TAX OBLIGATIONS

International Students and Programs Office

International Faculty & Scholar Office

International Center, 9500 Gilman Drive, Mail Code #0018

La Jolla, CA 92093-0018

Phone (858) 534-3730 Fax (858) 534-0909

Tax Obligations for

Internationals in F-1 & J-1 Statuses

Almost all internationals are required to file a Form

8843. All internationals in F-1 and J-1 status who

receive any sort of income—including tuition

reductions, scholarships, fellowships, grants,

stipends, salaries, wages, interest, dividends, etc.—

from U.S. sources are also required to file tax returns

with federal and state governments. When filing tax

returns you do all three of the following:

• Report all U.S.-source income for the entire

previous year (January 1-December 31),

• Calculate how much tax is owed on that income,

• At both levels of government, if you are owed

money, request it. If you owe money, pay it.

(Most taxpayers are owed money.)

The U.S. Internal Revenue Service (IRS) requires

that you submit tax returns by April 15. State tax

offices use the same deadline.

To ease the burden of having to make lump-sum

payments on April 15, your sources of income may

already have withheld estimated tax owed and paid it

directly to the IRS and state tax departments.

However, because withholdings are based on

estimates, you may owe more to the two levels of

government, but it is more often the case that the

various tax departments owe you money.

Please note that the UC San Diego International

Center cannot offer specific “tax advice.” It is your

responsibility to understand your tax obligations.

Unfortunately tax regulations can be confusing, and

rules are different for international students and

scholars. So you should rely only on professionals

with training in “non-resident alien (NRA) tax

regulations” to help file your taxes.

For federal taxes, precise and detailed information is

available in IRS Publications:

519: U.S. Tax Guide for Aliens

520: Scholarships and Fellowships

597:

Information on the US-Canada Income Tax Treaty

901: U.S. Tax Treaties, and

1040NR and 1040NR-EZ Instructions.

For California state taxes, you will need Form

540NR.

You can find these publications at the web sites

listed below. This guide is a summary of tax

requirements for most F-1 and J-1 internationals, but

it is no substitute for the materials listed above.

Read this guide to help you understand these

publications, and do not hesitate to seek out

competent tax advice (see Section V).

Note: In most cases the requirements reviewed here

apply only for the first—

• Five calendar years that you are in the

U.S. as a student in F-1 or J-1 status

•

Two calendar years that you are in the

U.S. as a J-1 professor or scholar.

Even if you were in the U.S. in F-1 or J-1 status

for only one day in any calendar year, you must

count that day as a whole calendar year. If you

have been in the U.S. for longer than five calen-

dar years for enrolled students, or two calendar

years for J-1 scholars, use IRS Publication 519

to determine your tax filing status.

REMEMBER: D

ifferent rules apply to professors

and scholars in statuses other than J-1. If

you were in H-1B, O-1, TN, or another

status, this information does NOT apply to

you.

For more detailed information on how to file taxes, please contact one of the following:

Federal Taxes, General ........................ (800) 829-1040 .............. ………..http://www.irs.gov

Federal Taxes, International ................. (above; ask for nonresident tax returns)…… http://www.irs.gov/Individuals/International-Taxpayers

California State Taxes ........................... (800) 338-0505 .............. ………..http://www.ftb.ca.gov/

Table of Contents

General Information ...................................................................................... 1

Section I. Upon Accepting Income, Remember These Forms .................... 2

Section II. Get Ready ..................................................................................... 3

A. Familiarize Yourself with IRS Materials & Vocabulary ................... 3

B. Determine Whether You Are Eligible to File As a Nonresident ....... 3

C. Find Out if Your Country Has a Tax Treaty with the U.S. ............... 3

D. Understand the Types of Income that You Are Expected to Report . 4

E. Collect the Following Information & Forms .................................... 4

F. Don’t Forget Your Institution Address & Phone .............................. 4

Section III. File Your Federal Tax Returns ................................................ 5

Section IV. File Your State Tax Returns ..................................................... 5

Section V. Resources for Tax Information & Support ............................... 6

Section I: Upon Accepting Income, Remember These Forms

The following forms should have been completed, signed, and submitted upon accepting employment or when

opening a bank account. The information collected is used to estimate tax withholding and will affect your taxes.

