All posts in Sprintax

  • 5 things every J-1 participant needs to know about US tax

    Tax for J-1 students
    • What President Trump’s ‘Tax Cuts and Jobs Act’ means for J-1 visa holders
    • Understanding J-1 tax obligations and entitlements
    • Sprintax – the easy way to file a J-1 tax return!

     

    When President Donald Trump introduced his ‘Tax Cuts and Jobs Act’ in November 2017, many J-1 visa holders and international students in the US were left feeling extremely confused.

    ‘How does this bill affect me?’ ‘Do I have to file a tax return?’ ‘Can I still get a tax refund?’

    A lot of questions were left unanswered.

    Today we are here to answer these questions! If you’re going on a J-1 trip to the US simply follow this guide and you’ll be able to keep the IRS (the American tax authority) happy while receiving any US tax back you are due.

    So without further ado, here’s 5 things every J-1 participant needs to know about US tax

    Short on time? Check out our video summary instead!

    (1) Yes, you have to file a tax return!

    First things first. Every J-1 visa holder in the US must file a tax return at the end of the tax year. It’s the law!

    Prior to President Trump’s bill there were a limited number of circumstances in which a J-1 holidaymaker would not be required to file a tax return.

    This is no longer the case however, and one of the conditions of the J-1 visa is that the visa holder files a tax return.

    Filing a return          

    There are a number of ways to file a tax return.

    For starters, you could file your return directly with the IRS.

    But, for many J-1 students, filing a tax return is an extremely confusing, complicated and frankly boring task!

    The fastest, easiest and best way to prepare your US tax return is to choose Sprintax. More on this below!

    Not filing a return

    Not filing a j-1 tax return

    If you don’t file a tax return after your J-1 program, you may be subject to penalties and interest.

    The late filing penalty is 5% of the additional taxes owed amount for every month your return is late, (up to a maximum of 25%). If you file more than 60 days after the due date, the minimum penalty is $205 or 100% of your unpaid tax, whichever is less.

    Failure to comply with your tax obligations may also result in you being denied a US visa in the future.

    What is a tax residency status?

    It’s vital to determine your residency status in order to file a compliant tax return.

    The majority of J-1 visa holders are considered non-resident aliens for tax purposes by the IRS.

    When you prepare your tax return with Sprintax, our software will determine your residency status based on the information that you provide.

    Prepare your tax return with Sprintax

    (2) What do Trump’s changes mean for J-1 students

    J-1 program and tax

    The ‘Tax Cuts and Jobs Act’ has wide ranging effects for all US taxpayers – but particularly for those venturing to the States to study, for an internship or to work and travel.

    As most of these changes were activated in January 2018, it’s vital that all non-residents understand their US tax obligations and entitlements.

    The primary change for non-residents relates to what’s known as the ‘personal exemption‘.

    Prior to the bill’s introduction, every non-resident who was working in the US was entitled to a personal exemption of $4,050. In other words, if you were working in the US on a J-1 visa in 2017 you could earn up to $4,050 without paying tax. The personal exemption was also the main means that non-residents could use to get their Federal tax refund.

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

    It’s important to note that these amendments do not affect the 2017 (and previous) tax return filing season. So, if you were working in the US on a J-1 visa in 2017, you can still avail of the personal exemption.

    Prepare your tax return with Sprintax

    (3) You could still be entitled to a tax refund

    J-1 refund

    The removal of the personal exemption means that, for most non-residents, Federal tax refunds will be reduced. From the 2018 tax year onwards, the only reason a non-resident will be entitled to a Federal tax refund is if too much tax is deducted from their income.

    However, even if you’re not entitled to a Federal tax refund, it’s pretty likely you’ll be entitled to a State tax refund.

    Our average State tax refund is $175.

    But remember; to receive your State tax refund you’ll have to file your State tax return. Before you can file your State tax return, you’ll first have to file your Federal tax return!

    Bottom line? You’re legally required to file a tax return. There’s a great chance you’ll be due a State tax refund. So file your return and claim your cash!

    Claim your refund with Sprintax here!

    (4) How much tax will you pay?

    From the 2018 tax year onwards, all non-residents must pay 10% in income tax up to $9,525. And if you earn more than this amount on your J-1 program, you must pay 12% in income tax on the amount between $9,525 and $38,700.

    Case studies

    1

    J-1 in Boston

    Fred travels to Boston on a J-1 visa to work in a restaurant for the summer. During his time in the US he earns $4,000.

    If Fred was working in Boston in 2017 he would not have to pay tax on his earnings as his income does not exceed the personal exception amount of $4,050.

    However, if Fred works in Boston in 2018, he will not be able to avail of the personal exception and must pay $400 (10%) in income tax.

    2

    Fiona moves to Miami on a J-1 visa and secures work in an office for the summer. During her time in the US she earns $9,000 (the average income for around 50% of all summer work and travel participants).

    Had Fiona earned this income in 2017, her tax bill would have been $495 ($9,000 – $4,050 = $4,950. 10% of $4,950 = $495).

    However, if she earns this income in 2018 her total tax bill will be $900.

    J-1 in Miami

    The full tax rate and bracket list is as follows:

    Bracket                                             Tax rate

    $0 – $9,525                                                       10% of taxable income.

    $9,526 – $38,700                                          + 12% of the balance over $9,526

    $38,701 – $82,501                                        + 22% of the balance over $38,701

    $82,501 – $157,500                                      + 24% of the balance over $82,501

    $157,501 – $200,000                                   + 32% of the balance over $157,501

    Claim your refund with Sprintax here!

    (5) Sprintax is the easiest way to prepare your tax return

    Sprintax is the only online self-prep tax software for those on a J-1 programme and non-residents in the US. It will help you prepare your US tax return in minutes!

    When you create a Sprintax account, our system will assist you in preparing fully compliant Federal and State tax returns.

    Our software will also enable you to receive your maximum legal tax refund.

    tax refund for international students

    Sprintax is also 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.

    What does self-prep mean?

    Sprintax is a self-preparation tax software that allows J-1 holidaymakers to easily prepare a fully compliant tax return.

    When you create your account you’ll be asked to enter some relevant information into the software. You can then download your fully completed and complaint 1040NR (non-resident tax return).

    When you file with Sprintax you file with confidence!

    • Compliant US tax return
    • Save time and stress!
    • Determine your residency status
    • Avail of relevant international tax treaties
    • Avail of personal allowances, credits & tax deductions
    • 24/7 Vita Qualified Live Chat facility
    • Maximize your State tax refund

    Over 500k people have used Sprintax to prepare their tax return and get their tax refund.

    How much will it cost?

    The Sprintax tax prep fees are:

    $35.95 – Federal

    $25.95 – State

    But don’t forget, most J-1 visa holders are entitled to a State tax refund!

