TAX SEMINAR
The hardest thing in the world to
understand is income tax.
– Albert Einstein
Why Should I File?
All individuals who have income subject to withholding
must file a tax return, regardless of whether or not they owe
money to the IRS
 If you have taxes withheld from your income, you maybe
eligible for a refund
 Failure to file may be regarded as non-compliance with
U.S. law and can affect your visa status
 Failure to file may also negatively impact residency and
citizenship application processes in the future
What is my Residency Status?
Aliens (non-U.S. citizens) can be resident, dual-status or
nonresident
Why is this important
-Resident and dual-status aliens are taxed like U.S. citizens,
nonresidents are taxed differently.
-The status affects amount of reportable income, availability
of deductions and treaty benefits.
 How do I determine my residency status?
-You are a resident alien for tax purposes if:
Green card test – you receive permanent resident status
from the INS (a.k.a. BCIS)
Substantial presence test – you have spent more than 183
days in the U.S (excluding days as exempt individual)
Am I an Exempt Individual?
Exempt individuals can exclude days of presence in the U.S. for
the Substantial Presence Test.
 Common exempt categories:
- Student on F, J, M or Q visa
- Teacher/trainee on J or Q visa
- Immediate family members (spouse & children) of above
categories
- Closer connection to foreign country (needs to file Form
8840 see IRS Pub. 519 for criteria)
The Substantial Presence Test
Nonresident vs. Resident
Nonresident:
a) pays tax only on U.S. source income,
b) subject to special rates, and
c) might qualify for treaty exemptions.
Resident:
Taxed under the same rules and file the same forms
as a U.S. citizen.
What Should I File? (nonresident)
1) 1040NR: U.S. Nonresident Alien Income Tax Return
OR
1040NR-EZ: U.S. Income Tax Return for Certain
Nonresident Aliens With No Dependents
2) 8843: Statement for Exempt Individuals and Individuals
With a Medical Condition
(all nonresident aliens MUST file the 8843)
3)
6251: Alternative Minimum Tax – Individuals
(typically required for Kellogg students)
Some Other Common Form:
 843: Claim for Refund and Request for Abatement
(erroneous withholding of Social Security and
Medicare taxes)
 4868: Application for Automatic Extension of Time to File
U.S. Income Tax Return (4 month auto extension)
 8233: Exemption from Withholding for Independent
Personal Services for a Nonresident Alien
 8822: Change of Address
 8840: Closer Connection Exception Statement for Aliens
Useful Tax Publications
 519: U.S. Tax Guide for Aliens
 901: U.S. Tax Treaties
 520: Scholarships and Fellowships
 508: Tax Benefits for Work-Related Education
 514: Foreign Tax Credit for Individuals
 529: Miscellaneous Deductions
 970: Tax Benefits for Education
 17: Your Federal Income Tax – Individuals
Some Familiar Forms
Form W-2: A form issued by the University/Employer stating
all payments made to you as compensation for services (RA,
TA, Summer internships) and all amounts withheld. You
should have received your W-2 by the end of January.
You need to file:
Copy B with Federal Tax return
Copy 1 with State Tax return
Copy 2 with City Tax return
Copy C with your records
Some Familiar Forms
Form 1042-S: Same as the W-2, but for scholarships and
fellowships which are not compensation for services. 1042-S
forms are mailed by the University around March 15th.
Form 1098-T: A form issued by the University to inform you
of the amount of tuition paid by you. It is useful to help you
calculate your deductions. It need not be sent along with your
Tax returns.
How do I get Forms &
Publications
Online: http://www.irs.gov/formspubs
By phone: 1-800-TAX-FORM (1-800-829-3676) 24 hours a day,
7 days a week
In the mail: using the order blank in the tax package you receive
in the mail
Form 1040NR or 1040NR-EZ
You can file the 1040NR-EZ only if you meet ALL of these
conditions:
1) No dependents are claimed on your tax return
2) You are not claimed as a dependent on another U.S. tax
return
3) The only sources of income were wages, salaries, tips,
taxable refunds of state and local income taxes and
scholarship/fellowship grants
4) Taxable income is under $50,000
Continued…
Form 1040NR or 1040NR-EZ
5) The only adjustment to income is student loan interest
deduction or scholarship exclusion
6) No tax credits are claimed
7) No exemption is claimed for spouse
8) The only itemized deduction is state and local income tax
9) The only taxes owed are income tax
If you do not meet one or more of these
conditions, you must file the 1040NR
What is my File Status?