I-9 Employment Eligibility Verification. Before you begin, your employer should have asked you to

complete (or completed for you) Form I-9 to show that you are eligible to work. You should have

completed Section I with your personal information, including your Social Security Number. You

should have also completed a statement that says, “I attest, under penalty of perjury, that I am . . . .”

You should have marked the box “An alien authorized to work until . . .” and put the completion date

on your I-20 (F-1) or DS-2019 (J-1), or the end date your Responsible Officer used in your

employment authorization letter. You should then have entered your I-94 number. You had to show

your employer your passport, I-94, and I-20 or DS-2019. (If you are in enrolled full-time and in F-1

status ONLY, you are eligible to work at UC San Diego facilities “incident to status”—no written

authorization is required.)

W-4 Withholding Allowance Certificate. If you received wages (compensation for teaching, research, or

other employment), you were required to complete a Form W-4. Because the instructions on the W-4

apply ONLY to U.S. citizens, you should have used the following instructions:

1) On line #3, check only “Single” marital status (regardless of your actual marital status).

2) On line #5, claim only one allowance, unless you are a resident of Canada, Mexico, Japan, Korea,

a U.S. national (U.S. Virgin Islands, American Samoa, and the Northern Marianas Islands), or a

student from India.

3) On line #7, do not claim “Exempt” withholding status.

Form 8233 Exemption from Withholding on Compensation for Independent Personal Services of a

Nonresident Alien Individual. If a tax treaty between the U.S. and your country provides an

exemption from withholding from your wages, you should have notified the payer of the income to

claim the benefits of the treaty. You should have been asked to complete the Foreign Information

Collection Form and Form 8233 and have your supervisor submit it to Human Resources / Payroll.

You must submit these two forms to Human Resources / Payroll every year that you continue to work

for the University. Consult IRS Publication 901: U.S. Tax Treaties and IRS Publication 519: U.S.

Tax Guide for Aliens Appendix A (for students) or B (for professors and scholars).

Form W-8BEN Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding. You should have

submitted this form to your bank or credit union. When opening an account, provide your passport

and SSN or ITIN to a bank or credit union representative and ask to fill out this form. You should

also use the W-8BEN to claim a tax treaty benefit from the University BEFORE receiving payments

from a scholarship or fellowship.

Page 2 of 6

Section II: Get Ready

A. Familiarize Yourself with IRS Materials & Vocabulary

It is important for you to understand what you are filing. This information was prepared especially for you with

the help of the IRS. Read it carefully. Then you will not need to spend time studying every IRS publication. But

before doing anything else do take a little time to familiarize yourself with the publications that apply to you:

Publication 519: U.S. Tax Guide for Aliens—

Pay special attention to what applies to you.

Publication 520: Scholarships and

Fellowships—If you have a scholarship,

fellowship, grant, tuition reduction, etc., be sure

to read and understand these IRS rules and

definitions. Understanding the different

categories may help you file your tax returns in

a way that saves you money.

Publication 597: Information on the U.S.-

Canada Income Tax Treaty—If you are from

Canada, please read this.

Publication 901: U.S. Tax Treaties—Check to

see if your country has a tax treaty with the

U.S. If so, make sure you understand it.

Review the instructions for the Form 1040NR

and 1040NR-EZ.

B. Determine Whether You Are Eligible to File As A Nonresident Alien

Did you

have U.S.-

Source

income in

2013?

Students with taxable U.S. income. Every F-1 and J-1 student who receives any type of income from a U.S.

source (including UC San Diego) and who claims nonresident alien tax status must file a Form 8843 as well

as Form 1040NR or Form 1040NR-EZ by April 15.

Students with no taxable U.S. income. Every F-1 and J-1 student with no U.S. income needs only to file IRS

Form 8843. [Note: Many tax preparers recommend that all internationals file Form 1040NR or 1040NR-EZ

even though they have no income to report or taxes to pay.]

See section D below for what IRS considers “income,” “taxable income,” and “non-taxable income.”

Is Your

IRS Status

Resident

or Non-

resident

Alien?

IRS definitions of “resident” and “nonresident” differ from definitions pertaining to your I-94 status as an

international in the U.S. IRS usually considers internationals in F-1 and J-1 status who comply with U.S.