    How can I get started?

    Easy!

    Set up a Sprintax account today!

    In summary:

    • The majority of all J-1 visa holders are considered non-residents for tax purposes in the US
    • Every non-resident in the US is legally obliged to file a tax return
    • Failure to do so may result in fines, penalties and future refusal of entry to the US
    • As of 1 January 2018, non-residents are no longer entitled to claim the personal exemption of $4,050
    • However, J-1 visa holders can still apply for their State tax refund by filing a tax return
    • Sprintax makes filing your US tax return easy!
    • When you prepare your tax return with Sprintax you’ll receive your maximum legal refund

     

    Filing your US tax return with Sprintax is super cheap and easy. Get started now!

     

     

     

  • Dreaming of a work and travel trip to the US? Here’s how to turn your dream into a reality!!

    Kick start your J-1 trip

    College semester coming to an end? Striving to find something new? You may be considering venturing on a J-1 US work and travel experience of a lifetime. And you’re not alone.

    In fact 300,000 foreign visitors travel to the US each year to work and experience ‘the American dream’.

    The work and travel program enables university and college students from around the world to spend an amazing summer working and travelling in the US. Participants can gather new knowledge, gain work experience and make new friends.

    But there’s one downside. For many people, the J-1 visa application process is extremely daunting. Where do you begin? And what if you can’t find a job in the US?

    Fortunately there are a number of organisations out there that can manage your J-1 visa application for you. Some of them will even guarantee to find you work!

    Let’s take a look at some of the best options below.

    J-1 work and travel applications

    students in the US

    Viking Cultural Exchange

    Viking have been organizing US Work and Travel programs for 13 years. Their package includes a job offer, issuance of the DS-2019 form, issuance of a round trip airplane ticket to the USA and back to home country, as well as preparation of all required documents for your program. Plus you’ll get free medical insurance to cover your travel period in the US. And all of this is delivered at an ‘affordable price’. 

    Cultural Homestay International

    Cultural Homestay International (CHI) offer overseas university students a unique opportunity to intimately experience life and culture in the US.

    For almost 40 years, more than 300,000 students and young adults have visited the US to participate in CHI’s educational and cultural programs, including:

    • Academic Year High School exchange
    • Short-term Group Homestay
    • Au Pair child-care
    • Internship training
    • Work & Travel
    • Camp Counsellor experience 

    Global Current

    Global Current has been a leader in international exchange and professional training for over 50 years. They provide 48 hour processing and ‘unrivaled personal attention’ to each and every J-1 applicant.

    Cultural Exchange Network

    Cultural Exchange Network (CENET) is a non-profit organization dedicated to cultural and international exchange.

    CENET administers the below programs for students looking for a US work and travel experience:

    • the International Trainee
    • International Intern
    • S.-Mexico Intern
    • Summer Work Travel Programs

    CICD Global Opportunities

    Since 1997, CICD has provided more than a thousand students with opportunities to successfully work and travel the US. CICD offers excellent personal service, program monitoring and support.

    InterExchange

    The InterExchange team of experts have helped over 225,000 explorers travel the world for the past 50 years. They administer five J-1 visa exchange visitor Programs:

    • Au Pair
    • Camp Counsellor
    • Intern
    • Summer Work Travel
    • Trainee

    Working Adventures Worldwide

    If you’re looking for an unforgettable US experience, Working Adventures Worldwide will help you with all the planning and preparation so that you can get more fun and less stress out of your overseas experience!

    Their parent company BUNAC (headquartered in Britain) has been in the youth travel industry for over 40 years, specializing in work and volunteer abroad programs.

    Summer Camp jobs

    J-1 summer camp in the US

    USA Summer Camp

    Every year, children across America head to Summer Camp for a summer in the outdoors, experiencing new things and building up their skills. Camps employ international staff to help run the camp, working as Camp Counsellors and Camp Leaders. This is a great opportunity to earn money over the summer while doing something that you love!

    Working Adventures Worldwide

    The best part of this company’s (based in New Zealand) program offering is that they will guarantee you a camp counselor job or your money back!

    Jobs can be found in all kinds of camp counselor roles including water sports, outdoor activities, land sports, horse riding, life guarding, performing arts, arts & crafts.

    They offer:

    • Low fees (you can save up to $200)
    • High salaries
    • A personal service

    Camp America (NZ)

    Based in New Zealand, Camp America have been tried and tested by thousands of Kiwis. With Camp America you’re guaranteed a placement or a refund!

    Camp America (OZ)

    This company will be for you if you’re hoping to travel to the US from Australia to work in summer camp.

    CampStaffUSA

    Attracting candidates from all around the world, CampStaffUSA is a one of a kind staffing site that focuses on summer camp employment.  The company was founded by camp directors looking for an all-in-one solution for hiring quality summer camp staff.

    Camp Leaders

    Camp Leaders are the only specialist summer camp company based in Ireland. They provide summer camp placements at over 500 summer camps throughout America. They offer high wages and a truly unforgettable J-1 summer experience.

    American Camp Association

    If you choose the American Camp Association for your US camp placement you’ll have an opportunity to pick from 3,656 Camps and 12,184 Programs. The American Camp Association is a community of camp professionals who, for over 100 years, have joined together to share knowledge and experience and to ensure the quality of camp programs.

    Internships

    J-1 intern in the US

    USEH International

    USEH provide high quality paid international internship/training to young professionals from all around the world, specializing in Tourism and Hotel management, business administration, finance, sales & marketing and IT.

    Intrax

    Intrax Global Internships offers J-1 visa sponsorship for Interns and Trainees in the following occupational categories:

    • Arts and Culture
    • Hospitality and Tourism
    • Information Media and Communications
    • Management, Business, Commerce and Finance
    • Public Administration and Law
    • The Sciences, Engineering, Architecture, Mathematics and Industrial Occupations

    Since 1980, more than 350,000 individuals (from over 100 countries) have participated in Intrax programs.

    International Interns USA

    For over 10 years, IIUSA has helped international students and graduates to find internships in the US. They will help you to find a great internship, get a J-1 visa and find a company for your OPT training.

    Cultural Vistas

    Founded in 1963, Cultural Vistas is a non-profit exchange organization which promotes global understanding and collaboration among individuals and institutions. Annually, more than 4,500 individuals and over 900 US businesses, companies, and NGOs turn to Cultural Vistas as their trusted solution for J-1 Visa sponsorship for internship and training programs.

    Career Internship Abroad

    Founded in 2008, Career Internship Abroad (CIA) is a world-class educational consultancy firm that creates global internship opportunities for students, fresh graduates, and young professionals.

    CIA has been recognized by different international regulatory agencies and is affiliated with different educational organizations to ensure that all the participants are protected and secured.

