All posts in Tax Tips

  • What happens if I miss the April 18th, 2017 deadline?

    Don’t panic! This is IRS’ advice for you. Nearly 30% of the taxpayers are unable to organize their documents before the deadline. You still have the chance to solve your situation; however there are a few important things you need to consider if you expect to miss the deadline.

    If you are due back a refund or your tax return shows no tax liability

    If you are due back 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. Even if you are not required to do so, you may still get a refund. This could apply if you had taxes withheld from your wages or you qualify for certain tax credits.

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

    Note that there is time limitation for you to file and receive your federal tax refund, so if you don’t file within three years from the due date of your tax return (18th of April, 2017 for 2016 tax year), you may not receive your refund.

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

    If you owe any money in tax

    If you owe any money in 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 further increase of your fine.

    Your failure-to-pay penalty depends 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 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 have the choice to enter into installment agreement with the IRS. There are certain conditions you should meet and Sprintax tax experts will be able to help you if you choose to request installment agreement from the IRS.

    In conclusion, 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!

    Do not delay your tax return further! Sprintax can help you to prepare  it, and estimate if you owe tax to the IRS.

     

  • Sprintax Tax Workshop: Non-resident taxes explained (video playlist)

    Preparing your non-resident tax returns can seem like a daunting task! Sprintax has helped many international students and scholars through the process and is always striving to make their experience as stress-free as possible.

    Check out our Tax Workshop playlist – we explain the most important things you need to know about US taxes and using Sprintax:

    The tax deadline is April 18th, so don’t delay and create an account!

    If you still have questions, Sprintax offers 24 hour support to students via our Live Chat facility here.

    Have a question? Ask our virtual assistant Stacy here.

     

  • I am an international student, why don’t I get a full refund of taxes paid?

    Many international students on F-1, J-1, M-1 and Q engage in practical training and earn income through one of the USCIS (United States Citizenship and Immigration Services) approved programs or participate in on-campus and off-campus employment during or post-study.

    Do I need to pay tax?

    It is sometimes thought that foreign students who receive any type of income and funds from their OPT or from on-campus or off-campus activity, are not liable to US taxes however this is untrue. For many international students, the US tax system may seem complex and as a result they are not aware of their filing and taxation obligations.

    According to US tax law and regulations (Publication 519), “non-resident aliens usually are subject to US income tax only on US source income”, respectively, foreign students under F1, M1, J1 and Q visas are liable to pay both federal and state income taxes on their US sourced income, which may include wages, tips, scholarship and fellowship grants, dividends, and so on.

    Non-resident aliens file Form 1040NR-EZ or 1040-NR “US Non-Resident Alien Income Tax Return” to assess and file federal income and taxes. Most non-resident aliens do not qualify for the standard deduction.

    Tax Time post-it and Red Alarm Clock. 3D Rendering

    Do I need to file a tax return?

    If your gross earned income from sources within the US does not exceed the personal exemption allowance ($4,100 in 2016), a federal income tax return is not due and any federal tax withheld will be refunded in full.

    Scholarships and Fellowship Grants are also taxable income when paid to non-resident aliens. IRS Notice 87-31 exempts scholarships and fellowships from tax in the US when paid to US citizens and residents, yet the US scholarship and fellowship grants paid directly to a foreign student are generally taxable and subject to reporting.

     

    Can I deduct expenses?

    The general rule is that you cannot deduct personal or living expenses, unless specifically allowed by the US tax code. Some foreign students are eligible for a direct write-off of that part of the scholarship or grant that was used to cover qualified educational expenses. The deduction applies to all non-resident aliens who are candidates for a degree or at least half-time students.

    The qualified educational expenses also include all out-of-pocket expenses paid for tuition, academic fees, books, supplies and equipment required by a college or university.

     

    property-tax-deduction-america-stay-9wVeRF-clipart

     

    What is a tax treaty?

    Another way for international students to decrease federal income tax is to avail of a tax treaty which will allow them to fully or partially exempt their US sourced income from federal and/or some state income taxes.

    The US tax treaty network covers more than 65 countries and almost all treaties have specific provisions that apply to students, trainees and apprentices.

