Archive for September, 2018

  • Can the college I choose to enroll in effect my US tax bill?

    State tax refunds Sprintax

    Want to work while studying in the US? It’s important to be aware that tax rates differ greatly from State-to-State

    Every year, more and more students select the US as the destination in which they want to continue their education. And it’s easy to see why. The US boasts a world renowned university system and an outstanding program offering in virtually all fields.

    But with so many universities in such a vast country, how can students choose the college and course that is right for them?

    The truth is that there are many different factors that go into deciding where to study and which college to attend. While lifestyle, history and climate are always important elements for students, cost and financing college fees usually come out on top of their list of considerations.

    Expenses and college fees vary from State-to-State and can have a big impact when choosing where to study.

    Even though many US colleges and universities make financial aid and scholarships available, most international students must still rely on their own sources of funds in order to pay for their education – family funds, loans and savings etc.

    It’s no surprise then that so many international students are interested in securing employment in the US during their time in college in order to earn some much needed cash.

    These programs are known as ‘work & study’. If you are a full-time student in the US and want to be a member of a work & study program, you must either have an F-1 or M-1 visa – the two non-immigrant visa categories available for international students.

    Sprintax state tax refunds

    International students & tax

    Every international student is legally obliged to file a tax return for each year they were in the US. If you worked in the US during your time in college you must detail your earnings on your tax return.

    Many students are unaware that the State they choose to work in can affect their monthly tax withholding.

    In the US, taxes withheld on wages by employers include Federal income tax, State income tax, and certain other levies by a few States.

    While Federal tax withholding is required no matter which State you choose, not all States have an income tax on earned income. There are nine States that have no personal income tax:

    1. Alaska
    2. Florida
    3. Nevada
    4. New Hampshire
    5. South Dakota
    6. Tennessee
    7. Texas
    8. Washington
    9. Wyoming

    Note: Tennessee and New Hampshire only tax dividends and interest.

    This means that if you chose to study and work in one of the States mentioned above, you will have one less tax deduction to worry about!

    In other words, you can potentially receive a higher wage every pay period.

    State tax refunds

    California state tax refunds Sprintax

    If you do study and work in a State where there are State tax deductions, it’s important to note that it’s likely you’ll be entitled to a refund of a significant portion of your contributions.

    You can claim your refund when you file your end of year tax return.

    But does the State that you study in have any effect on the amount of money you’ll be refunded?

    The answer to that question is yes!

    At Sprintax we help hundreds of thousands of international students to file their tax returns and claim their State tax refund every year.

    We’ve crunched the numbers and can reveal, as detailed below, that, in 2017, students who studied and worked in California received a larger State tax refund ($1015) than anywhere else in the US!

    Top 10 average State tax refunds

    top 10 state tax refunds Sprintax

    Claiming your State tax refund

    The easiest way to file your US tax return and claim your State tax refund is to choose Sprintax.

    Sprintax is the only online Federal and State self-prep tax software for international students and non-residents in the US. It will help you prepare your US tax return in minutes and enable you to receive your maximum legal tax refund!

    Sprintax is the ‘go-to’ tax filing software for numerous major universities in the US including NYU, Columbia, Arizona State University, Illinois Institute of Technology and Cornell. We’re also the non-resident partner of choice for Turbo Tax.

    To file your US tax return the easy way, get started here!

  • Form 8843. What is it? And how do I file it?

    File your US tax return the easy way with Sprintax

    There are three things that every US international student and J-1 visa holder needs to know about American tax.

    1 – Every US international student and J-1 visa holder has a tax filing requirement

    2 – It doesn’t matter if you have earned income. You must still file your documents before the deadline

    3 – The IRS takes this stuff seriously! In other words, if you don’t comply with your tax obligations, you may encounter complications when applying for US visas in the future

    Regardless of whether you have earned income during your time in the US, you will still need to file what’s known as a Form 8843.

    This blog will focus on exactly what you need to do in order to file this form and remain complaint with the IRS.

    Sprintax US tax form 8843

    First things first. What is a Form 8843?

