All posts tagged Non-resident taxes

  • Nonresident aliens: Your guide to navigating the COVID-19 CARES Act Stimulus Payments

    Can I claim the CARES payment as a nonresident?

    Updated 7 May 2020

    In response to the COVID-19 pandemic, the US government has introduced the CARES (Coronavirus Aid, Relief and Economic Security) Act.

    In short, the CARES Act is a stimulus package which aims to support workers (earning less than $75,000 per year) with a one-time payment of $1,200.

    Married couples (who file jointly and earn less than $150,000) will receive $2,400 and families will also get $500 per child.

    Taxpayers who have filed US tax returns in 2018 or 2019 have already begun to receive CARES payments.

    With that in mind, in this guide, we’ll take a closer look at the CARES payment, who is entitled to receive it, and what you should do if you receive the payment when you are not eligible. 

    Table of Contents:

    As always, if you have any questions about US tax, our Live Chat team are available to support you 24/7. Just get in touch!

    Who is entitled to receive the CARES payment?

    In short, the CARES Act can be claimed by US citizens, permanent residents and residents for tax purposes (individuals who can pass the Substantial Presence Test) who have a valid Social Security Number (SSN) and who have filed their 2018 tax return (in 2019), or their 2019 return (in 2020) and who will be considered a qualifying resident alien for the 2020 tax year.

    Are nonresident aliens entitled to avail of the CARES Act?

    No. Nonresident aliens are not eligible to receive this stimulus.

    You will also not be eligible for this payment if you are:

    • An individual who can be claimed as a dependent by another taxpayer
    • An estate or trust
    • Part of a married couple where one partner has an SSN and the other has an ITIN or no number (unless one spouse is a member of the armed forces)

    How can I determine whether I am a resident or nonresident alien for tax purposes in the US?

    Can I claim CARES without green card?

    In short, you are a resident alien for tax purposes if you pass either the Green Card or Substantial Presence Tests:

    The Green Card Test

    If you hold a Green Card you are authorized to live and work in the US on a permanent basis and are considered a resident alien for tax purposes.

    The Substantial Presence Test

    Alternatively, if you spend 31 days in the US during the current year and 183 days during the three-year period that includes the current year and the two years immediately before that, you will also be considered a resident alien.

    However, it’s important to note that there are exemptions for time spent in transit (less than 24 hours in the US), time during which the person could not leave because he or she required medical treatment, as well as for teachers and students (on F, J, M, or Q visas) who haven’t stayed in the US beyond a certain period of time.

    Complete the Substantial Presence Test for free with Sprintax.

    In Summary

    If you visited the US to live, study or work as a nonresident – for example as an international student or J-1 program participant – and you do not pass the Substantial Presence Test, you will not be entitled to benefit from the CARES Act.

    Are F-1 students eligible for stimulus checks?

    I’m an international student in the US. If I pass the Substantial Presence Test, will I be entitled to receive a stimulus check?

    Can nonresidents claim covid payment?

    The IRS has not published any information which excludes the ‘international’ community in the US from benefiting from the CARES Act.

    So, if you pass the Substantial Presence Test, and you have been in the US long enough to be considered a resident for tax purposes, it is likely that you will be entitled to receive a stimulus check.

    In 2018 I mistakenly filed my tax return as a resident. I should have filed as a nonresident alien. I have now received the CARES payment. What should I do?

    Firstly, don’t worry, you are not alone!

    If you filed as a resident by mistake, all you need to do is file an amended tax return for each year that you filed incorrectly and pay any tax liability that you owe.

    The IRS receives thousands of amended returns each year. The process of filing is relatively straightforward and is very easy to do online with Sprintax.

    If you believe that you have received the stimulus payment in error, it is probably best to return the payment to the IRS.

    Can I claim the Cares payment?

    How to return the CARES stimulus check you received in error

    It is important to return the stimulus payment if you believe that you received it in error.

    You should return the payment separately to your amended return. In other words, the IRS is advising that you do not add the CARES payment to the check or electronic transfer you submit to cover your tax liability.

    Instead you should follow the directions below.