    In conclusion, foreign students are liable to pay US income taxes on the income they earn in US, including wages, tips, scholarship and fellowship grants, dividends, and must use non-resident tax return forms 1040NR-EZ or 1040-NR to calculate the amount of federal income tax they must pay.

     

    Am I due a tax refund?

    If the amount of tax deducted from your payments during the tax year 2016 is more than the tax shown on your 1040NR-EZ or 1040-NR, then you will be due a refund, otherwise you will be required to pay your US tax liabilities.

    It is important to note that each individual state has its own tax system and tax regulations imposing different residency and filing requirements under which foreign students may have to a file state tax return and pay state income tax even when no federal return is due.

     Claiming-a-tax-refund-–-explained-step-by-step

    Preparing your tax return online

    Sprintax.com offers you non-resident tax form preparation online through a simple step-by-step process. The software analyzes personal, income and tax information and produces non­-resident tax forms such as 1040NR, 1040NR-EZ, more than 10 state tax returns, including CA, NY, MI, IL, PA, MA, NC, NJ, VA, GA and many others, including the 8843 form and W-7 ITIN application where applicable.

    Through the user-friendly, step-by-step application, the software collects data that considers your allowed expenses, tax treaty benefits, deductions and exemptions helping you to prepare a compliant tax return and reduce your income tax liability as much as is legally possible.

    Sprintax offers 24 hour support to students via our Live Chat facility to answer any questions you may have here.

    Have a question? Ask our virtual assistant Stacy here.

     

  • Tax Treaties: What’s The Deal?

    US Flag

    If you’re an international student in the US, a tax treaty could mean excellent news!

    Under these treaties, residents of foreign countries are:

    • Taxed at a reduced rate
    • Exempt from US on income derived from specific sources earned within the US

     

    Is your country in blue? Then it has a tax treaty with the US:

    tax Treaty

    If your country does not have a tax treaty with the US or the treaty doesn’t cover they type of income you earn, then you must pay tax on this income.

     

    Saving Clause

    Most tax treaties have a clause that preserves the right of each country to tax its own residents, so once you become a resident of the US, you will lose most of the tax treaty benefits. However, many treaties still allow you to claim certain benefits even if you become a US citizen or resident.

     

    Non-Resident Aliens

    If you are a non-resident alien, like most international students, a tax treaty will eliminate or reduce taxes on certain income and services, including; pensions, interest, dividends, royalties, and capital gains. For students, apprentices, and trainees, the limit to the benefits of the tax treaties is 4-5 years. For teachers and professors, the limit is around 2-3 years.

     

    Requirements

    You must meet certain requirements to avail of the benefits of a tax treaty:

    • Requirements as laid out in IRS Publication 901 (pdf)
    • You should have Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN)
    • Complete the correct tax treaty exemption forms

     

    You can view the text of each treaty on the IRS website here.

     

    How Sprintax can help?

    When you do your online tax return with Sprintax, we will automatically check if you can avail of any tax treaty benefits, thus increasing your chances of a higher tax refund!

     

    Find out more here.

  • 10 Quick Tax Tips!

    us tax tips

    Studying in the US? You’re required by US taxation law to file a tax return so here are 10 tips to help your taxes go smoothly!

     

    1.You should submit your tax documents to the IRS (Internal Revenue Service) by 15 April for any income earned in the previous year (the 15 April deadline may be extended to accommodate holidays or weather conditions).

     

    2. You may be able to take advantage of a ‘tax treaty’ between the US and your home country, so make sure you check this as it could mean you pay less tax! Sprintax can also check for this when you apply.

     

    3. As a non-resident alien, even if you don’t need to file a US income tax return, you still must file a Form 8843.

     

    4. Students in F-1 and J-1 status are generally considered Non Resident Aliens (NRAs) for the first 5 years in student status, including the tax year (January 1 – December 3). In the 6th year, they become a resident for tax purposes. Scholars in J-1 status are typically considered NRAs for the first 2 years (for example, scholars who arrived in 2015 or later are non-residents for the 2016 tax year).