    Council of International Programs USA

    CIPUSA offer an array of exchange programs ranging from two weeks to 18 months in duration and spanning a variety of professional fields. Their J-1 Training Visa program is open to both applicants who already have a training program lined up in the US and to those who are still looking for opportunities.

    Medical roles

    Medical jobs J-1 USA

    J1 WAIVER JOBS

    This company provides J-1 Visa Waiver Jobs For Physicians, with an emphasis on roles in Montana. With this waiver, you will not be required to return to your home country after the completion of your J-1 exchange visitor program. This is a very desirable factor for many medical doctors that come to the US on a J-1 visa.

    3RNet

    This non-profit organization helps to connect health professionals searching for jobs in rural or ‘underserved areas’ with health care facilities. 3RNet offer roles in every state!

    Hospitality positions

    J-1 working in a hotel

    Hospitality Placements USA

    This company specializes in the placement of qualified international hospitality graduates and young professionals into major brand hotels and resorts in the US. They match qualified interns and trainees into paid training positions to receive on the job training, build career experience and improve professional skills.

    Placement International

    Placement International has over 10 years of experience in offering positions for highly educated students and young professionals to do paid internships and management training programs in the most luxurious hotels and restaurants in the US. Looking to work in a top hotel brands while on your J-1 program? Step this way!

    Agricultural work

    Working on a farm on a J-1 trip

    Communicating For Agriculture Exchange Programs

    Looking to experience farm life stateside?

    CAEP brings young adults together from all over the world to share and learn ideas, beliefs, and agricultural practices through international paid agriculture exchange programs.

    And finally

    Tokio Marine HCC

    When you’re in the US on a J-1 visa you’ll no doubt be hoping to earn some money to supplement your trip. However as the saying goes – ‘your health is your wealth’! In the US, you’ll have access to quality medical care for any unexpected illnesses or injuries you may encounter during your trip. But this care can be extremely costly without insurance coverage. Tokio Marine HCC can provide coverage in the event of an accident or emergency as you travel within the US. You’ll be back on your feet in no time!

     

  • I filed an incorrect tax return. What should I do now?

    Amending your tax return

    “Don’t worry if you made a mistake on your tax return or forgot to claim a tax credit or deduction. You can fix it by filing an amended return.” – The IRS

    The Internal Revenue Service (IRS) knows the tax code is complex, and that people make mistakes. A tax return can be considered ‘incorrect’ or ‘incomplete’ for a variety of different reasons. Simple things like forgetting to sign a form to big issues like misreporting income or incorrectly calculating a deduction can all effect the validity of a tax return. If you realize that you made an error on a tax return you already filed or you have come across new information (for example you received an additional W-2 or 1042-S), simply file an amended tax return to make a correction.

    It’s very important to note that you should not attempt to correct the situation by filing another original Form 1040NR return. That will confuse things further and may cause additional headaches for you. Instead file a Form 1040X, even if you filed your original return only a few days ago.

    Need a hand filing your amended tax return? Contact Sprintax today!

    Here are some key things you need to know in order to correctly amend your tax return:

    When to Amend a Tax Return That You Filed

    The first thing you should know is that not all errors require an amended tax return. You should amend your tax return if you need to:

    • Correct your filing status – for example, if your filed as single but actually got married on the last day of the tax year, you will need to amend your return by filing his taxes under the appropriate status – married filing jointly or married filing separately (note: non-residents can file only as married filing separately).

    Filing US tax return as a married couple

    • Correct your income and tax figures because you did not include all your payment documents when preparing your return. If you receive additional tax documents for the tax year, for example, a Form W-2 arrives in the mail after the tax deadline, you would need to file an amended tax return to report the additional income and tax.
    • You should also amend your return to claim all of the allowable tax deductions or tax credits that you did not claim when you filed your original return. In previous years there were a number of deductions that international students could use to reduce their overall tax liability. However, in November 2017, President Donald Trump introduced a GOP tax reform bill which brought widespread tax-related changes for most taxpayers.
    • Correct the number of dependents you claimed. An amended return will be needed if a taxpayer wants to claim additional dependents, or has claimed ineligible dependents and needs to adjust the exemptions amount. The general IRS rule states that a non-resident alien, whether single or married, may claim only one personal exemption, as long as they are not claimed as a dependent on any other US tax return (in which case their personal exemption was already used). There are some exceptions to the general rule which allow specific groups of taxpayers to claim dependent exemptions for their family members:
    • Residents of Canada or Mexico
    • Residents of the Republic of Korea
    • Residents of India

    Check out if you qualify to claim an additional exemption for your dependent here.

    If you realize that you need to make one or more of the corrections listed above use Form 1040X to amend the federal income tax return that you previously filed.

    Need a hand filing your amended tax return? Contact Sprintax today!

    When Not to Amend a Tax Return That You Filed

    In some cases, you don’t need to amend your tax return. The IRS usually corrects math errors when processing your original return. If you didn’t include a required form or schedule, you’ll receive a request for the missing item needed to finish processing your tax return. When you receive a notice about errors, there will usually be other ways to correct errors besides an amended tax return.

    Usually, these misunderstanding can be quickly rectified by providing the correct information to the IRS. The notice that you receive will explain clearly what the issue is and how to respond.

    filing a US tax return

    How to Amend a Tax Return That You Filed

    To amend your tax return you will need:

    • A form 1040X
    • Your original tax return
    • New documents

    The Form 1040X is two pages long and you are only required to include new or updated information. You will also find a space where you can write an explanation as to why you are amending your return.

    It’s very important to ensure you are using the latest version of the 1040X.

    Once you complete the form, you’ll have to mail it to the IRS along with all required supporting document. Amended returns are only filed on paper. The normal processing time for a Form 1040X, is between 8 and 12 weeks from the time the IRS receives your tax return.

    If you are amending for more than one tax year, you will need file Form 1040X for each tax year separately.

    Many people find the prospect of dealing with the IRS and amending their tax return to be quite daunting. If that sounds like you, contact Sprintax today!

    What Happens After You Amend Your Tax Return

    US tax refund

    If you are filing an amended tax return to claim an additional refund, you’ll have to wait until you have received your original tax refund before filing a Form 1040X. Amended returns take up to 12 weeks to process. You may cash your original refund check while waiting for the additional refund. Also you generally MUST file the amended return within three years from the date you filed your original return, or within two years after the date you paid the tax (whichever is later) in order to get the extra refund.

    If you owe additional taxes with Form 1040X, file it and pay the tax as soon as possible to minimize interest and penalties. If your amended return shows you owe more tax than you reported on (and paid with) your original return, you’ll owe additional interest and probably penalties too. Even though you might be amending a return from one or two years ago, the due date for your original return and for payment has already passed. The IRS may not penalize you for a small mistake, but it sure will collect some interest on the proper amount you didn’t pay on time in the first place. The sooner you correct the error, the less interest you’ll pay.