    If you received the payment as a paper check and have not yet cashed it:

    1. Write “Void” in the endorsement section on the back of the check.
    2. Mail the voided Treasury check immediately to the appropriate IRS location listed below.
    3. Don’t staple, bend, or paper clip the check.
    4. Include a note stating the reason for returning the check.

    If you received the payment as a paper check and cashed it, or if you received the payment as a direct deposit:

    1. Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
    2. Write on the check/money order made payable to ‘U.S. Treasury’ and write ‘2020EIP’, and your taxpayer identification number (social security number, or individual taxpayer identification number).
    3. Include a brief explanation of the reason for returning the payment.

    Where to return the payment?

    If you live in:

    1. Maine, Maryland, Massachusetts, New Hampshire or Vermont:

         You should mail to this address: Andover Refund Inquiry Unit, 310 Lowell St Mail, Stop 666A, Andover, MA 01810.

    2. Georgia, Iowa, Kansas, Kentucky or Virginia:

         You should mail to this address: Atlanta Refund Inquiry Unit, 4800 Buford Hwy, Mail Stop 112, Chamblee, GA 30341.

    3. Florida, Louisiana, Mississippi, Oklahoma or Texas:

         You should mail to this address: Austin Refund Inquiry Unit, 3651 S Interregional Hwy 35, Mail Stop 6542, Austin, TX 78741.

    4. New York:

        You should mail to this address: Brookhaven Refund Inquiry Unit, 5000 Corporate Ct. Mail Stop 547, Holtsville, NY 11742.

    5. Alaska, Arizona, California, Colorado, Hawaii, Nevada, New Mexico, Oregon, Utah, Washington, Wisconsin or Wyoming:

         You should mail to this address: Fresno Refund Inquiry Unit, 5045 E Butler Avenue, Mail Stop B2007 Fresno, CA 93888.

    6. Arkansas, Connecticut, Delaware, Indiana, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, Ohio or West Virginia:

         You should mail to this address: Kansas City Refund Inquiry Unit, 333 W Pershing Rd, Mail Stop 6800, N-2, Kansas City, MO 64108.

    7. Alabama, North Carolina, North Dakota, South Carolina, South Dakota or Tennessee:

         You should mail to this address: Memphis Refund Inquiry Unit, 5333 Getwell Rd Mail, Stop 8422, Memphis, TN 38118.

    8. District of Columbia, Idaho, Illinois, Pennsylvania or Rhode Island:

         You should mail to this address: Philadelphia Refund Inquiry Unit, 2970 Market St, DP 3-L08-151, Philadelphia, PA 19104.

    9. A foreign country, U.S. possession or territory*, or use an APO or FPO address, or file Form 2555 or 4563, or are a dual-status alien:

        You should mail to this address: Austin Refund Inquiry Unit, 3651 S Interregional Hwy 35, Mail Stop 6542 AUSC, Austin, TX 78741

     

    Finally, it’s a good idea to include a cover note with your amended tax return to confirm why you are returning the payment.

    You should also keep copies of everything that you send to the IRS – both physical and electronic. They may be required for any visa applications you submit in future.

    I filed as a resident in 2018 but I have since left the US. I received the CARES payment to my American bank account. Am I entitled to keep this money?

    Countless international students and scholars who had filed (either correctly or incorrectly) as residents for the 2018 tax year, and since left the US, have received the $1,200 payment.

    However, if you have left the US and you will not be considered a qualifying resident alien for the 2020 tax year, you are not eligible for this payment.

    In this scenario, you should return the payment to the IRS.

    How do I file an amended US tax return?

    How to file an amended US tax return

    You should file a Form 1040X in order to amend the federal income tax return that you filed previously.

    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.

    Here’s everything you need to know about amending a tax return

    Who can help me file an amended US tax return?

    You can easily amend your 2018 or 2019 US tax return using Sprintax!

    You can check our step by step guide to using Sprintax to amend your tax return.

    Amend Your Nonresident Tax Return with Sprintax

     

     

     

     

    Subscribe to the Sprintax Blog!

    US tax can be confusing. Especially for nonresidents!

    That’s why, if you’re an International Student or J-1 participant in the US, or you work in a University International Student Office, you should subscribe to the Sprintax blog.

