Tax Workshop for Foreign Nationals Preparing 2018 Forms Douglas Kelley

Transcription

1 Tax Workshop for Foreign Nationals Preparing 2018 Forms Douglas Kelley Guest Lecturer Lamden School of Accountancy San Diego State University 1

2 Before we begin Filing taxes means submitting tax forms (or a tax return ) to the appropriate government agencies. YOU may be responsible for filing taxes every year. There is a free tax preparation service available on campus for foreign nationals! After this workshop, I will be opening up appointments on Schedulista for you to schedule! Go to to schedule an appointment 2

3 What is covered today 1. Free tax preparation service on campus VITA (Volunteer Income Tax Assistance) 2. Determine your federal tax residency status 3. What you need to file 4. How to fill out & What to do with the completed forms 5. Questions 3

4 What is not covered today Form 1040NR-EZ / Form 1040NR and State tax return o VITA will assist you with these Form 1040 o VITA may be able to assist you with these depending on your situation 4

5 1. Using the free tax services on campus 5

6 VITA U.S. Citizens Permanent Residents Resident Aliens (RA) Nonresident Aliens (NRA) + Had income in 2018 (wages and/or scholarships) Domestic VITA International VITA Domestic + International VITA = all one big happy VITA! 6

7 Two categories Form 8843 only: No income at all Non Residents All exempt income and no withholding All other non residents We have a fixed number of returns we can prepare at VITA If you are a Form 8843 only please do this form yourself (I will walk you through it later today) 7

8 Student volunteers VITA Trained and tested on basic & advanced (domestic) and foreign student (international) tax preparation They work for free and you pay nothing they will be respectful but be polite and patient in return If your return is complicated, you may have to go elsewhere 8

9 VITA They will prepare for you: Form 1040-NR or 1040-NREZ Form 8843 CA 540-NR You will have to mail these in yourself (electronic filing is NOT available except for India federal returns) Book an appointment Prepare your Client Intake Form as best as you can and bring all other required materials (list is provided at site) 9

10 2. Determining Tax Residency Status 10

11 Why this is important? U.S. Citizens Permanent Residents Resident Aliens (RA) Nonresident Aliens (NRA) U.S. Tax Resident System Non-resident Alien Tax System 11

12 Testing for residency status US Govt. has a test based on the number of days present in the US to determine if you are a TAX resident However students and researchers MAY be EXEMPT from even having to take the test and will be declared non-resident aliens 12

13 Testing for residency status (student) Am I exempt? Q1: Are you temporarily in the US as a student on an F, J, M or Q visa? Q2: Have you been in the US for no more than 5 calendar years (any 1 day during the year counts as a year)? If Yes to both then you are exempt!!! Note: 2019 does not count (until next year) we are analyzing your 2018 tax status. 13

14 Testing for residency status (scholar) Am I exempt? Q1: Are you temporarily in the US as a teacher or trainee on a J visa (and not also a full-time student)? Q2: Have you been in the US for no more than any part of 2 of the preceding 6 calendar years? If Yes to both then you are exempt!!! Note: 2019 does not count (until next year) we are analyzing your 2018 tax status. 14

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16 I m not exempt now what? Substantial Presence Test ( SPT ) Based on how many days you were physically present in the U.S. Two parts 1. at least 31 days in current year (2018), and days during the 3-year period based on the formula # of Days Tax Year (2018) XX x 1 = Year 1 (2017) YY x 1/3 = Year 2 (2016) ZZ x 1/6 = = TOTAL Total < 183 days NRA Total 183 days RA Remember - Only applies if you are NOT exempt! 16

17 Example 1 Exempt Individual Immigration Status: F-1 or J-1 (student) Arrival Date: 12/30/2014 (first visit to the U.S.) This student was physically present in the U.S. every semester since arriving but left the U.S. for 2 months during each summer. Exempt Years Yr Yr Yr Yr Yr 5 # of Days 2018(Tax Year) 0 x 1 = x 1/3 = x 1/6 = 0 TOTAL = 0 Total < 183 days NRA 17

18 Example 2 Exempt Individual Immigration Status: F-1 or J-1 (student) Arrival Date: 8/1/2017 (this student was also in the U.S. under F-1 from May 2007 May 2010) This student was physically present in the U.S. since arriving but left the U.S. for 60 days during summer of Exempt Years Yr Yr Yr Yr Yr 5 # of Days 2018(Tax Year) 305 x 1 = x 1/3 = x 1/6 = 0 TOTAL = 305 At least 31 days in current year & Total 183 days RA 18