 Single
 Married
- Filing separately
- Filing jointly (usually not available to nonresident
aliens see IRS Pub. 519 for more information)
What is my Taxable Income?
The IRS only taxes U.S. source income:
Scholarship/fellowship grants from a U.S. source that are not
exempt by a tax treaty
Salaries, wages and other compensation for personal services,
including RA/TA/internships
Dividends from stock investments
Lottery/casino winnings
Income from sale of personal property, real estate, rent etc.
located in the U.S.
Royalties from patents, copyrights registered in the U.S.
What Income is NOT Taxable?
All non-U.S. source income (personal funds, family funds,
foreign scholarships etc.)
Interest paid by U.S. banks on checking and savings
accounts
 Scholarships/fellowships/wages exempt by a tax treaty
Tax Treaty Information
 Tax benefits available to persons from certain countries
 Some treaty benefits have time and dollar limits
 If limits are exceeded, benefits may be lost retroactively
 Most treaties require residency in home country prior to entry
into the U.S.
 Treaty information listed in IRS Pub. 901
Deductions vs. Credits
Deductions and exemptions are the amounts you can subtract
from your income before calculating your tax liability
Credits are amounts that you can subtract from your tax liability
Income
$10,000
Deductions
$ 2,000
Taxable Income
$ 8,000
Tax Liability @ 20%
$ 1,600
Tax Credit
$ 500
Net Tax Payable
$ 1,100
What Deductions Can I Take?
Students without prior work experience:
 Charitable contributions
 State and local income taxes paid during the year
 Losses from casualty or theft if property was located in the U.S.
 Qualified student loan interest (see IRS Pub. 519 for qualification
criteria)
 Students/scholars from India can take a standard deduction of
$4,750 instead of itemizing deductions
 Job expenses (only if they are over 2% of your Adjusted Gross
Income)
 Generally one personal exemption of $3,050 for 2003
 Exemption for spouse or other dependents (See Pub. 519 for
qualification criteria)
What Deductions Can I Take?
Additionally, for students with prior work experience:
 Tuition expenses, books, supplies are deductible if it is a
qualifying education (see IRS Pub. 508 for details)
 Student loan interest payments are deductible if your Adjusted
Gross Income is less than $65,000
 What is a qualifying education?
What is Qualifying Education?
What Credits are Available?
 Usually nonresident aliens are not eligible for any tax credits
Under some special circumstances, some nonresident aliens
may be eligible for Child and Dependent Care Credit, and
Child Tax Credit. (see IRS Pub. 519 for details)
What Should I Send to IRS?
 Completed Form 1040NR/NR-EZ
Copy B of W-2 from University and Summer Employer (if you
did an internship)
 1042-S from University
 Form 8843
If you owe the IRS money, attach a check, money order or
cashier’s check made out to “U.S. Treasury” (put Social
Security No. and which tax year the money is meant for in
‘memo’ section), or pay by credit card
 Do not send cash!
Where do I Send the Forms?
Send your tax return with all enclosures to:
Internal Revenue Service
Philadelphia, PA 19255
TAX RETURNS MUST BE POSTMARKED
APRIL 15TH OR EARLIER!
Where Can I Get Help?
Online:
IRS website at www.irs.gov (Forms, FAQs etc.)
By phone:
(800) 829-1040 (live general tax assistance)
Other: Professional tax preparer, e.g. H&R Block
OTHER USEFUL LINKS:
Refund status:
https://sa.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp
Tax treaties (complete texts):
http://www.irs.gov/businesses/corporations/article/0,,id=96739,00.
html
STATE TAX
Who Should File?
 All full-year or part-year residents of the state of California
 Residency implies domicile, and not citizenship or green card
status
 If your U.S. address is in California, you are a resident of the
state of California for state tax purposes
Start state tax paperwork after you have completed
the federal tax return
Who Should File?
All individuals: Form CA 540NR
In addition:
- Part-year residents: Schedule NR
- Residents claiming credit for taxes paid in another state:
Schedule CR (see form for criteria)
Where Can I Get the Forms?
Online: www.ftb.ca.gov
By phone: (800)338-0505
In Person: libraries and post offices
How Can I Pay?
Personal check
 Money order
 Credit card
Do not send cash!
Where Do I Send the Forms?
Refund:
Franchise Tax Board
PO BOX 942840
Sacramento CA 94240-0002
OWE:
Franchise Tax Board
PO BOX 942867
Sacramento Ca 94267-0001