    Don’t hesitate to contact the Sprintax team if you need help with amending your return!

  • Everything you wanted to know about US tax (but were afraid to ask!)

    Us international students tax questions

    You might be surprised to learn that, at present, there are around one million international students studying in the United States. What won’t surprise you however, is that each of these one million students have tax obligations in the United States.

    What are these obligations? This is where things get a bit tricky!

    If you’re an international student in the US you might not be too familiar with the local tax system. And it’s highly likely that you’ll have some questions about your tax obligations and what you’re entitled to. That’s why we’ve created this handy guide to US tax for international students.

    So let’s get into it.

    Q – Who or what is the IRS?

    IRS for international students

    The Internal Revenue Service (IRS) is the US government agency responsible for the collection of taxes and the enforcement of tax laws. The agency dates all the way back to 1862 when it was introduced by the then President Abraham Lincoln. Its primary purpose includes the collection of individual income taxes and employment taxes. The IRS also handles corporate, gift, excise and estate taxes.

    Q – What can you tell me about the American tax system?

    Both Americans and foreign nationals residing in the US must pay taxes to both the State and Federal government. Usually, when an individual earns an income, a portion of it is automatically deducted and transferred directly to the government. Every January employers send summaries to their employees of how much income they were paid as well as how much of their income was sent to the IRS.

    Q – What income will I need to pay tax on in the US?

    US tax for international students

    As an international student in the US you will have to pay tax on the follow types of income:

    • Wages
    • Salaries
    • Tips
    • Interest
    • Dividends
    • Some scholarships/fellowship grants

    Q – How do I know if I made ‘US source income’?

    US source income is defined as wages from a job in the United States, received scholarship money from an American organization, or made interest on money in an American bank account etc.

    Q – What is an Income Tax Return?

    US tax returns for international students

    An income tax return is the form that individuals and business submit to the IRS in order to file their taxes.  ‘Form 1040 NR’ and ‘1040NR-EZ’ are all examples of income tax forms.

    The purpose of filing your tax return is so that you can report all sources of your income to the government – including the tax you have already paid and what you still owe. It’s also an opportunity to claim any deductions or exemptions that you may qualify for.

    At the end of the process, you calculate the total tax you should have paid. If you paid more than what you owe during the year, you will be reimbursed. On the other hand, if you didn’t pay enough, you have to pay the difference.

    Q – Am I required to file a tax return?

    Yes. Every international student inside the United States must file their tax return each year.

    Q – What is tax residency status?

    US residents have differing tax obligations depending on their relationship with the country. Each taxpayer must determine their own residency status before they file their tax return. The most common tax residency statuses are ‘resident’ and ‘non-resident aliens’.

    Q – How can I work out my residency status?

    Most international students who are studying in the US on F, J, M or Q visas are considered non-resident aliens for tax purposes.

    International students on F1 visas are automatically considered non-resident aliens for their first 5 calendar years in the US, and scholars (and their dependents) on J visas are automatically considered non-residents for their first 2 calendar years in the US.

    If you’ve been in the US for longer than the 5 or 2 calendar years, you will be considered a ‘resident alien’ for tax purposes if you pass either the ‘green card test’ or the ‘substantial presence test’ for the calendar year (January 1-December 31).

    Green Card Application Form. for international students

    Q – What is a substantial presence test?

    You will be considered a US resident for tax purposes if you pass the substantial presence test for the calendar year. To meet this test, you must be physically present in the US on at least:

    • 31 days during the current year and
    • 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
      – Every day you were present in the current year
      and
      – 1/3 of the days you were present in the first year before the current year
      and
      – 1/6 of the days you were present in the second year before the current year

    Case study

    Sam was present in the US for 120 days in each year from 2015-2017. To determine if he passes the substantial presence test for 2017 he can count his full presence in 2017, 40 days in 2016 (1/3 of 120 days), and 20 days in 2015 (1/6 of 120). Since the total for the 3-year period is 180 days, Sam will not be considered a resident under the substantial presence test for 2017.

    Days of Presence in the United States

    You are treated as present in the US on any day you are physically present in the country, at any time during the day. However, there are some exceptions to this rule. For example, you can’t count the following as days of presence in the US:

    • Days you commute to work in the US from a residence in Canada or Mexico, if you regularly commute from Canada or Mexico
    • Days you are in the US for less than 24 hours, when you are in transit between two places outside the United States
    • Days you are in the US as a crew member of a foreign vessel
    • Days you are unable to leave the US because of a medical condition that develops while you are in the US
    • Days you are an ‘exempt individual’ (more details below)

    Exempt Individual

    The term ‘exempt individual’ refers to anyone in the following categories:

    • An individual temporarily present in the US as a foreign government-related individual under an A or G visa (other than individuals holding A-3 or G-5 class visas)
    • A teacher or trainee temporarily present in the US under a J or Q visa, who substantially complies with the requirements of the visa
    • A student temporarily present in the US under an F, J, M, or Q visa, who substantially complies with the requirements of the visa
    • A professional athlete temporarily in the US to compete in a charitable sports event

    Q – What tax forms do I need to file?

    Form 8843 for international students

    Every international student, will need to file a Form 8843 (which essentially proves that you’re a non-resident) and if you have received income in the last calendar year then you will most likely need to file a Form 1040NR-EZ also.

    The 1040NR-EZ is used to declare your US source income and determine how much tax you owe on that income. It’s a simplified version of the 1040-NR and most international students can use it.

    Q – What information will I need in order to complete my tax return?

    This is an official government W-2 Form.

    The first thing you will need is your US taxpayer identification number (TIN). A US TIN for an individual is either a US Social Security Number (SSN) or an individual taxpayer identification number (ITIN). Only foreign nationals who are authorized to work in the United States under the US immigration law are eligible to apply for a SSN. Foreign nationals not eligible to apply for a SSN may submit a Form W-7 ITIN application to the IRS.

    Confused? Learn more here about ITIN.

    To prepare your tax return you will also need your income documents like W-2’s, 1042-S’s, and/or 1099’s, which will be mailed to you by the university and your employer.

    W-2 – This document, provided by your employer, includes details of the wages you earned and the taxes withheld from your wages. You should receive this document by January 31.

    1099 – This document is a report from your bank on the interest you have earned on your accounts. You should receive this by January 31.

    1042-S – This details wages paid to you if you already claimed a tax treaty benefit, and scholarship income that was used for expenses other than tuition and fees (such as room, board, or travel). You will receive this by March 15.

    Don’t forget – if you don’t have taxable US sourced income you won’t receive income documents and you won’t need to apply for a US TIN. In this case you’ll just need to submit Form 8843 to the IRS.

