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:

 

 Do J-1 visa holders have to pay taxes in the US?

 J-1 holders in the US have to pay tax on any US-sourced income they receive during their stay in the US. How much tax you will pay will depend on a number of factors, such as how much you earn, the rate of tax in your state and if your country of residence has a tax treaty with the US. All non-residents must pay 10% on any income tax up to $9,525. 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.

As a nonresident in the US, you’ll be taxed on:

      • Wages and compensation
      • Salaries
      • Tips
      • Interest
      • Dividends
      • Some scholarships/fellowship grants
      • Prizes/awards

How can I determine my tax residency status while in the US on a J-1 program?

Most J-1 holders in the US are considered to be nonresident aliens for tax purposes. This is determined by what’s known as the substantial presence test, which is used by the IRS to decide whether an individual who is neither a US citizen nor a US permanent resident should be taxed as a US citizen or a nonresident alien for a specific year. The difference between the two is that US citizens are taxed on their worldwide income while nonresident aliens have to report only their US-sourced income.

Complete the Substantial Presence Test for free with Sprintax.

 How do I file my J-1 tax return?

The deadline for filing your US tax return is 15 April (due to Covid-19 outbreak, the tax filing deadline has been extended to 15 July in 2020). Every J-1 program participant has a tax filing obligation.

If you earn income in the US, you must file a tax return. It’s hugely important that you file correctly when completing your tax return. Failure to file or filing a non-compliant tax return can lead to fines or penalties. It can also jeopardize your future US visa green card applications.

When preparing your US tax documents you will need:

      • Passport
      • US 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-Form DS-2019
      • Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)

The 1040NR-EZ can be particularly confusing for nonresidents to complete, so it’s important to take your time and follow the instructions. It’s important to remember that many of the boxes on the form won’t apply to you and the majority of the information required is your personal information, earnings, amount of tax you paid, and the amount you are to be refunded (if this is applicable to you).

I have a J-1 visa. Which forms do I have to fill out?

1. If you received a US source income

If you have received US-sourced income during the year then it is extremely likely that you will need to file ‘Form 8843’ (if you had no US source income) and also ’Form 1040NR-EZ’ to complete your tax return.

You will be required to enter your name, current address, and social security number (SSN) or IRS individual taxpayer identification number (ITIN) as well as other general personal information.

Form 1040NR-EZ is your US tax return and you can file it along with a copy of your W2 at the end of the tax year. 1040NR-EZ is for J-1 students with no dependents and who can’t be claimed as a dependent on another person’s tax return. You should file 1040NR-EZ if your only income is from salaries, wages, tips, tax refunds, scholarship grants, and your only deductions were state and local taxes.

If you earned US-sourced income you will also need to send off a Form W2 ‘Wage and Tax Statement’ or 1042-S form ‘Foreign Person’s U.S. Source Income Subject to Withholding’ with your tax return. This is an IRS tax document used by your employer to report wages paid to employees and the taxes withheld. It is divided into state and federal sections and there are fields with employer information and details of income. Your employer must complete a Form W2 or 1042-S and they will send it to you typically by 31 January.

2. If you did not receive a US source income

If you are in the US and had no US-sourced income then you will still need to file a Form 8843 ’Statement for Exempt Individuals with a Medical Condition’.

Easily prepare your tax return here online with Sprintax 

Are there any tax exemptions for those on a J-1 visa?

As a nonresident, you will be exempt from certain taxes, such as Social Security and Medicare. Your country of residence will also have a bearing on what taxes you will pay, as you may be entitled to tax treaty benefits. It is important to note, as a nonresident J-1 participant, it is ILLEGAL for you to claim American Opportunity Tax Credit (AOTC).

Are there different exemptions based on whether you are a J-1 student, teacher or trainee?

No, the exemptions are the same. Currently, the only deduction if there is no tax treaty entitlement, which is available to all J-1 participants if the deduction for state and local taxes they paid during the year, capped at $10,000.

Can J-1 visa holders avail of tax treaty benefits?

Most J-1 participants (for example work & travel and au pairs) can’t avail of tax treaties.