     

    5. If you have any source of US income, you must declare it on your US tax return.

    Sources of income include:

    • On-campus/off-campus employment
    • Scholarship/fellowship grants/stipends
    • Graduate or teaching assistantships
    • Salary for a teaching or research appointment

     

    6. Documents you’ll need for your US tax return:

    • Passport
    • Visa info (Form DS-2019 or Form I-20)
    • Your Tax Identification Number or Social Security Number (not required if you’re just filling Form 8843)
    • All U.S. entry and exit dates

     

    7. You’ll also need certain tax forms:

    • Your W-2: This form reports your income earned from your employer
    • 1042-S: This reports scholarships, fellowships, grants paid to you.

     

    8. You can still file your tax return after the April deadline and don’t worry about penalties and fines if you have no tax liability. However if you own money to the IRS, you may incur late filing fees and/or penalties.

     

    9. You cannot file your non-resident tax return online, but Sprintax can help you fill in all the information online and will give you instructions on where to mail it.

     

    10. Need to file a US tax return? To get started with your U.S. tax return, click here to create an account!

  • Form 8843 Explained

    Form 8843 US tax

    As a non-resident alien, even if you don’t need to file a US income tax return, you still must file a Form 8843. So what’s it all about?

    What is a Form 8843?

    8843

    (extract of form)

    A Form 8843 ‘’Statement for Exempt Individuals with a Medical Condition” is not an income tax return, it is a statement you file for the US Government if you are a certain non-resident alien (including spouses/dependents of certain non-resident aliens).

     

    Who must file a Form 8843?

    Non-residents aliens in the US under F-1, J-1, or J-2 non-immigrant status are required to file a Form 8843, even if you had no income in the previous tax year.

     

    You must file a Form 8843 if:

    • You were present in the US in the previous tax year
    • You are a non-resident alien
    • And you are in the US under F-1, F-2 or J-2 status.

     

    Even if you don’t need to file an income tax return, you should file the Form 8843 if the above criteria apply.

     

    How do I fill it in?

    Here is the Form.

    Part 1:

    • Fill in your details accurately including your name as it appears on your passport.

     

    • If you have a social security number (SSN) or individual taxpayer identification number you should include it. You generally don’t need an SSN or ITIN to file a Form 8843 but if you have been assigned one, you must include it on Form 8843. The exception to this is for those who can be claimed as dependents on a US tax return. These dependents must have either an SSN or ITIN.

     

    • Enter the type of visa you’re on in the US (F-1, J-1, etc.).

     

    • Enter your current non-immigrant status, unless this has changed since you entered the US. In this case you should also enter the date your change of status was approved.

     

    • Enter the number of days you were present in the US in the last 3 calendar years.

     

    • In the box on the substantial presence test, enter the number of days that you were in the US in the tax year.

     

    Part 2

    For teachers and trainees, answer the questions according to your personal circumstances and include the details of what academic institution or programme you were involved in the previous year.

     

    Part 3

    If you are an F-1, J-1 (and dependents), you should fill in this section.

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

     

    Part IV and V

    These parts don’t apply to those in the US on F or J non-immigrant status so you don’t need to fill these in.

  • Your Free Guide to Studying in the US

    Check out how Sprintax works

    Considering embarking on an academic course in the US?

    Being an international student in the US can be a hugely rewarding experience. If you’re wondering how to go about it or just looking for tips, then you should download our free PDF guide straight to your PC or smartphone.

    Topics include:

    • How to get a scholarship
    • Getting your visa
    • Where to go
    • Accommodation in the US
    • Eating on a Budget
    • US Tax Tips
    • Getting a Job
    • Student Life
    • And much more!

    Simply fill in the form below to get your free guide!

  • Your Tax Questions Answered

    Tax questions answered

    Here are the answers to some of the most common questions we get asked about U.S. taxes.

     

    1. Do I need to file a tax return?

    If you are a non-resident in the U.S. you must file a tax return to stay compliant with your visa’s tax obligations.

    If you are any of the following, you must file a return:

    • Non-resident alien individual not engaged in a trade or business in the U.S. and has U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.
    • Even if you had no income, you must still file Form 8843

    As well as federal tax, there are also state taxes and local taxes. The basis on which you must file a state tax return will depend on the tax rules of the state in which you lived and/or worked. Sprintax can prepare your federal tax return and if required, will also prepare your state tax return.

