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Frequently Asked Questions

Basic Rules of U. S. Taxation

What determines the U. S. taxation of income? The general rule is that income is taxable where the activity or transaction occurs. All compensation for services performed in the U.S. is subject to U. S. taxes unless an exception applies.

How do I calculate the taxes on my U.S. income? The services you perform in the U.S. will be taxed based on your residency status for federal income tax purposes. Whether you are considered a resident alien or non-resident alien for tax purposes determines how you are taxed. Note, these are tax terms not immigration terms.

How do I determine my residency status? Your residency status for federal income tax purposes will depend on your immigration status and U.S. presence over a three-calendar year period. In general, a non-immigrant is considered a resident if he or she has been physically present in the United States for 183 days or more, based on a formula unless an exception applies. Most students and scholars will meet one of the exceptions for a least part of their stay.

Determining Residency Status for Federal Income Tax Purposes

Why is my residency status for federal income tax purposes important? Resident and non-resident aliens for tax purposes are taxed differently. In general, resident aliens are taxed in the same manner as U.S. citizens — they are taxed on their worldwide income, the same deductions and credits as U.S. citizens receive are allowed, and they may file a joint tax return if they are married. Non-resident aliens are subject to different rules. They are taxed only on income that they receive from sources within the U.S., they have limited deductions and credits, and they can not file a joint tax return with their spouse. They are required to file a different U.S. income tax return, either Form 1040NR or Form 1040NR-EZ.

How do I know if I am considered a resident alien for federal income tax purposes? Non-residents become residents for tax purposes in one of two ways: One is by receiving permanent resident status (termed the "green card test") and the second is by having a substantial presence in the US. This is determined by what is referred to as the "substantial presence test." Non-residents meet the "substantial presence test" if they have spent more than 183 days in the US during a 3 year period. To meet this, you must be physically present in the U.S. on at least:

  1. 31 days during the current year, and
  2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
    1. all the days you were present in the current year, and
    2. 1/3 of the days you were present in the first year before the current year, and
    3. 1/6 of days of presence in the year before that.

You do not count days for any year you are considered an "exempt individual." Students in F or J status are exempt from the "substantial presence test" for 5 years, with any part of a calendar year counting as a full year. Teachers and trainees in J status are exempt from the "substantial presence test" if they have been in the U.S. no more than 2 out of the last 6 years, with any part of a calendar year counting as a full year.

I am an F-1 student attending my second year at Dartmouth. I was also an F visa holder during a previous stay in the U.S.Do I need to include my previous stay in calculating the 5 year limit for exemption from the substantial presence test? Yes, the rule for F and J students is a five-year lifetime limit. The student five-tax-year limit includes any time spent in exempt status as an F or J visa holder after January 1, 1985.

I am an F-1 student and would be considered a nonresident for tax purposes. Do I have a choice about which tax return (resident or non-resident return) I can file? In most instances no, however, there are certain exceptions. Non-resident aliens who are married to US citizens or residents can elect to file a joint return and be treated as a resident alien. Also, under the Barbados, Hungary and Jamaica tax treaties, students from these countries, regardless of marital status may elect to be treated as a resident alien.

How, When, and Where to File Tax Returns

The College is withholding federal income tax from my pay. Do I still need to file a tax return? Yes. The U.S. tax system requires that taxes be withheld from your pay as you earn it. You file a federal tax return after the end of the calendar year to reconcile the taxes withheld with your actual tax liability. The process of completing the tax return determines your tax liability.

I’m a first year F-1 student and I had no U.S. earned income or scholarship. Do I need to file a federal tax form? Yes. All non-resident students and scholars must file Form 8843 to substantiate their non-residence, even if they have no income.

What about my F-2 or J-2 dependents? All F-2 and J-2 dependents must file Form 8843 even if they had no U.S. source income during the tax year. If they have U.S. income they would be required to file either the Form 1040NR or Form 1040NR-EZ, in addition to the Form 8843.