    Q – How do I submit a tax return?

    You can choose to fill out all of the paperwork and submit your tax return directly to the IRS yourself. Depending on the tax rules of the state in which you lived and /or worked you may also need to file a state return to your state tax office.

    Alternatively, many international students find the thought of submitting a tax return to be quite daunting. If you’d like a hand with the preparation of your return, you can enlist the help of a tax agent like Sprintax. Preparing your tax return is easy with Sprintax and we guarantee to keep you compliant with the US tax authorities.

    Q – How can Sprintax help me?

    Sprintax will take the stress out of filing your tax return by offering you step-by-step assistance throughout the entire process.

    Sprintax can also help you to determine if you are considered a ‘resident’ or ‘non-resident’ for tax purposes and guarantees to maximise your tax refund.

    • Online US tax prep solution for international students and scholars
    • US tax compliance guaranteed
    • Built-in knowledge of over 350 different types of tax deductions
    • 65 international tax treaty agreements and exemptions covered
    • Maximum legal tax refund for federal, state & medicare

    Just complete the registration form here to get started.

    Q – What is the deadline for filing a tax return?

    The filing deadline for US federal income tax returns for individuals is April 15. However, in the event that this date falls on a Saturday, Sunday or holiday, the first succeeding day that is not a Saturday, Sunday or holiday will be the deadline.

    Q – What should I do if I am unable to file my tax form by the deadline?

    Form 4868 for international students

    Need more time to complete your return? Simply file a 4868 to request an automatic deadline extension to August 15.

    It’s important to note that you will not be notified if your extension request is approved – the process is automatic.  If you owe any taxes, you must still mail the estimated tax payment by the April 15 deadline or you will have to pay penalties and interest on any payment owed.

    Q – Does it cost anything to file my tax return?

    If you decide to file your tax return yourself, the process is free.

    The Sprintax fee structure is as follows:

    Form 8843 – $15.95

    Form 1040-NR – $35.95

    ITIN Application – $15.95

    State Tax Forms – $25.95

    Q – Am I entitled to any tax exemptions?

    In previous years there were a number of exemptions and deductions that international students could use to reduce their overall tax liability.

    However, in November 2017, President Donald Trump introduced a GOP tax reform bill which brought widespread tax-related changes for most taxpayers.

    Check out our detailed article about the GOP Tax Reform and its effects on the taxation of foreign students and other non-resident aliens here.

    tax returns for international students

    Q – Will I be entitled to a tax refund?

    You may be entitled to a tax refund if you paid more than what you owed during the year.

    Once you’re tax return has been completely filled in you will be able to determine if the US government owes you a refund.

    Sprintax can help you to you to retrieve your maximum tax refund.

    Q – How can I claim my tax refund?

    You can claim your tax refund when you file your tax return.

    Alternatively, if you choose to file with Sprintax, you’ll be guaranteed to receive your maximum legal tax refund.

    tax refund for international students

    Q – Do I have to pay taxes on income I received from my home country?

    No. The US will not tax your income from non-American sources.

    Q – There is a tax treaty between the US and my country. Should I file a tax form?

    Yes. You will still be required to file a tax return for each year you spent studying in the US.

    Q – I’m an F-1/J-1 student with no US income or scholarships for 2017. Do I need to file anything?

    Yes. You are required to complete a Form 8843 with the IRS regardless of whether you received income.

    Q – I arrived in the US in December and I didn’t work. Do I still have to file Form 8843?

    Yes. Every non-resident alien who spends any portion of the year in the US on an F or J visa must complete a Form 8843 and send it to the IRS.

    Q – What happens if I don’t file a tax return?

    Payment of an income tax liability is required by law and complying with US tax law is one of the conditions of your visa. If you owe taxes and don’t file, the IRS can impose penalties and interest and there can also be consequences for future immigration.

    For instance, if you apply for permanent residency (a green card) it’s likely that you will be asked to provide evidence of your tax filing for previous years in the US.

    Filing a tax return is also the only way you can retrieve your tax refund. It would be a shame to leave money you’re entitled to behind!

    File your return with Sprintax today!

  • Phew! Tax season is finally over! But what should I do now?

    Here are the tax records you need to keep and how long you should keep them for

    When tax season ends it can feel like a big weight has been lifted off your shoulders – an opportunity to exhale and relax (until it all starts again next year that is!) But before you expel all tax topics completely from your mind, there is one final task you must complete.

    Carefully store all of your tax records!

    It’s very important that you organize and store all of your tax records and documentation – including a copy of your tax return.

    Here’s why:

    (1) Audits

    If you’re ever selected by the IRS for an audit you will need to have access to your tax returns and the documents you used to complete them. If the IRS does audit you, they’ll generally look back at your returns over the previous three years so you’ll want to have copies of the returns you filed for those years close at hand. You’ll also need your W2s, 1042-S’s, 1099s, receipts, or any paperwork that will support your tax deductions or credits that you may have claimed on those returns.

    sprintax

    (2) Amendments

    After you file your tax return, you may discover that you need to amend it due to an error or a tax break that you should have claimed. In such cases you will need a copy of the return you filed along with all documents (such as your W-2, 1042-S, 1099) and supporting information (like receipt and statements) you used to prepare the return.

    (3) Residency

    Good tax record keeping will also be useful if you decide to apply for permanent residency (a green card). During the application process you will need to provide evidence of continuous compliance with the US tax law by enclosing the tax return(s) you’ve filed.

    (4) Future returns

    Tax returns you have filed in previous years can help you in preparing future tax returns. For example, you may need to refer to previous figures like refund amounts, deductions, or tax due etc.

    sprintax washington

    How long should I keep tax records?

    According to the statute of limitations outlined by the IRS, the basic rule is that you should keep all of your relevant tax documents for at least 3 years after the date in which you filed. In other words, if you filed a return in 2017 you should keep all tax documents relating to it safe until 2020.

    In some cases, you may need to hang onto your records for longer than three years. For instance, you should plan on keeping tax forms for retirement accounts such as IRAs for seven years after the account is completely wiped out.

    Additionally, if you buy or sell property, you should keep property records until the statute of limitations expires for the year in which you dispose of the property.

    Our advice? Keep all your US tax records at least until 3 years after you have left the US!

    How to keep tax records?

    The law doesn’t require any special record-keeping system for all taxpayers. You can keep your records in any manner that works best for you. If you plan on keeping your records for a long time you should consider scanning your documents and keeping a backup of the files.

    sprintax time square

    Filing your return

    All international students and scholars in the US are required by law to file a tax return. Sprintax can help you to do exactly that. Our easy-to-use system removes all of the stress from the tax filing process. Plus we’ll even help you to retrieve your maximum legal tax refund!

    Not bad!

    Get started now!