19 3. I am an NRA. What do I need to file? 19

20 Most Likely Possibilities You have no US income did not work and receive a W-2 No taxable scholarship and did not receive a 1042-S Only File a Form 8843 You have US income Worked or had taxable scholarship Were taxes withheld? probably want to file income tax return If required to file income tax return can either Try on your own Come to VITA! 20

21 Form 8843 Information return to let the IRS know that you were an exempt individual. You must file if you were an exempt individual for SPT purposes even if you had NO income. o F/J students - First 5 calendar yrs as F/J students o J non-students - 2 out of preceding 6 calendar yrs as F/J students OR J nonstudents Your family members also must file if they were in the U.S. under an F or J status in

22 Form 8843 This is a return you can complete yourself and I encourage you to do so. We will cover how to do this later today VITA will not assist you if you only have to file Form

23 Form 1040NR-EZ You are NOT required to file this form if you did not have any wages AND You have no other reasons to file, such as o you had wages or scholarship income exempt by a tax treaty OR o you had taxable scholarship OR o tax was withheld from wages/scholarships (i.e. eligible for a refund) 23

24 How do I know if I need to file? Wages or scholarship income exempt by a tax treaty Taxable scholarship income Did you receive Form 1042-S? 24

25 How do I know if I need to file? Tax withheld from wages/scholarships W-2, Box S, Box 7 25

26 How do I know if I need to file? Other forms you may have received Form 1098-T (Tuition Statement) o Disregard; nonresident aliens generally cannot claim educational credits on their tax returns Form 1099-INT (Interest Income) o Disregard; nonresident aliens generally do not need to report their interest income Others? o Form 1099-MISC? may have to file Form 1040NR 26

27 4. How to fill out & What to do with the completed forms 27

28 Form 1040NR-EZ/1040NR VITA will complete these for you, but you still need to mail them out because you CANNOT e- file or fax these forms to the IRS (except India) Make sure you sign and date Make copy of everything for your file before mailing (keep them for at least 4 years) Form 8843 Form 1040NR-EZ (or Form 1040NR) Copy B of Form W-2 (if received) Copy C of Form 1042-S (if received) Form W-7 (if applicable) Attachments (if any) 28

29 Form 1040NR-EZ/1040NR Mail to: Department of the Treasury Internal Revenue Service Center Austin, TX Recommend certificate of mailing so you will have the proof of mailing to the IRS April 15 th,

30 Form 1040NR-EZ/1040NR You can check the status of your refund on the IRS website ( Where s My Refund? The IRS NEVER sends you an about your tax return. Instead, the IRS always sends a letter to the address on the last tax return. If you receive an from the IRS, DO NOT click on any links and NEVER provide any personal information! 30

31 Form 8843 No US income but claiming exemption from substantial presence test Get a blank form and instructions at 31

32 Form 8843 PAGE 1 of 2 Part I Everyone fills out this part. Part II Taxpayer ID If you do not have an SSN or an ITIN, leave this blank. Only J-1 non-students fill out this part. Part III Only F-1/J-1 students fill out this part. 32

33 Form 8843 PAGE 2 of 2 SKIP PART IV SKIP PART V Sign and date. 33

34 Form 8843 Line by Line Type of visa you had when you entered and date. Does NOT include tourist visas. Your current visa type and date of change. Typically F-1, J-1 Your home country Typically also your home country Best guess as to the number of days present in US. Almost always 365 but you can report the number on a 34

35 Form 8843 Line by Line San Diego State University, 5500 Campanile Dr, San Diego, CA Get the name of your department chair or advisor off the website 35

36 Form 8843 Page 2 36

37 Form 8843 CANNOT e-file or fax this form If you are filing Form 8843 ONLY Sign and date on page 2 Make copy for your record Mail to Deadline is June 17, 2019 Department of the Treasury Internal Revenue Service Center Austin, TX You are done! 37

38 Resources IRS Website IRS article on foreign students and scholars Students-and-Scholars IRS Forms and Instructions Form 8843 and Instructions: Form 1040NR-EZ: Form 1040NR-EZ Instructions: IRS Publications Publication 901, U.S. Tax Treaties: Publication 519, U.S. Tax Guide for Aliens: California Franchise Tax Board SDSU Volunteer Income Tax Assistance (VITA) 38

39 Questions? 39