 1040NREZ) for that tax year.

● Make sure any product you use will prepare one of those two forms for you.

● Does Turbo Tax prepare a nonresident form for tax year 2018?

NO!

Create an account at Sprintax. If you already have an account, log into your existing account.

See “How Sprintax Works” video (4 minutes)

More detailed information follows in these slides.

NOTE: Some of the following Sprintax screen shots are from 2017 tax year. If you are completing the tax form for 2018, you will see that year on your Sprintax data entry screens.

Opening Screen: what information needed. Employers should send you W-2 or 1099-misc by Jan 31; 1042-S by Mar 15

Get Help in this order: 1. read FAQ; 2. “Ask Stacy” - online chat; 3. Call Sprintax; 4. Ask Greg or FOCUS help session.

Step 1: Residency, Part 1

Step 1: Residency, Part 2

Because I selected “India” you will see later screens refer to India.

Step 1 - Residency - Resident Alien

If you are seeing this screen next, Sprintax has determined from the information you entered that your status is NOT nonresident alien. Sprintax will only complete nonresident forms.

Verify you have entered everything correctly.

See options for residents.

Step 2: Getting to Know You - About You

If no, only 8843 is needed

Step 2: Getting to Know You - address, passport data, phone

If you had income, advance to the next slide.

If you did not have income, you only need to complete IRS Form 8843. Download IRS Form 8843 and follow the simple instructions. You do not need the PSU access code.

If you did not have income, Sprintax will advance you to the data screen regarding College/Program.

Income or no?

Step 2 - Getting to know you: Marital status, spouse details

See IRS Pub 4011, page 9, to see if you can deduct spouse and/or dependents

(Canada, Mexico, India, South Korea only)

FYI: each spouse and dependent with you in the US on F2 or J2 visa must submit their own 8843. See simple 8843 instructions here.

Step 2 - Getting to know you: Dependents

Step 3 - Let’s talk money: documents received reporting tax year 2017 income.

Step 3: Types of documents, part 1

Types of document you may receive showing income, from most common to least common

● W-2 - this will be made available to you (mailed physical copy or electronic/web version) to you by your employer. It will report wages earned and taxes withheld.

● 1042-S - three reasons you might receive this:○ Student wages. The U.S. employer reports the amount of wages exempt from

federal taxes due to a treaty benefit. You will see income code 20 in box 1 of the 1042-S. See IRS Pub 4011, page 7, for a list of countries where students have treaty benefits.

○ Visiting scholar wages. The U.S. employer reports the amount of wages exempt from federal taxes due to a treaty benefit. You will see income code 19 in box 1 of the 1042-S. See IRS Pub 4011, page 6, for a list of countries where visiting scholars may have treaty benefits.

○ Scholarship/grant income. The U.S. source of the payer of the scholarship/grant reports the amount of scholarship/grant exempt from federal taxes due to a treaty benefit. You will see income code 16 in box 1 of the 1042-S. See IRS Pub 4011, page 5, for a list of countries where recipients may have treaty benefits.

Step 3: Types of documents, part 2

Types of document you may receive showing income, from most common to least common

● 1099-INT - you will this receive this (mailed physical copy or electronic/web version) by a financial institution (for example, your bank) to report interest you earned for money on deposit. If this interest was paid regarding a checking account or savings account you opened because it is related to your reason for being here on an F or J visa, you do not need to report this income.

● 1099-G - Government Payments - if you submitted tax forms last year and received a refund of some or all of your state income taxes, you should have received one of these. If you did not, look on last year’s state tax return form and see if you had a refund due. Confirm you have received it. If you did receive it in 2018, you will report it as if you had received the 1099-G. NOTE: INDIAN STUDENTS: If you took the standard deduction on your previous 1040NR(EZ) . . . and you should have . . . you do not need to report on this year’s federal form the state tax refund received.

● Letter from the payor (university) - if you received a scholarship, grant, award, etc., from your university, they may report the income to you on a letter. You may want to get some extra advice on how to handle this as incorrectly entering the amount could result in unnecessary extra taxes.

Step 3: Types of documents, part 3

Types of document you may receive showing income, from most common to least common

● 1099-MISC - some employers treat you as a contractor rather than an employee. You will receive a 1099-MISC instead of a W-2. (NOTE: To be classed as a contractor, you have to work without supervision; for CPT and OPT work, you must have a supervisor. Not sure how they can classify you as a contractor.)

● 1099-B and 1099-DIV - reporting of income related to investments: Stocks, bonds, mutual funds, etc.

● 1099-R - reporting of retirement income.

Step 3: Types of documents, part 3

Other documents you may receive

● 1095-A, B, or C - this reports health care coverage. The information is not needed for nonresident returns.

● 1098-T Tuition Statement - If you were a student during 2018, this will show how much you paid in tuition and how much you received in scholarships from the school. This is not needed for preparing your nonresident tax returns. But if the 1098-T shows that you received more in scholarships than you paid in tuition and school expenses, then the excess amount may need to be reported as income. You may receive a 1042-S (see above) showing the taxable amount.