    You’ll find tons of useful content for nonresidents. We cover tax, student life, acclimatizing to the US and much more.

    So what are you waiting for? Sign up today and never miss a thing!





  • COVID-19, the CARES payment and the tax deadline – all of your non-resident tax questions answered!

    COVID-19 tax questions

    As a non-resident in the US, you probably have a lot of questions about tax.

    That’s why, at Sprintax, we offer a 24/7 Live Chat service. Our team are available any time day or night to support you and answer all of your tax questions.

    In this blog, we’ve compiled some of the most common tax questions that our team have received recently.

    Recent questions about non-resident taxes

    Q. I have a US tax liability for the 2019 tax year. I can’t afford to pay it by 15 April. What should I do?

    Due to the COVID-19 pandemic, the IRS has extended the federal tax filing deadline from 15 April to 15 July 2020. The federal tax payment deadline has also been extended to 15 July. Meanwhile, most states have also extended their filing and payment deadlines to 15 July. There are some exceptions:

    State                                   Extended deadline

    Hawaii                                   20 July

    Idaho                                     15 June

    Iowa                                       31 July

    Virginia                                  1 June

    If you need to defer your tax payment beyond the 15 July deadline, you can file a federal extension until 15 October 2020.

    It’s important to note that the IRS applies late payment and filing penalties if you don’t file by the deadline. The penalties and interest are based on each different case and how many days have passed the due date.

    Frequently asked questions about nonresident taxes during COVID-19 pandemic

    Q. I have heard the tax filing deadline has been extended. When is the last day that I can file my return?

    This depends on your personal circumstances and the state in which you lived and worked or studied.As we mentioned above, the federal tax filing deadline has been extended to 15 July. And most state filing deadlines have also been extended to 15 July. However, if you have a state filing requirement in Idaho (deadline- 15 June), Iowa (31 July) or Virginia (1 June) you will have to file your documents before the deadline.

    Meanwhile, if you lived in Hawaii, you have until 20 July to file your state return.

    Remember, it’s very important to comply with your tax filing obligations.

    By not filing your documents, you can jeopardize your future visa or green card applications.

    You can also be hit with fines and penalties.

    Find out more about the tax deadline extension here.

    Q. I received a $100 dollar bonus when I opened my US bank account. Do I have to pay tax on this money?

    Many banks in the US offer incentives to encourage you to open a bank account.The incentives are often very enticing too and typically you will be offered $100 – $500 as a new account bonus when you shop around.

    In short, if you receive a bank bonus you have a tax filing requirement.

    If the bonus is over $600, the bank is required to report it on a 1099-Misc as an ‘award’.

    If it is less than $600, you will be required to report it as ‘other income’ on your tax return.

    Finally, ‘cash back’ bonuses or any bonuses that require the customer to spend money as a condition in order to receive it are non-taxable and non-reportable.

    Q. In 2019 I attended a university in Florida as a non-resident student. I also worked on campus as a Resident Assistant. One of the perks of the role was that I received on-campus accommodation rent-free. Do I have a tax filing requirement?

    The position of Resident Assistant (RA) is common in campuses across the US.RAs are student leaders who are trained to create welcoming residential environments for fellow students on campus.

    To compensate them for their work, many RAs receive a monthly stipend and complimentary accommodation on campus.

    If your accommodation is paid for by your university to compensate you for your RA role you will have a tax filing requirement.

    If your accommodation is paid for as a part of a grant or scholarship and no personal services are expected to be performed, the income should be reported on a 1042-S form (‘standard income code 16’).

    However, if the payment is provided and there is a requirement to deliver services as a part of the contract (as is likely if you are working as an RA), this income should be reported either on a W-2 form or on a 1042-S (it will be considered income code 18’ or ‘income code 20’ if you are a student on an F or J visa).

    How coronavirus affects your US tax requirements

    Below you will find some of the questions we have received following the outbreak of COVID-19.

    Q. I’m an Indian student attending a New York University as a non-resident scholar. I also teach a class at the university. Due to COVID-19 I am currently teaching my class online from my home in India. Do I have a US tax filing requirement for the teaching income I earn while in India?