    The first thing you should know about Form 8843 is that it’s not a tax return. Instead, it’s a statement you file if you are a certain type of non-resident alien (including spouses/dependents of certain non-resident aliens).

    Who should file a Form 8843?

    All non-residents aliens who are in the US on F-1, J-1 or J-2 visas are required to file a Form 8843. It doesn’t matter if you didn’t earn any income, you must still file this form.

    How can I fill out this form?

    There are a number of sections in this form. However, not all of them will be relevant to you. It depends on your personal circumstances.

    Part 1

    file Form 8843 with Sprintax

    In part 1 of your Form 8843 you will need to include the following information:

    • Your personal details (as they appear on your passport)
    • Your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) – if you have one
    • Your visa type: (F-1, J-1, etc)
    • Your current non-immigrant status
    • The number of days you were present in the US in the last 3 years
    • The number of days you were present in the US in the relevant tax year (enter this in the substantial presence test box)

    File your Form 8843 the easy way!

    Part 2

    Form 8843 Sprintax

    In part 2, teachers and trainees are required to include details of what academic institution or programme you were involved in during the previous year.

    Parts 3, 4 & 5

    file US tax with Sprintax

    File US tax forms with Sprintax

    F-1 and J-1 visa holders should, in part 3:

    • Include details of your academic institution or programme
    • and answer the rest of the questions according to your personal circumstances

    The majority of students in the US on F or J non-immigrant status will not need to fill in parts 4 and 5.

    What is the deadline for filing a Form 8843?

    You must file your Form 8843, along with any tax return that is due, by the 15 April deadline.

    International students and scholars – file your tax return before the April 15th deadline

    Do I have to file any other tax documents?

    If you get a job in the US, you’ll need to fill out a W-4 Form so your employer knows what income should be withheld from your wages as taxes.

    Similarly if you received a grant, scholarship or stipend, some of this may be classified as income and have tax implications. At the end of the tax year, you will need to prove that you’ve paid the correct amount by filing your tax return.

    If you earned income in the US you must file a tax return – Form 1040NR/Form 1040 NR-EZ – as well as Form 8843.

    What’s the easiest way to file my tax documents?

    Sprintax will guide you through the tax filing process, firstly determining your tax residency status, and then identifying which forms you need to complete based on your own personal circumstances.

    Plus, if you have any questions, our Vita Qualified Live Chat team are on hand to help 24/7!

    File your US tax documents the easy way today!

  • Introducing Sprintax TDS…

     

    All of your questions answered

     

    Tax. Granted, not the most exciting topic in the world. But its importance can never be called into question.

    Over recent years the proper documentation and withholding of payments to non-resident students and scholars has become an increasingly important issue for US educational institutions.

    How much tax should an international student being paying? Are they entitled to any reliefs or deductions? Who can help them handle their US tax?

    Finally there is an easy to manage, easy to use solution which makes US tax easy for international students.

    Sprintax, the only online self-prep tax software for non-residents and J-1 visa holders in the US, is launching a Tax Determination System (TDS) – a hassle-free tool which will help non-residents to pay the correct amount of tax.

    Sprintax TDS ensures that students and scholars are taxed correctly on income earned in the US, so that the correct amount of tax is withheld from their earnings and reported to the IRS.

    Let’s take a closer look at how it works.

    Who can use Sprintax TDS?

    Sprintax TDS is available for use by foreign students, scholars, teachers, researchers, trainees and all other international visitors with F, M, J, Q, H and L visas.

    How does it work?

    All students and scholars have to do to get started is quickly complete our online questionnaire. TDS will take care of the rest!

    Based on the information a student provides, Sprintax TDS will calculate student and scholar tax withholding and determine whether they’re eligible for tax treaties or deductions. It will then prepare the necessary tax documents for students, such as 1042-S, 8233, W-8Ben, etc.

    How is this tool useful for US educational institutions?

     Sprintax TDS:

    • Calculates tax withholding for non-resident international students, scholars, and professionals
    • Determines residency for tax purposes
    • Calculates tax withholding rates
    • Generates tax forms such as 1042-S, W-4, and W-8Ben, etc.
    • Documents and securely stores student tax information
    • Tax treaties built-in
    • Simple school and student interfaces

    Is Sprintax TDS easy to use?