  • What to do if you miss the tax deadline

    US TAX Deadline

    Step one: Don’t panic!

    Missed the April 17th deadline? Don’t panic! Nearly 30% of taxpayers are unable to organize their documents before the deadline. But you can still fix this! Here are a few important things you should consider if you missed the tax deadline.

    (1) If you are due a refund or your tax return shows no tax liability

    Tax refund

    If you’re entitled to a refund or your tax return shows no tax liability, you may not be fined for filing late. If you’re due a refund, you should file as soon as possible to get it. You may be entitled to a refund if you had too much tax withheld from your wages or you qualify for certain tax credits.

    Sprintax will help you determine if you are due a refund.

    It’s important to note that there is a time restriction on claiming a federal tax refund. So, if you don’t file within three years from the due date of your tax return (17th of April, 2018 for 2017 tax year), you may not receive your refund.

    In addition, there are some tax refund policy changes for late filing taxpayers that the IRS is implementing and these may affect how quickly you will receive your refund.

    (2) If you owe tax

    USA flag and American dollars. American flag blowing in the wind and 100 dollars banknotes in the background. USA flag and American dollars. American flag blowing in the wind and 100 dollars banknotes in the background

    If you have underpaid tax, keep in mind that both late filing and late payment penalties may be charged on top of your tax liability. The failure-to-file penalty is the bigger portion of your penalty, and after 60 days of delay its minimum amount will be $205. So if you have not filed form 4868 – Extension to file – you may need to submit your tax return to the IRS as soon as possible in order to avoid a further increase of your fine.

    Your failure-to-pay penalty will depend on the amount of tax you owe. The percentage of the penalty increases over time, so even if you are not ready with your documents, the more tax you pay on time (before the deadline) the less interest and penalty charges you will accrue.

    If you are unable to pay your tax on time, you can choose to enter into installment agreement with the IRS. There are certain conditions you will have to meet and Sprintax tax experts can help you if you choose to request an installment agreement from the IRS.

    Summary

    If you missed the deadline, the best thing you can do is to prepare your tax documents and file your tax return as soon as possible!

    Sprintax can help you to prepare your tax return and determine if you’re entitled to a refund.

     

  • I’m studying in the US. Can I stay in America after I finish my degree?

    It’s possible to stay in the US under certain circumstances. We take a closer look at two options – OPT and H-1B

    Most international students studying in the US have been granted entry into the country on an F-1 visa. This visa allows students to attend college, university, conservatory, high school, elementary school, and seminary or language school in the US. If you are studying in the US on an F-1 visa, once the study program is finished, you will have 60 days to depart the country, get a new visa or otherwise validate your stay in the country.

    If you would like to stay in the US after you have completed your program, the first possibility you should consider is the Optional Practice Training (OPT) program.

    Optional Practical Training (OPT)

    Intern. International student. Portrait Of An Office Worker

    OPT is a program that allows international students to work in the US after their graduation, and gain practical experience.  Students with F-1 visas may apply for 12 months of OPT after each level of education complete. For instance, after completing their bachelor education, students can apply for 12 months of OPT, and then for another 12 months after the completion of their master degree. Science, Technology, Engineering and Mathematics (STEM) graduates have the option to extend their program by 17 months (to total 29 months).

    While you participate in your OPT program, you do not need a new visa. OPT program participants are treated as F-1 status holders.

    H-1B Speciality Occupations

    Another option available to you is to change your visa status to H-1B by applying for an interim OPT phase before H-1B, or to apply for H-1B directly from F-1.

    H-1B Specialty Occupations is a non-immigrant visa that gives graduates temporary employment authorization in high-skilled occupations. H-1B applicants are required to have specialized knowledge and a bachelor’s degree or higher (or its equivalent). Most H-1B jobs are in industries such as science, engineering, and information technology. Under this visa you are allowed to work in the US for initial period of three years, and you may apply for an extension which, if your application is successful, will entitled you to a further three years in the US.

    Here are some useful tips on how to get started

    Start early

    Intern. International student. Woman's hand writing on a notebook with a pen on a wooden desk.

    Plan ahead and try to secure a job or an internship as soon as possible so you have time to prepare all of the required documents. You can even start looking before your graduation, and by doing this you can be sure that you have explored all available options.

    Choose your start day wisely

    You are allowed to choose your OPT start date. Keep in mind that with OPT status you can stay in the US for 90 days while unemployed, and the 12-month work period begins on the start date you choose on your application.

    Networking

    Building connections is also very important when you are looking for an internship or a job. You never know how the person you met yesterday can help you in finding the perfect job tomorrow. Therefore, go out, attend different events, and make connections that may turn out to be very effective.

    Attend career forums

    Career forums can be quite useful so give them a chance! You will get to meet people representing different companies and sectors, and you can be introduced to other people that can offer you exactly what you have been looking for.

  • Moving to the US to study? Here’s 10 things to expect

    From your daunting first day to excelling in the classroom – top tips to make the most of college life

    Are you planning a move to the US for study? You’re not alone.

    In fact, the US attracts 1,000,000 international students to its colleges and universities every year. And it’s very easy to see why.

    American universities are amongst the best in the world and offer truly high-class education opportunities to their students. Away from the campus, the US boasts a large mix of cultures which makes it a really interesting place to study and live.

    But moving to a new country is always a big deal for any international student. And it can be hard to know what to expect.

    With this in mind, here’s 10 things to expect when you arrive in the US to study.

    1 – You might freak out at first!

    Let’s face it. There’s a lot to do at first when you move to a new country.

    You’ve got to move into your accommodation and unpack. Next you have to familiarize yourself with the local area. And then you’ve got to get set up with supplies, college necessities, a new phone, a bank account ……..

    And then it hits you. ‘I’m an international student in America. And I’m a long way from home.’

    But don’t freak out! This is when the exciting stuff starts to happen. Go out and meet new people.

    It’s likely there’ll be lots of international students that are going through the same things you are. Talk to them. Pretty soon you’ll be feeling right at home in your new surroundings!

    2 – You can hit the ground running

    ‘Orientation Week’ or ‘Welcome Week’ can be a really useful time to help you get used to your new surroundings. During this week you’ll have a great opportunity to explore your new campus and find your bearings. You’ll also be properly introduced to your course, tutors, and peers.

    Make sure you use this time to sign up for lots of on-campus clubs and societies as these are a good way to meet people.

    3 – There are top-notch student support facilitates available on campus

    Studying in the US is no doubt a rewarding experience, but navigating your way through day-to-day issues can sometimes be tough. The aim of an international student office is to assist students, just like you, to adapt to their new environment.

    That’s why they offer a wide range of student services such as:

    • English-language practice courses
    • Orientations, and trainings
    • Financial aid
    • Career advice
    • On-campus psychiatry and counselling

    They can also help to answer any questions you may have regarding your visa status, housing, employment possibilities, health concerns and more.