I have to file a non-resident tax return.  Which tax form should I use, the 1040NR or the 1040NR-EZ? Most students and scholars will find that they can use the form 1040NR-EZ, which is shorter and easier to complete than the 1040NR. However, there are some rules and limits for use of the 1040NR-EZ. You may use the 1040NR-EZ if:

  • You are a non-resident for tax purposes.
  • Your only U.S. income was from wages, salaries, tips, taxable refunds of state and local income taxes and scholarship or fellowship grants.
  • You do not claim any dependents (only citizens of Canada, Mexico, India, Korea and Japan can claim spouses and/or children as dependents, and they can only do so by filing form 1040NR. Note, there are special rules related to Indian dependents — not all are eligible).
  • You can not be claimed as a dependent on another person’s U.S. tax return.
  • Your taxable income was less than $50,000.
  • The only itemized deductions you claim are for state and local taxes — if you wish to claim charitable or other deductions, you must use 1040NR.

Both the 1040NR and 1040NR-EZ forms ask for a social security number or an ITIN. Can I file a tax return if I don’t have a tax ID? No. A U.S. tax identification number is needed in order for you to file a tax return. All F-1 and J-1 visa holders and J-2 dependents who are employed in the U.S. should have a social security number. If you are not eligible for a social security number, you must obtain an Individual Taxpayer Identification Number (ITIN) from the IRS. To apply for an ITIN it is necessary to complete a Form W-7, and include the application form with your tax return.

What about the Form 8843 if I don’t have a tax ID? F & J visa holders who have no U.S. source income and thus only file Form 8843 are not required to have a social security number or ITIN to file the Form 8843.

Can my non-resident tax return be filed electronically? Not at this time. The 1040NR or 1040NR-EZ must be mailed to the IRS. This is the case even if you used GLACIER to prepare your tax return. Be sure to make a copy of your completed return and keep it in your files.

When and where do I file my tax return? The due date for filing your return is generally April 15, although it may vary by a day or two from year to year. Forms 1040NR ,1040NR-EZ and 8843 should be mailed to: Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215 U.S.A. If enclosing a payment, mail to Internal Revenue Service, P.O. Box 1303, Charlotte, NC 28201-1303 U.S.A.

What happens if I don’t file a tax return? If you owe taxes and don’t file the IRS can assess penalty and interest and seize U.S. bank assets for repayment. Fines and penalties often can be more than the original debt. The IRS will not impose penalties if no tax is due. However, the terms of your visa require you to comply with all laws of the United States, including the requirement to file an income tax return. You might be required to show proof that you filed if you wish to change your visa status, or obtain permanent residency, or regain entry into the United States once you have left. Don't risk your visa status by failing to comply with this requirement.

Tax Treaties

I am not sure if my country has a tax treaty with the U.S. How would I find out? Publication 901, U.S. Tax Treaties, has information about U.S. tax treaties. You can also locate the complete text of treaties at http://www.irs.gov/businesses/international/article/0,,id=96739,00.html. While Publication 901 contains a summary of the treaty articles, it should not be relied upon to determine if an individual qualifies for the benefits of a tax treaty. The actual text of the tax treaty should be reviewed to determine if the provisions of a tax treaty apply.

My country has a tax treaty with the U.S.that provides an exemption from tax on my wages. How do I receive the treaty benefit? You should contact the Payroll Office to claim the tax treaty withholding exemption. You would do this by filing a Form 8233 with the Payroll Office.

I was eligible for a treaty benefit but I didn’t give Payroll a Form 8233 to claim the tax exemption. Can I still receive the tax exemption? Yes. A treaty exemption can be claimed when doing a tax return.

Can resident aliens claim treaty benefits? Generally, resident aliens can’t claim treaty benefits, but there are exceptions which may permit an exemption from tax to continue even after the person has become a U.S. resident alien for tax purposes. A resident who is claiming an exemption from withholding tax based on a treaty article must submit Form W-9, not a Form 8233.

Last Updated: 2/28/14