    Sprintax TDS highlights the tax status of your international students and scholars on a user-friendly administrator dashboard, and identifies how they should be taxed on income from your institution. TDS can also link to Sprintax Tax Preparation where students can prepare their tax returns upon completing their TDS account.

    Why should your international students try Sprintax TDS?

    Let’s face it. Tax is confusing.

    It’s hard enough coming to terms with the tax system in their own country. Then, when an international student moves to the US, they have to become familiar with a completely new tax system.

    Sprintax TDS makes managing tax easy for international students in the US.

    So why not give it a try?!

    Contact us today to schedule a FREE Demo

     

  • Using TurboTax to Claim Your J1 Tax Refund is Illegal

    Testimonial image for Sprintax

    It’s hard to imagine anything worse than the IRS (Internal Revenue Service) sniffing around after your J1 experience of a lifetime.

    But this is exactly what can happen if you file an inaccurate US tax return.

    If you worked in the US on a J1 visa, then chances are you are legally obliged to file your US tax return by the Apr 15 deadline.

    So for example, if you’re on a J1 in 2018, then you should file your tax return by April 15 2019. If you file your US taxes correctly, you won’t run into any trouble later on. This is important if you ever wish to return to the US on another visa or for a holiday.

    If you go the US on a J1 visa, you’ll be considered a non-resident for tax purposes and must file as a non-resident.

    TurboTax logoResidents in the US can prepare and file their US taxes with the country’s biggest online tax preparation service, TurboTax . TurboTax guides US residents on their taxes and guarantees them maximum refunds. TurboTax offers an excellent online service that helps millions of US residents prepare their taxes and claim refunds. It’s super easy to use, however TurboTax is a service for US residents only, so it’s not suitable for you if you’ve been to the US on a J1 visa. Sprintax is TurboTax’s preferred partner for non-residents on a J1 visa.

    However, TurboTax is a service for US residents only.

    And as a J1 student you’ll typically be considered non-resident for tax purposes.

    If you do use TurboTax to file your US taxes, then you’ll end up filing as a resident. As a non-resident J1 visa-holder, this means your tax return will be inaccurate and you could get into trouble later on!

    trouble meme

    As a J1 visa-holder, you should NOT file as a resident.

    TurboTax and any other resident tax preparation service for residents will assume you understand your residency status, so if you file with them, you may unwittingly file as a resident. And if you file inaccurately, the IRS could come knocking and you may be subject to fines and penalties.

    One such J1 participant, finance student Sofia García from Venezuela felt the strong-arm of the IRS when she filed as a resident through TurboTax:

     

    From May to September 2017, Sofia worked as a busser, clearing tables at The Surf Lodge in Montauk New York. A friend pointed her to TurboTax as the perfect solution for filing her taxes. Unfortunately, Sofia went ahead and filed using TurboTax despite being non-resident for tax purposes.

    A few months down the line and back in Venezuela, she got a letter from the IRS asking her to confirm her identity.

    Had Sofia prepared her tax return with non-resident tax partner of TurboTax, Sprintax, her US taxes would have been filed without incident. She also wouldn’t have to wait to claim her tax refund. For example the average state tax refund for New York State is currently 464.18.

    Sofia came to us for help so we proceeded with an amendment of her US tax return, which could now take the IRS 6 months or longer to process, meaning she’ll have to wait a lot longer for any long due refunds.

    She won’t be making that mistake again!

     

    So if I file an inaccurate tax return, will I get into trouble?

    Claiming a refund you are not entitled to is considered tax evasion, which is a crime.

    If you’re caught you may have to pay penalties and interest. You may also have trouble re-entering the US or applying for a green card.

    It doesn’t matter if you do it yourself or another company does it for you, if a fraudulent tax return is filed on your behalf, it is you that will be held responsible.

    And the worst part is you may not even be aware any laws were broken.