    4 – You’ll find cutting-edge technology

    American universities pride themselves on being at the forefront of technology and research techniques.

    If you’re chosen discipline doesn’t directly involve science or engineering, don’t worry. You’ll still have tonnes of opportunity to become skilled in using the latest technology to conduct research, as well as obtain and process information.

    5 – Life in college is relaxed…. until the grading begins!

    Life on campus is usually pretty relaxed and flexible. In fact, it’s normal for US students to work classes into their own schedules.

    Most students are not obliged to show up at every single class, or even to stay for an entire lecture. But, just because you can avoid and skip classes, doesn’t mean you should!

    Remember, the importance of your grades and Grade Point Average (GPA – an average score based on the grades and results of every class you’ve taken during your studies) can’t be overstated.

    The key is to find the right balance between your studies and enjoying campus life.

    6 – You’ll acclimatize to the culture sooner than you think!

    If you like sports, you’re going to feel right at home in the US. Between all of the professional sports like basketball, American football, ice hockey, baseball and soccer, there is something on pretty much every night of the week!

    And Americans take their college sports pretty seriously too. In fact, some of the biggest stadiums in the world were built for US college teams.

    Rooting for your college team is a great way to feel part of the community. Not only will this help you to have conversations with native students, it will also provide you with an authentic experience of American culture.

    Away from the sports field, you’ll find no shortage of options to keep you entertained. America is at the cutting edge of the music, film and literary worlds. So it won’t take you too long to find something you like.

    If you like going out on the town, remember that the legal drinking age in the US is 21. And you’ll need a proper ID to get into most bars and clubs.

    7 – Opening a bank account may take some time

    You’ll find a US bank account to be very useful, especially if you plan to work part-time, pay bills or keep savings. Setting up a bank account can take some time, as there a number of steps to complete. So it’s a good idea to start this process soon after you arrive in the US.

    Here’s further information on how to set-up a US bank account and some more tips for international students in America.

    8 – You shouldn’t work too hard!

    You may be intending to search for employment in your spare time and earn some extra cash. But be careful, as not all types of employment are eligible under the conditions of an F-1 (student) visa.

    For instance, F-1 students who want to work off campus can only do so in roles that are related to their studies. Most of the other off campus roles are not authorized under F-1 and you will need permission by a DSO (Designated School Official) in special circumstances to do this work.

    F-1 students are entitled, however, to find employment on campus.

    But it’s important to note that while school is in regular session, a student can’t work for more than 20 hours per week. During extended holidays, breaks and summer sessions, you can work full time (up to 40 hours per week).  If you are confused whether a job is considered on-campus employment, ask the employer before you accept the role.

    9 – You’re going to have to file a tax return

    You may find this a bit strange if you are normally resident in a country where you don’t have a tax filing obligation.

    Yes, every international student is required to file a tax return (federal and state, if required) for each year present in the US, and pay tax if they earn income. In fact, it’s one of the terms of the student visa.

    And even if you don’t earn money during your time in the US, you will still need to file with the IRS by the April 17 deadline.

    Many international students find the prospect of filing a tax return to be quite daunting and this is completely understandable. Fortunately help is on hand!

    Sprintax can file your fully compliant Federal, State and FICA tax return. We can also help you to retrieve your maximum legal tax refund. And, if you’re confused about your US tax obligations, Sprintax can answer any questions you have. Get in contact with us today!

    We’ll take care of the complex tax requirements so all you have to do is enjoy your time studying in America!

    10 – You’ll have a blast

    You’re studying in the United States after all!

    Each day you will have opportunities, not only to broaden your knowledge in top academic institutions, but also to collect countless life experiences that will stay with you forever.

    Most universities offer a variety of student clubs and organizations to meet every interest. You’ll also have the chance to immerse yourself in American culture, meet new people and make new friends.

    What could be more exciting? Enjoy!

  • Here’s everything you need to know about the W-2 tax form

    Your questions answered!

    The tax filing deadline is on the horizon and quickly approaching! And most employees are now on the lookout for their W-2 tax form. But why is this little form so important?

    Here’s everything you need to know.

    What is a W-2 Form and why do I need it?

    The Internal Revenue Service (IRS) requires every employer that is engaged in a trade or business, and that pays remuneration for services performed by an employee, to file a Form W-2 for each employee.

    You will find the W-2 Form to be very useful when you are filing your end of year tax return. The form includes  important details regarding your total gross earnings including wages, tips and taxable fringe benefits, Social Security earnings, Medicare earnings, and the Federal and State tax that is withheld.

    How do I read a W-2?

    The information is divided into different sections on the form.

    For example, in Box 1 you will find information about your annual wage and salary payments, together with the amount of federal tax withheld from it in Box 2. Other boxes on the W-2 form such as 3, 4, 5 and 6 include your wages subject to Medicare tax, Social Security tax and the amount of these taxes withheld from your income. Boxes 15 to 20 provide information about each state you worked in, state income subject to tax in this state, and the amounts of state and local taxes withheld, if applicable.

    Important elements like your name, surname, address and SSN or ITIN (social security number or individual taxpayer identification number) as well as your employer’s EIN (employer’s identification number) are also included on the form.

    Note: While you read your W-2, always double check that the information is correct. If you find any errors, inform your employer immediately about the mistakes so they can amend them before you start your yearly tax return.

    When is the deadline?

    Your employer must provide you with your W-2 form by 31 January after the end of the tax year to which it relates (for example, you must receive your W-2 form by 31 January 2018 for the year ending on 31 December 2017).

    What if I still haven’t received my W-2?

    If this deadline has passed and you still have not received your W-2 form from your employer, you should contact them immediately to confirm that it was sent and that it was dispatched to the right address. Your employer may also provide your copy via a secure link online.

    Alternatively, you can contact the IRS or use Sprintax offline services provided by our team of tax professionals.

    Got all your income documents?

    Good for you!

    If you have received your W-2 Form, as well as any other required income documents (such as 1042-S or 1099’s) you can use Sprintax to prepare your tax returns online. Last year Sprintax assisted approximately 100,000 international students, scholars and non-resident professionals with their tax returns. What’s more, 90% of those that had a Federal filing requirement were also due a refund!

    Get started with Sprintax today and our live chat team will guide you through your tax return!

     

     

  • GOP Tax Reform and its effects on the taxation of foreign students and other non-resident aliens

    We examine how the bill effects the tax obligations of US non-residents

    In November 2017, President Donald Trump introduced a GOP tax reform bill that will have wide ranging consequences for all US tax payers.

    There has been much confusion surrounding the new bill and tax payers have been keen to work out what the changes will mean for their pockets.

