All posts tagged us taxes

  • 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!

  • 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.

     

  • 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!

     

     

  • Do I need an ITIN?

    As an international student in the US, it is important that you understand the tax requirements of your visa.  Here we explain everything you need to know about ITIN and how we can assist you.

    What is an ITIN?

    An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS). If you expect to receive taxable Scholarship, Fellowship or Grant Income and you do not qualify for a Social Security Number (SSN) you must apply for an ITIN. ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a US filing or reporting requirement under the Internal Revenue Code.

    Why do I need an ITIN?

    There are a number of circumstances why someone may require an ITIN.  Individuals falling under the following categories that do not have, have never had, or are ineligible for, a US Social Security Number may require an ITIN:

    • A Nonresident alien expecting to receive taxable Scholarship, Fellowship or Grant Income and who is not eligible for an SSN
    • A Nonresident alien required to obtain an ITIN to claim a tax treaty benefit;
    • A Nonresident alien filing a US tax return and who is not eligible for an SSN;
    • A Nonresident alien filing a US tax return only to claim a refund;
    • A US resident alien (based on days present in the United States) filing a US tax return and not eligible for an SSN

    What documents do I need?

    The IRS has streamlined the number of documents it will accept as proof of identity to obtain an ITIN. There are now 13 acceptable documents. An original, or a certified copy, of an unexpired passport is the only document that is accepted for both identity and foreign status. If you do not have a passport, you must provide a combination of current documents that contain expiration dates.

    The IRS will accept documents issued within 12 months of the application if no expiration date is normally available. The documents must also show your name and photograph if they support your identity, and your permanent domicile (place of birth, permanent foreign address), to support your claim of foreign status. The IRS will accept certified copies of a combination (two or more) of the following documents, in lieu of a passport:

    • National identification card (must show photo, name, current address, date of birth, and expiration date)
    • US driver’s license
    • Civil birth certificate
    • Foreign driver’s license
    • US state identification card
    • Foreign voter’s registration card
    • US military identification card
    • Foreign military identification card Visa
    • US Citizenship and Immigration Services (USCIS) photo identification
    • Medical records (dependents – under 14 years old – only)
    • School records (dependents and/or students – under 25 years old – only)

    It’s important to note that, if you are sending your ITIN application with a tax return, all documents will need to be certified by a Designated School Official (DSO) or by a certifying acceptance agent.

    Sprintax will help you to select the proper set of documents for your application.

    When can I expect to receive my ITIN?

    It can take 6 to 8 weeks and sometimes longer to obtain an ITIN. And it’s important to be aware that it can often take more than one application before you successfully receive an ITIN. The IRS is generally efficient in informing applicants of any issues with the process. Once your application is complete you will receive a letter from the IRS assigning your tax identification number.

    How Sprintax can help!

    Sprintax will guide you through the process of applying for your ITIN.

    There are two options for applying for an ITIN with Sprintax.

    If you have received income in the US without an ITIN or SSN, the Sprintax NR service will help you to obtain an ITIN and to file a federal tax return.

    Meanwhile, the Sprintax ITIN service is for students who need an ITIN before the end of the tax year so that they can receive their scholarship.

    To get started, you can register at: https://itin.sprintax.com/

  • Sprintax at NAFSA 2016 Regional Conferences

    Following the national conference earlier in the year, the 11 NAFSA regions held their conferences in late October and early November. These events are excellent opportunities for those involved in international education and exchange to network with experts and business partners and stay current with the latest trends.

    Sprintax were delighted to attend again and meet many of our partners and colleagues. We were represented by Jennifer Gallagher in Alaska, Wisconsin, California and Indiana and Enda Kelleher in Rhode Island, New York, New Mexico, Louisiana and Pennsylvania.

    Enda and Jennifer had statistics from the 57,000 students and scholars who prepared their taxes with us and were glad to offer advice and information to anyone who stopped by their booths.

    Sprintax Competition

    This year, we continued our tradition of giving away prizes at NAFSA. Enda and Jennifer ran a draw for a Bluetooth speaker for all of those who stopped by to chat with them.

    The lucky winner from the conference in New Orleans was Joy Werka from University of West Alabama, while Kelly Hughes from Towson University got the prize at NAFSA Philadelphia. Congratulations Joy and Kelly!

    IMG_3967

    Enda from Sprintax team and Joy from University of West Alabama

    We were thrilled to be part of the NAFSA regional conferences and we’d like to thank all participants for the wonderful experience! NAFSA is helping to shape the future of education and we look forward to attending more events.

     

  • 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.