    ‘’Not knowing’’ isn’t considered a valid excuse by the IRS.

    So one of the most important things is to ensure you file using the correct tax status and if you’re using a tax preparer, use a reputable one like Sprintax.

     

    You could be claiming reliefs, exemptions, and credits you’re not entitled to!

    If you file as a resident, then you may end up claiming certain reliefs, exemptions or credits you’re not entitled to. This could result in a bigger refund. However, as a non-resident you won’t be entitled to many of these and must repay them to the IRS if they demand it.

    This could leave you with a hefty tax bill.

    The American Opportunity Tax Credit (AOTC) is a good example of this. We’ve come across cases where some J1 students incorrectly claim this credit as a ‘’$1000 bonus’’.

    However, if someone says you can claim this as a non-resident J1 participant, this is false.

    The AOTC is only available under strict conditions.

    A J1 visa holder can’t avail of AOTC unless in their 6th year for students or 3rd year for all other categories in the US and considered a resident for tax purposes. You must also be studying the US.

    If you claim it incorrectly, you’ll end up owing money to the IRS and it could affect future visa applications.

     

    If I file an inaccurate tax return, what happens if there’s an audit?

    The IRS can audit your taxes any time within a 3 year time limit after you file your tax return. Most people find the prospect of an audit to be stressful.

    So the more help you get, the better.

    If you get selected for an audit and you run into issues. Sprintax.com can help you file an amendment of your US tax return.

     

    How do I avoid issues with the IRS?

    The easiest way to file your non-resident taxes and stay on the right side of the IRS is to file with Sprintax.

    As an authorised partner of TurboTax, Sprintax J1 tax preparation is specifically designed for non-residents filing US taxes. Sprintax is a self-prep service, meaning you can create an account here and prepare your federal and state tax return by answering a few simple questions online.

    Here is how it works:

    1. You create a Sprintax account here
    2. Answer some simple questions
    3. Upload any required docs, such as your W2 form
    4. We prepare your fully compliant federal/state tax return(s)
    5. You pay an online fee of $35.95 for Federal Return or $25.95 for a State Return
    6. We give you instructions on where to send your tax return
    7. You print and send (file it) with the IRS as per our instructions

    It’s also essential here that you answer each question honestly!

     

    What’s the benefit of filing my tax return?

    100% compliance is probably the most important benefit of filing an accurate tax return.

    And if you’re due a refund it’s a bonus!

    Due to the Tax Cuts and Jobs Act in 2017, it’s now more important than ever to file your US tax return.

    As of 1 January 2018 (and up to 2025) the personal exemption was reduced from $4,050 to $0 which means that the overall taxable income has increased for all non-residents.

    So if you work in the US from 2018, you must file a tax return, no matter how much you earn. And if you worked there in previous years, you should file to find out how much you could claim!

    The removal of the personal exemption also means that for most non-residents, federal tax refunds will be reduced.

    It’s important to note that these amendments don’t affect 2017 (and previous years). So if you worked in the US before 2018, you could be due a federal tax refund.

    The average US refund is currently $800.

    The changes do not impact your state refund, no matter what year you’re filing for.

    To claim your state tax refund you must file your federal tax return first, before you file your state.

    Bottom line?

    You’re legally required to file a tax return and there’s a chance you’ll be due a tax refund.

     

    What now?

    Well if you worked in the US in 2017 or previous years, then you should file your tax return as soon as possible. You may have missed the deadline but if you’re due a refund, you can still claim this money.

    If you work in the US in 2018, then the deadline for filing is April 15 2019.

    The easiest way to file is by using Sprintax.

    Our tax preparation service for non-residents will help you prepare your federal and state tax returns in minutes and guide you through the filing process.

    With Sprintax you get:

    • A 100% compliant US tax return
    • Check for residency status
    • Any applicable tax treaties to lower any tax liability or increase your refund
    • Avail of personal allowances, credits & tax deductions
    • 24 hour live chat help
    • Claim any tax refunds due

    Over 500,000 non-residents who worked in the US have already used Sprintax.

    Get peace of mind and create your account here now to start preparing your US tax return.