    Below we take a look at how the bill will affect the future tax obligations of US non-residents. Most of the changes have taken effect from January, 2018 and will change methods of withholding and the way non-residents will be taxed throughout 2018.

    It’s important to note that these amendments do not affect the 2017 tax return filing season.

    Changes to the current tax law:

    1) Personal exemption will be waived in full

    Permanent amendment

    Effective date: 31 December 2017

    This change means that the personal exemption available for all non-residents to decrease taxable income is reduced from $4,050 in 2017 to $0 in 2018 for all individuals (residents and non-residents).

    In other words, overall taxable income has increased for all non-residents

    2) Standard deductions increase from $6,350 to $12,000

    Permanent amendment

    Effective date: 31 December 2017

    This change will only effect students and trainees from India who are covered by an income tax treaty between the US and India. From the 2018 tax year onwards, they will be able to claim higher standard deductions on their non-resident form.

    All other non-residents are not entitled to avail of standard deductions.

    3) Tuition waivers for tuition and books under Section 529(c) for university students (education next to secondary) will be taxable in full

    Permanent amendment

    Effective date: 31 December 2017

    In previous tax years, tuition waivers under 529(c) were considered non-taxable and non-reportable. They were treated in a similar fashion as scholarships under Section 117.

    However, this will no longer be the case. The Tuition waiver is now taxable as of the 2018 tax year. Scholarships under section 117 will remain non-taxable and non-reportable.

    4) SALT (State and Local Taxes) will be retained for the tax years 2018 to 2025 (inclusive), but they are capped at $10,000 ($5,000 for married people who file separately)

    Temporary amendment for tax years 2018 to 2025 (inclusive)

    Effective date: 31 December 2016

    Most non-residents (including students and other exchange visitors) can only use SALT as an itemized deduction on their Schedule A, 1040NR form or line 11, 1040NR-EZ form. The State and Local Taxes (SALT) deduction decreases taxable income by the amount paid to state and local tax government during the tax year.

    This change sets a cap on SALT deductions to $10,000 which may not affect the deduction most of the students and scholars are eligible for. However, some non-residents paying larger state and local taxes may be unable to use all of them as a deduction.

    5) State taxes paid for previous tax years during the current tax year are no longer allowed

    Permanent amendment

    Effective date: 31 December 2016

    Under the former terms of SALT, individuals could claim state taxes for previous years that they were paying for in the current tax year. In other words, if a student paid their 2015 and 2016 state taxes during the 2017 tax year, they could claim that this added to SALT.

    However, this will no longer be allowed from the 2018 tax year.

    6) Miscellaneous itemized deductions are not allowed

    Temporary amendment for tax years 2018 to 2025 (inclusive)

    Effective date: 31 December 2017

    Expenses under section – Job Expenses and Certain Miscellaneous Deductions, at Schedule A include:

    • Unreimbursed employee expenses (2106 form)
    • Tax preparation fees
    • Other expenses (investment expenses, deposit box and etc)

    Most students are not allowed to use itemized deductions (except for tax preparation fees and SALT). Additionally, some teachers, researchers and other cultural exchange visitors are eligible in some cases to use business expenses and expenses for professional equipment.

    But from 2018 onwards, all of these expenses – tax preparation and business expenses – are not allowed for all resident and non-resident individuals.

    7) Moving expenses are not allowed, except if a taxpayer is an employee of the US Armed Forces

    Temporary amendment for tax years 2018 to 2025 (inclusive)

    Effective date: 31 December 2017

    Moving expenses (which are not covered by the employer) for starting a new job in the US, used to be allowed as a deduction. Usually, this deduction could not be granted to a student, however many teachers and researchers were entitled to avail of it.

    But from the 2018 tax year, this deduction is suspended.

    8) Expenses for personal casualty loss and theft are not allowed, except if they are under disaster area rules

    Temporary amendment for tax years 2018 to 2025 (inclusive)

    Effective date: 31 December 2017

    While expenses for personal casualty loss and theft are very rare among students and exchange visitors, this cohort had been entitled to them. This will no longer be the case from the 2018 tax year onwards.

    9) Change of the treatment of effectively connected income for non-residents: “effectively connected with the conduct of a trade or business within the United States (within the meaning of section 864(c), determined by substituting ‘qualified trade or business (within the meaning of section 199A)’ for ‘non-resident alien individual”

    Permanent amendment

    Effective date: 31 December 2017

    From the 2018 tax year onwards, ‘qualified trade or business’ will not include ‘trade or business of performing services as a non-resident employee’.

    This change is likely to have a noticeable effect on most non-residents income in regards to the option to treat FDAP (Fixed, Determinable, Annual or Periodic) income as affectively connected. This change will mainly affect Procedure 88-24, however it may also effect the tax rates for employment income.

    The IRS will be supplying further details on this change in the near future.

    10) Withholding on employee income by the employer

    Permanent amendment

    Effective date: 31 December 2017

    While the certificate of allowance (currently W-4) will remain the same for 2018, the calculation of the amount to be withheld was changed from 1 January 2018.

    The changes surrounds ‘Notice 1036’. The main change detailed (so far) is that standard deductions allowable will be the only eligible deduction considered before the monthly (periodical) tax withholding is calculated.

    As non-resident aliens do not have the right to avail of standard deductions, they will now be taxed on their whole income.

    The changes must be implemented by employers before 15 February 2018.

    11) Tax rates are changed into 4 brackets

    Permanent amendment

    Effective date: 31 December 2017

    New tax brackets for a single individual:

    Not over $9,525                        –                              10% of taxable income.

    Over $9,525 but not over $38,700         –           $952.50, plus 12% of the excess over $9,525.

    Over $38,700 but not over $82,500            –      $4,453.50, plus 22% of the excess over $38,700.

    Over $82,500 but not over $157,500      –         $14,089.50, plus 24% of the excess over $82,500.

    Over $157,500 but not over $200,000    –         $32,089.50, plus 32% of the excess over $157,500.

    Tax tables for resident and non-residents currently in use will be waived.

    Procedure 88-24

    As a result of the changes in points 3, 4, 7 and 8, it is not yet clear whether Procedure 88-24 (for the treatment of scholarship as wages on W-2 form) will be waived or simply be non-beneficial anymore (except for India students and trainees who can use standard deductions under their tax treaty agreement).

    Procedure 88-24 is an alternative procedure for the calculation of withholding amounts on scholarships that enable the use of personal allowances (and itemized or standard deductions) as a tax deduction, leading to a decrease in the taxable scholarship. As all of these items will no longer be available, the Procedure 88-24 will not be applicable next year.

    It might also be waived by the change of the treatment of the term “trade and business” in relation to non-residents. This treatment may cause the scholarship to be ineligible and treated as effectively connected income (wages) in future.

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