    Typically, if you earn US sourced income you will have a US tax filing requirement. Your income will be defined as ‘US sourced’ if:

    • the property that produces the income is located in the US
    • the services for which the income is paid were performed in the US
    • or the income is a dividend equivalent

    If you are not a resident of the US and you are earning income from teaching a class for a US university while you are outside the US (such as your home in India) this income will be treated as foreign income and is not reportable and not taxable in the US.

    Similarly, if you are doing research or writing your thesis while outside the US, the grant you receive to cover your expenses while you work, will be treated as foreign income and is not reportable or taxable in the US.

    It’s important to note that each individual situation is different and you may need a consultation to determine if your income is considered foreign or from US source. Talk with our Live Chat team today!

    International student from India in the US

    Q. I am a Chinese student attending an Ohio university as a non-resident student. Before the coronavirus outbreak, I had been working on campus and earning an income. Fortunately, I am able to continue this employment while working from home in China. Do I have to pay US tax on the income I earn while working from home in China?

    As we mentioned above, your income will be defined as ‘US sourced’ if the property that produces the income is located in the US.When carrying out your work from your home in China, if you are using a software or platform which is installed on a server in the US, the property that produces the income is likely to be considered to be located in the US. Therefore, the income that you earn will be taxable in the US.

    In other words, you will have the same tax filing and payment obligations as you would if you had earned the income while working on campus.

    What’s more, if the payment is provided for a work that you do would normally be performed in the US (for example, after the COVID-19 crisis is over), the income earned is taxable in the US.

     

    Q. I am receiving a scholarship to attend a college in California as a non-resident student. Due to COVID-19 I can no longer attend classes in person. Instead I am attending the classes online from my home country of Brazil! Do I have to pay US tax on my scholarship?

    Scholarships, fellowship grants, targeted grants, and achievement awards received by non-resident aliens for activities performed outside the US are not considered US source income.However, your school must determine if the activity for which they pay the grant is performed outside the US.

    Some important points to consider:

    • If the stipend is granted for tuition it will be treated as foreign income and it is non-reportable and non-taxable
    • If you received travel and living expenses which were intended for you to spend in the US, this income will be considered taxable scholarship in the US
    • Finally, if the stipend you received was paid to cover expenses while you are studying outside the US, the income may be considered foreign income and is non-taxable and non-reportable in the US

    It’s important to note that each individual situation is different and you may need a consultation to determine if your income is considered foreign or from US source. Talk with our Live Chat team today!

    Nonresident alien tax savings

    Q. I am a non-resident alien in the US, can I avail of the CARES Act?

    The Coronavirus Aid, Relief and Economic Security Act (CARES) was introduced by the US government in order to support workers who have lost their job due to the pandemic.Under the Act, many single individuals who earn less than $75,000 can expect to receive a one-time payment of $1,200. Meanwhile married couples who file jointly and earn less than $150,000 will receive a check worth $2,400. Families will also receive $500 per child.

    Payments begin to phase out at $75,000 for single individuals ($150,000 for joint taxpayers) and phase out entirely at $99,000 ($198,000 for joint taxpayers).

    It’s important to note that these are considered one time payments and are not taxable income for recipients because the rebate is a credit against tax liability and is refundable for taxpayers with no tax liability to offset.

    In order to claim CARES, each taxpayer must also have a social security number.

    Q. Are non-resident aliens entitled to avail of the CARES Act?

    In short, no, non-resident aliens are not eligible to receive this payment. It is available for American taxpayers and resident aliens only.

    You are considered to be a resident alien for tax purposes if you meet either the green card test or the substantial presence test.

    The Green Card test

    You are a resident alien if you have US permanent or conditional residence (a green card). This means that you are a citizen of another country but are authorized to live and work in the US on a permanent basis.

    The Substantial Presence Test

    Even if you do not have a green card, if you spend 31 days in the United States during the current year and 183 days during the three-year period that includes the current year and the two years immediately before that, you are considered a resident alien.

    This can include many people who are in the United States on temporary non immigrant visa types.