     

    2. Can I avail of a tax treaty?

    You may be able to claim a tax refund under international ‘tax treaties’. Tax treaties are agreements between the U.S. and other countries allowing you to claim back whole or part of tax paid while working in the U.S.

    Sprintax will check if you’re eligible for a tax treaty when preparing your U.S. tax return. You can check for tax treaties here.

     

    3. What’s a W-2 form?

    You’ll need a W2 form to file your tax return if you worked on or off-campus. Your employer will give you a W-2 by the deadline and it will detail your income from the previous year. This form is divided into state and federal sections and there are fields with employer information and details of income.

     

    4. What is a 1042-S form?

    If you received a scholarship, fellowship, grant, or any other source of U.S. income subject to tax, you’ll need Form 1042-S in order to complete your tax return. This form can also be used for other income types such as teaching, research, and investment income. You should receive Form 1042-S from your university’s payroll department or whatever party provided the income.

     

    5. What is a Form 8843?

    Form 8843 it is not an income tax return. It is a statement for exempt individuals and individuals with a medical condition for the U.S. Government. You will need to file Form 8843 if you are a non-resident alien in the U.S. under F-1, F-2, J-1, or J-2 non-immigrant status and you are exempt for a certain period from substantial presence test. This applies whether you received U.S. income or not.

    Non-resident aliens who are not required to file an income tax return (Form 1040NR or Form 1040NR-EZ), but  are required to file Form 8843, do not need to get a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN). But if an SSN has been assigned, the number must be included on Form 8843.

     

    6. What is Form 1098-T?

    Form 1098-T (Tuition Statement) is for U.S. nationals and residents in order to figure out their educational credits which are not available to non-residents. Sprintax is specifically for non-residents, so you do not need this form in order to complete your income and tax details in our system.

     

    7. What is the April 15 (18 in 2016) deadline for?

    The April 15 (18 for 2016 tax season) deadline is the date by which all tax returns must be filed for the previous year. If you owe money to the tax office and don’t file your 2015 tax return by April 18, 2016 the U.S. tax authorities will impose late filing penalties and interest on the amount you owe.

     

    8. What happens if I miss the April 15 (18 in 2016) deadline?

    You should not worry about penalties and fines if you have no tax liability, the IRS will not penalize you if you do not file a return although you must still file Form 8843. If you owe anything to the tax office, however, you may incur late filing fees and/or penalties.

    Non-residents can apply for their tax refunds even after the April 18 deadline, but a return has to be filed no more than 3 years after the original deadline in order for the IRS to issue a refund

     

    9. Can I file electronically?

    No, you must print and mail your forms to the IRS as Sprintax will not mail your forms to the IRS on your behalf. Follow the detailed instructions provided enclosed with your tax forms.

     

    10. I don’t have an SSN or ITIN

    If you don’t have a Social Security Number (SSN) you will need to get a temporary number instead. This is called an Individual Taxpayer Identification Number (ITIN). Sprintax can organise this for you.

    An ITIN must be provided on tax returns, statements, and other tax related documents.

     

    11. What documents/information might I need to prepare my tax return?

    • Passport
    • U.S. entry and exit dates for current and all previous visits
    • All tax forms you’ve received (including Forms W-2, 1042-S and/or 1099, etc.)
    • Visa/immigration status information, including Form DS-2019 (for J visa holders) or Form I-20 (for F visa holders) Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
    • If you are using Sprintax to prepare your state tax return(s) you will need a copy of your already prepared federal tax return

     

    12. What are the benefits of using Sprintax?

    • IRS compliance
    • Step by step guidance
    • ITIN applications
    • User-friendly system
    • 24/7 Live Help

     

    13. I’m not a student, can I use Sprintax?

    If you’re a temporary visitor to the U.S. on a H1B, H2B, L or B-1 working visa, Sprintax can prepare your U.S. income tax return. However, you must be classified as non-resident for the entire tax year. If you’re unsure, Sprintax can review your status.

     

    14. Who can use Sprintax?

    Sprintax was created for international students, scholars, teachers and researchers in the U.S. on F, J, M and Q visas.

     

    15. Where do I start?

    To get started with your U.S. tax return, click here to create an account.

    If we haven’t answered all your questions, then please ask our tax guru, Stacy!