Department of Homeland Security regulations to be nonresident aliens for up to—

• Five calendar years for students (both F-1 and J-1)

• Two calendar years for scholars (J-1 only)

If you have been in compliance with F-1 or J-1 status for more than the above limits, carefully review IRS

Publication 519 and instructions for Form 8843 to determine whether to file as a resident or nonresident.

Nonresident aliens only report and pay taxes on U.S.-source income. In addition, if a tax treaty exists

between your home country and the U.S., all or a portion of your U.S.-source income may be exempted from

taxes as well. (See Publication 901: U.S. Tax Treaties.)

Resident aliens should file Form 1040, 1040A, or 1040 EZ (notice that the letters “NR” for Nonresident are

missing from the names of these forms).

C. Find Out if Your Country Has a Tax Treaty with the U.S.

Different

benefits

for

students,

scholars,

and

professors

The U.S. has signed tax treaties with more than 50 countries. Many of these tax treaties provide exclusions

for wages, scholarships, and fellowships, and other sorts of income paid to international students, professors,

& scholars. (See Publication 901: U.S. Tax Treaties for details.)

If you want to claim an exemption from withholding of U.S. taxes based on a tax treaty, you should file one

or both of the following forms with Human Resources / Payroll and renew your filing every year:

1. Form 8233 to claim a treaty exemption related to income from wages

2. Form W-8BEN to claim a treaty exemption related to scholarship and fellowship income

Page 3 of 6

D. Understand the Types of Income that You Are Expected to Report

Payment

for

Services

performed

in the U.S.

Wages that appear on any Forms W-2 are taxable income and should be reported on your tax returns. So

should any income you receive from sources outside the U.S. for services performed while you are within the

U.S.. Finally, any scholarship or fellowship income you receive might be taxable as wages if you are

required to perform any personal services as a condition for receiving the payments.

If employment of F-1 and J-1 internationals is authorized under their I-94 status and they are still nonresident

aliens, then they are not covered under the U.S. Social Security program. So Social Security and Medicare

taxes should not be withheld from their pay as long as they maintain F-1 or J-1 status.

Scholar-

ships,

Fellow-

ships,

Grants,

Tuition

Reduc-

tion, etc.

from a

U.S.

Source

For tax purposes a fellowship or scholarship is an amount given to individuals to support their study, training,

or research. If you are required to perform services as a condition of receiving payment, then the payment

will be treated as wages—not a scholarship or fellowship. Recipients who are candidates for a degree are not

taxed on portions spent on tuition, fees, books, supplies, and other required equipment.

However, amounts from a grant that are used for other expenses—e.g., travel or living expense not required

for courses—are taxable. See Publication 520: Scholarships and Fellowships. Taxable scholarships and

fellowships paid to nonresident aliens (in F, M, or J status) are subject to 14% withholding of federal income

tax, and should be reported to them on Form 1042-S. (Nonresident aliens in statuses other than F or J are

subject to 30% income tax on their scholarship or fellowship income.) Tax treaties may eliminate taxes on

scholarship and fellowships.

Interest

from U.S.

Bank

Accounts

Interest income that is not connected with a U.S. trade or business is not taxable to nonresident aliens if the

interest income is paid from one of the following sources:

1) U.S. Bank

2) U.S. Savings & Loan Association

3) U.S. Credit Union

4) U.S. Insurance Company

This nontaxable interest should NOT be reported on Form 1040NR or 1040NR-EZ. Instead, before the end

of the tax year, you should submit form W-8BEN to your bank or financial institution.

E. Collect the Following Information & Forms

Your passport including

• All visas

• I-94 card

List of all U.S. entry & exit dates up to Dec-

ember 31, 2012 and the visas you used to enter

Your I-20 or DS-2019

Social Security Number (SSN) or Individual

Taxpayer Identification Number (ITIN)

Addresses

• Current U.S. address

• Permanent address in home country

Name, title, address, and phone of the Chair or

Director of your Department or Program

Documents establishing all U.S.-source income

• Forms W-2, 1099-Int, 1099, and/or 1042-S

• Other income statements

• Letters describing scholarship or fellowship

F. Don’t Forget Your Institution Address & Phone

University of California, San Diego

9500 Gilman Drive, Mail Code #0018

La Jolla, CA 92093-0018

(858) 534-3730

Page 4 of 6

Section III: File Your Federal Tax Returns

Do It By

Computer!