    However, there are exemptions for time spent in transit (less than 24 hours in the US), time during which the person could not leave because he or she required medical treatment, as well as for teachers and students (on F, J, M, or Q visas) who haven’t stayed in the US beyond a certain period of time.

    If you do not meet either of these tests, then you are likely a non-resident alien and you will not be eligible for this payment.

    In summary, if you are a resident alien, have a social security number, and earn less than $75,000 as a single individual (or less than $150,000 married filing jointly) you can expect to avail of CARES.

    For more information, check out our full guide to CARES Act Stimulus Payments and how it affects nonresidents.

    Got questions about US tax?

    Get in touch with our Live Chat team anytime 24/7. They will be happy to assist you!

     

    Subscribe to the Sprintax Blog!

    US tax can be confusing. Especially for nonresidents!

    That’s why, if you’re an International Student or J-1 participant in the US, or you work in a University International Student Office, you should subscribe to the Sprintax blog.

    You’ll find tons of useful content for nonresidents. We cover tax, student life, acclimatizing to the US and much more.

    So what are you waiting for? Sign up today and never miss a thing!





  • The ultimate US tax guide for J-1 participants

    Tens of thousands of people flock to the US on J-1 visas each year.

    Every J-1 participant has a tax filing requirement, it’s the law!

    Many J-1 visa holders are confused by the often tricky US tax jargon. However, it’s not as bad as it seems, and knowing even a little about your filing requirements can go a long way!

    With this in mind, we’ve created a blog post that will answer some common queries from J-1 participants in the US!

    Table of Contents:

    Continue reading “The ultimate US tax guide for J-1 participants” »

  • Where’s My Tax Refund?

    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

    Filed your tax return and wondering where your refund is? Here’s how you can keep up to speed with your refund

    With your tax return safely filed, you’re probably wondering ‘how long will it be before I receive my tax refund?’

    Fortunately you can now get information about your tax refund online.

    Here’s what you need to know…
    Continue reading “Where’s My Tax Refund?” »

  • 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 and other nonresident aliens.
    Continue reading “Everything you wanted to know about US tax (but were afraid to ask!)” »

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

    Moving to study in the USA

    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 to study? You’re not alone.

    In fact, the US attracts 1,000,000 international students to its colleges and universities (of which there are more than 4000!) every year. And it’s very easy to see why.

    When you consider the standard of a university in America – Princeton, Yale, and Harvard, to name a tiny few – it’s very easy to see why the US is so incredibly popular with international students. 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 are 10 things to expect when you arrive in the US to study.
    Continue reading “Moving to the US to study? Here’s 10 things to expect” »

  • 10 Quick Tax Tips for International Students in the US

    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!
    Continue reading “10 Quick Tax Tips for International Students in the US” »

  • Your Frequently Asked Tax Questions Answered

    US Nonresident Tax questions answered
  • 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.
    Continue reading “Filing Your U.S. Tax Return: 5 Things You Should Know” »

  • Tax Tip: Tax treaties and how they can help you save money at tax time

    As an international student are also obliged to file a tax return.

    For most people, except for those who prefer U.S. taxation laws as a Sunday read, tax matters are so overwhelming and hard to understand that even the thought of tax return filing can deepen the usual tax time blues.

    It might be hard to believe it but tax return preparation can actually be stress-free and even easy. Below we have unveiled the power of tax treaties for non-resident international students and how they help you save some money at the tough tax times.

    Continue reading “Tax Tip: Tax treaties and how they can help you save money at tax time” »

  • Top 6 Tax Myths International Students in US believe in – DEBUNKED!

    George Orwell once said: “Myths that are believed in tend to become true”.

    Well, there might be a grain of truth in what he said but not when it comes to taxes and the U.S. taxation laws.

    As an international student you are not supposed to know the US tax procedures concerning tax return filing by heart but at least you should be aware of the Top 5 tax myths that most international students tend to believe in. So do not walk around believing in “old wives’ tax tales and check the most common tax myths DEBUNKED here!

    Continue reading “Top 6 Tax Myths International Students in US believe in – DEBUNKED!” »

  • Clearing up the confusion of whether you are Resident or Non-Resident

    Clearing up the confusion of whether you are Resident or Non-Resident