     

  • Filing Your U.S. Tax Return: 5 Things You Should Know

    filing your taxes

    As an international student in the U.S., you are obliged to file a federal and state tax return for each year you are present in the U.S. Even if you have earned no U.S. sourced income, you still need to file a form 8843. All non-resident aliens in the U.S. under F-1, F-2, J-1, or J-2 and other non-immigrant exchange program status must file form 8843.

    Generally in the U.S., you will be taxed on:

    • Income earned on or off campus
    • Stipend, fellowship, grant
    • Any other income from US sources

    Here are 5 things you should know before filing your U.S. tax return:

    1. Deadlines

    Don’t miss the tax filing deadline as you may get penalized by the Internal Revenue Service (IRS)! This date usually lands on April 15 each year unless it happens to be on a weekend or holiday. This year, the deadline is Monday, April 18.

    2. Get your documents in order

    It’s very important that you have the correct documents required to prepare and file your tax return.

    These include:

    • Passport
    • U.S. entry and exit dates for current and all previous visits
    • All tax forms you’ve received (including Forms W-2, 1042-S and/or 1099, etc.)
    • Visa/Immigration Status information, including Form DS-2019 (for J visa holders) or Form I-20 (for F visa holders) Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
    • If you are using Sprintax for State Tax Return(s) preparation only you will need a copy of your already prepared Federal Tax return

    • W2 Form:
    You’ll need a W2 form to file your tax return if you worked on or off-campus. Your employer will provide you with a W-2 by the deadline and it will reflect your income from the previous year. The form is divided into state and federal sections and there are fields with employer information and details of your income.

    • 1042-S
    Typically, if you received a scholarship, fellowship, grant, or any other source of U.S. income subject to tax, you’ll need a form 1042-S to complete your tax return although this form may be used for many other income types as teaching, research, and investment income. You should receive form 1042-S from your university’s payroll department or the party that provided the income.

    3. ITIN

    You’ll need your ITIN for your federal tax return if you do not have and are not eligible for a social security number. If you don’t have one, Sprintax can help organize this for you. You don’t need one if you are just filing a form 8843, but if you have been supplied with one, you must include it on the form.

    4. Residency status

    The first thing you need to know when filing a tax return in the U.S. is if you are a resident or non-resident alien for tax purposes. If you are not a U.S. citizen, you are considered a non-resident alien unless you meet one of two tests. You are a typically deemed a resident for tax purposes if you meet either the green card test or substantial presence test. Sprintax can determine your status for you when preparing your tax return.

    5. Tax treaties

    If you’re an international student in the U.S., you may be able to benefit from a tax treaty with your home country. Generally, under these tax treaties, residents of foreign countries are taxed at a reduced rate or sometimes even exempt. The IRS has a list of tax treaty countries here. Sprintax can check if you’re eligible for a tax treaty when preparing your tax return.

    Sprintax was created specifically for international students, scholars, teachers and researchers in the U.S. on F, J, M and Q visas, to make tax prep easy.

    Watch our video demo to see how it works:

    To begin filing your U.S. non-resident tax return, get started by creating an account here. 

  • The 2015 Tax Year is Live!

    U.S. tax return

    International students and scholars-you can now use Sprintax for your 2015 U.S. tax returns!

    We’re delighted to announce that the 2015 tax filing season is now open and you can use Sprintax to file your non-resident tax returns. Sprintax is for international students and scholars in the U.S. and will help you prepare your Federal, State, and FICA tax returns to ensure you stay fully compliant with the IRS and obligations of your visa.

    When you use Sprintax, we’ll check for income tax deductions, tax treaty benefits, personal allowances, and tax credits to make sure you get the highest refund possible.

    How Sprintax works

    To begin, you simply create an account here and answer a few simple questions. Sprintax will give you a step-by-step guide to the whole process. Once you’re done, Sprintax will generate your tax return/s and all you need to do is send it to the tax office!

    Once complete, we’ll store your details for any future tax returns. You can also prepare tax returns for previous years using the same account.

    Here’s a short video demo:

    Get started!

    You can get started now by creating an account here. Don’t miss out on your tax refund and stay compliant by using Sprintax-the sooner you file your tax return the better.

    Have a question? Ask our virtual assistant Stacy  here.