Many internationals should be able to do their federal tax return online via Glacier Tax Prep. This software is

easy to use. It asks simple questions, determines your IRS tax filing status, calculates your tax liability, and prints

out most forms you might need for filing federal tax returns—all in about 20 minutes. There’s even online support

if you have questions. Please bring your University ID to the International Center to get your access code.

Manually Fill

Out IRS Tax

Forms

If you are filing as a nonresident alien, you normally would be required to file—

1. Form 8843 For all internationals and dependents to indicate IRS-defined nonresident status.

2. Form 1040NR-EZ For all internationals who in the current tax year—

• Do not claim any dependents

• Cannot be claimed as a dependent on another person’s U.S. tax return

• Whose only U.S.-source income was from wages, salaries, tips, taxable refunds of state and local taxes,

scholarships or fellowships, and nontaxable interest as described above in Section D

• Had less than $100,000 in U.S.-based taxable income (Form 1040NR EZ line #14 is less than $100,000)

• Only claimed adjustments to income are—a) student loan interest deduction (Form 1040 NR EZ line #8); or

b), exclusion to scholarship and fellowship deduction (Form 1040NR EZ line #9)

• Do not claim any tax credits

• If married and a resident of Canada, Mexico, Japan, Korea, a U.S. national (U.S. Virgin Islands, American

Samoa, and the Northern Marianas Islands), or a student from India, and do not claim exemption for spouse

• Claim as their only itemized deduction state and local income taxes

Form 1040NR For internationals who cannot file Form 1040NR-EZ.

These forms are available at http://www.irs.gov.

Keep A Copy

of Everything

on File

Keep photocopies of every form, letter, or supporting document that you submit with your tax returns. Record-

keeping is very important for your entire stay in the U.S., and possibly for years after your departure. It is also

important to keep information on all income including receipts, canceled checks, bank statements, W-2 Forms, etc.

Section IV

File Your State Tax Return

Internationals are also responsible for filing tax returns in the state in which they reside. Forms and instructions for California taxes

are available at http://www.ftb.ca.gov/

Page 5 of 6

Section V

Resources for Tax Information & Support

Workshops

The federal tax workshop will be held on Thursday, March 8, 2011, at 12:00 pm, at the International

Center. The state tax workshop will be held on Monday, March 12, 2011, at 12:30pm, at the

International Center. No RSVP required. Just come to the International Center for the workshops if you

are interested.

IRS (Federal)

Web Site

Go to http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Students-and-Scholars

IRS (Federal)

Tax Offices

Internal Revenue Service

San Diego District

880 Front Street

San Diego, CA 92101

Open Monday-Friday 8:30am-4:30pm

No appointments; walk-ins only

(619) 615-9555 (no phone help

available)

General Info: (800) 829-1040

California

State Tax

Offices

San Diego

7575 Metropolitan Drive

Suite 201

San Diego, CA 92108-4421

General Info: (800) 852-5711

Professional

Tax

Preparation

Services

In addition to the IRS, commercial services are available to help but be sure your tax preparer has

experience in nonresident alien taxation. Discuss the fees and what specific services the fees will

cover. Here are professionals trained in nonresident alien taxation—

UC San Diego does not endorse these or any commercial tax preparation firms. You should read the

relevant IRS publications and choose a firm with care.

Tim Kelley (CPA)

5151 Shoreham Place, Suite 250

San Diego, CA 92122

(858) 558-7777

Jackson Hewitt Tax Service

5755 Oberlin Dr, Floor 3

San Diego, CA 92121

(858) 412-1215

Tax Back International

(888) 203-8900

http://www.taxback.com

Jeff Ward (CPA)

3941 Mason St, Suite 4

San Diego, CA 92110

(619) 725-0935

Jerry Shaffer (CPA)

7816 Ivanhoe Avenue #2

La Jolla, CA 92037

(858) 587-1112

jerryshaffercpa@hotmail.com

LPLM Tax Attorneys, Inc.

(760) 730-5395

www.LPLMTaxAttorneys.com

H&R Block

7770 Regents Rd, Suite 111

San Diego, CA 92122

(858) 658-9260

http://www.hrblock.com

Gary Engler

gary@englercpa.com

http://www.englercpa.com/international.html

Page 6 of 6