Step 3 - Let’s talk money - W-2

If amounts in boxes 4 and 6, see FICA Refund

If amounts in boxes 12a-d and/or 14, see information here.

Step 3 - Let’s talk money: misc

Depending upon what other documents you received, you will have data entry screens to capture data from those documents.

Income not reported elsewhere: You will also be asked if you have sources and amounts of income that you have not already entered into Sprintax.

Step 3 - Let’s talk money - taxes and tax payments

If you answer “yes” to any questions on this page, additional data fields will appear. Fill in the requested information.

It would be uncommon to say “yes” to the first four questions.

If you filed US and or State tax returns in previous years, you will answer “yes” to the last two.

Step 3 - Let’s talk money - previous US tax returns

If you have ever filed a US federal tax return before enter the most recent tax year you filed and the type. Don’t go by memory. Look at the form.

For most, it will be 1040NR-EZ: the short form for nonresident aliens.

1040NR is the long form for nonresident aliens. See IRS Pub 4011, “Which form to file?” for more info

Forms only for residents: resident aliens, green card, US citizens - 1040, 1040A, 1040EZ (not available as a choice in Sprintax). If you were a nonresident alien, you should not have submitted these forms.

Step 3 - Let’s talk money - previous US 1040NR-EZ tax returns

If you filed 1040NR-EZ, Sprintax will ask about state tax deducted on Line 11.

If you entered that you filed a tax return for the previous tax year, Sprintax will ask add’l questions.

If you are student from India taking standard deduction last tax year, then you did not claim state tax expenses.

If 1040NR-EZ

It would be very unusual to have IRS hold overpayment (which reduces your refund) for next year’s taxes. But check your tax return to be sure.

Step 3 - Let’s talk money - previous US 1040NR tax returns

If you filed 1040NR, Sprintax will ask about state tax deducted on Schedule A, Line 1.

If you entered that you filed a tax return for the previous tax year, Sprintax will ask add’l questions.

It would be very unusual to have IRS hold overpayment (are reduces refund) for next year’s taxes. But check your tax return to be sure.

If you are student from India taking standard deduction last tax year, then you did not claim state tax expenses.

If 1040NR

Step 3 - Let’s talk money - adding back state tax refunds from last tax year not already entered from 1099-G

If you received a 1099-G, you may have already entered state tax refunds you received last tax year. Don’t re-enter that amount here.

If you did NOT receive a 1099-G (or can’t find it) and you received a state tax refund last year, you can enter that amount here.

If you received a state tax refund from more than one state, press the blue “add state”

NOTE: If you are student from India taking standard deduction last tax year, then any refund of state taxes does not need to be reported on this year’s tax return.

Step 3 - Let’s talk money: Tax Treaty

Step 4 - Offset your expenses

You can reduce your taxes if any of the following apply to you:

Student loan interest deduction: Did you pay interest on a qualified student loan?

Charitable contributions: Did you contribute to a 501(c)3 charitable organization (for example, a church)? The organization will normally give you a statement of your contributions during the tax year.

Did you pay previous year’s state taxes in this tax year? NOTE: Students from India who are claiming the standard deduction can disregard this.

Health Insurance: IRS Forms 1095 A, B, or C - If required, these are sent to you.

1095-B or 1095-C: you do not need your 1095-B or 1095-C to file your tax return. 1095-A: you would only receive a 1095-A if you purchased health insurance through one of the health insurance “marketplaces.” See Sprintax, Step 4 - Offset your expenses - Health Insurance payments

Step 5 - About your College / Program

Step 6 - State Taxes: Living in the US

Step 6 - Oregon: Residency Determination

Question: Does Oregon consider you a resident or nonresident?

Let’s Review the Number

PSU is not a VITA site for nonresident taxes.

Let's review the numbers

Federal Tax: Good news - you are due a federal tax refund.

Transfer to US Bank Account is safest and fastest.

State Tax

Transfer to US Bank Account is safest and fastest.

Let’s Review the Number

Your decision.

Let's review your order

Enter your access code received from PSU. That will remove the $35.95 charge for the federal return

Sprintax Charges

Federal return: $35.95 - PSU access code removes the $35.95.

State return: $25.95 for each state return (check state requirements for tax forms as it may vary).

Single 8843: $15.95 - each F2 and J2 spouse and dependent are required to submit an 8843.

Application for dependent tax identification numbers: $7.95? If you have Sprintax complete the form there will be a charge for each dependent’s application.

Instruction and forms for Social Security and Medicare refund: $15.95?

Post-filing service: $9.95 now or $35.95 later.

Options

If you want to do your Oregon return yourself:

● Oregon State Tax Return: Manually complete your own Oregon Form 40 (full year resident). See simplified instructions. Go to the download section for current year Oregon tax forms and see link to instructions.

If you want to apply for the Social Security and Medicare refund yourself:

● Manually follow steps and fill forms for obtaining a refund of improperly withheld Social Security and Medicare taxes. See instructions.

For more tax information that is relevant to nonresident aliens on F or J visa, see my pages at “Tax Resources F & J Visa.”

This presentation can be viewed at https://goo.gl/o71FnP.