However, students, teachers, researchers, scholars and treasurers can avail of certain tax treaties if they meet the requirements. 

Can you claim dependents on your J-1 tax return?

Citizens of Canada, Mexico and South Korea and J-1 students and trainees from India who use the India tax treaty are allowed to claim their dependents on 1040NR form.

The US has income tax treaties with various foreign countries, which may affect your tax filing if your country of residence is included in them. For nonresident aliens, these treaties can often reduce or eliminate U.S. tax on various types of personal services and other income. This can range from anything such as pensions, interest, dividends, royalties, and capital gains.

The below countries shaded in dark blue have a tax agreement in place with the US:

The US has tax treaties with each of the following countries:

For students, apprentices, and train on J-1 visas, the benefits of the tax treaties are applicable for 4-5 years. For teachers and professors, the limit is around 2-3 years.
If your country does not have a tax treaty with the US or the treaty doesn’t cover the type of income you earn, then you must pay tax on this income

Article 21(2) of the Tax Treaty between the United States and India allows International Students from India to claim Standard Deductions in Form 1040NR or Form 1040NR EZ.

How is the tax treaty between Germany and USA relevant for J-1 holders?

There are two different paragraphs in the Germany tax treaty document covering J-1 visitors. One paragraph is related to teachers and visiting professors which exempts them for 24 months from the date of arrival in full income for teaching and research if they are invited to the US on a program for no more than 2 years.

The other paragraph allows full-time students at US University, academic and business trainees to claim $9,000 per year for four years if they are paid for personal services (employment) in the US. They are also entitled to full exemption of tax on scholarship and grants they receive from US educational institutions.

Sprintax state tax refunds

Where do I send my J-1 tax return form?

The address you send your relevant tax forms will depend on where you stayed during your time in the states.

In general, you will send you tax forms to the Department of the Treasury Internal Revenue Service in whichever state you were in. You should check the IRS website if you are still unsure where to send your forms.

Can I file a joint J-1 tax return if you are married or should I file separately?

Nonresident aliens cannot file married filing a joint tax return under any circumstances. They should always file separate returns even if they have the right to claim dependents. Dependents may be claimed on only one of the returns of the spouses.

How do I claim J-1 tax back?

Many J-1 international students are entitled to claim refunds on both federal and state taxes. You can do this by filing your tax return.

Doing it by yourself can often be stressful, but Sprintax makes claiming your J-1 tax refund easy!

Easily prepare your tax return here online with Sprintax 


How long does it take to get a direct deposit for a J-1 tax refund?

Exact timelines are determined by the IRS and are different for each refund, so it is difficult to put an exact timeline on your refund. Tax return processing time for paper tax returns is estimated at 4-6 weeks from the moment when the tax return is received by the IRS. You should allow a further 1-2 weeks for mailing.

Do you get your taxes back faster with direct deposit?

The length of time for processing paper tax returns is the same as it is online. However, receiving a direct debit is faster than cashing a cheque in your bank.

Can I speed up my tax refund?

Yes, if you file before the 15 April deadline (due to Covid-19 outbreak, the tax filing deadline has been extended to 15 July in 2020) your tax return is likely to be processed faster than if you were to leave it to the last day. This is due to the volume of tax returns that will need to be processed when the deadline comes.

Need help amending your US tax return

Who can help me with my J-1 tax return?

Sprintax is the nonresident partner of choice for TurboTax and the only online federal and state self-prep tax software for nonresidents in the US.

By creating a Sprintax account you can easily prepare fully completed and compliant 1040NR or 1040NR-EZ (non-resident tax return) and form 8843 tax documents.

Sprintax will also help you to claim your maximum legal tax refund.

With Sprintax you can:

      • Save time and stress!
      • Determine your residency status
      • Prepare a fully compliant US tax return
      • Maximize your State tax refund
      • Avail of our 24/7 Live Chat facility

Prepare your J1 tax documents with Sprintax today

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Stacy
Hey I'm Stacy! I'm dealing with US taxes and can't wait to help you prepare your tax return! I've been working with taxes for like forever, so you can totally trust my expertise. Sprintax can make things much easier for you. Check out my blog posts and feel free to ask me any questions.

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