UCAR International Visitor & Scholar Services

INCOME TAX OBLIGATIONS FOR ALL VISITORS AND SCHOLARS

The following information is designed to give you a basic understanding of your tax responsibilities and to provide additional resource information. This information is being provided for the convenience of our Foreign Visitors. Please feel free to seek your own tax and legal counsel. UCAR is in no way providing tax or legal advice. 

1. Related foreign tax web sites and information, including tax treaties.
2. Descriptions of different types of taxes.
3. Tax reporting requirements for dependents.
4. Important tax filing dates to remember.

Virtually ALL foreign students, visitors/scholars and their dependents must file an income tax form every year in order to be in compliance with the Internal Revenue Service (IRS) regulations http://www.irs.gov/. This is true regardless of whether you earned income while in the United States or not. Income tax issues for foreigners are complex and can be confusing and we encourage all visitors/scholars to seek professional foreign tax assistance with your personal tax questions.

If you have any questions, please feel free to contact your division administrator, UCAR's Payroll department or by accessing http://www.fin.ucar.edu/hr/visitors/manual/. You can also seek personal tax advice from immigration tax professionals, your home country's Embassy office, or Internal Revenue Service offices.

1. RELATED FOREIGN TAX WEB SITES AND INFORMATION:

U.S. tax laws can be difficult to understand and can change from year to year. It is in your interest to meet your tax obligations.

Taxpayer Help and Information (for Foreign Nationals)

Internal Revenue Service (IRS)
Helpful telephone numbers:
IRS (for general tax information): 1-800-829-1040
To order forms: 1-800-829-3676

For an informational handout prepared by Lowell Hancock, International Tax Specialist with the IRS, please contact UCAR's Foreign Visitor Coordinator, ext. 8705.

Tax Consultants. Please note that any costs incurred for personal tax advice or services will be borne by the foreign visitor, student or scholar. UCAR does not provide any financial assistance for personal tax advice or preparation, nor specifically endorse these or any tax consultants.

Consultant Richard Phillips, International Tax Specialist, IRS - Retired. 295 South 8th Avenue, Brighton, CO 80601-2131, intltaxconsultants@comcast.net, Telephone 303-659-7221. Preferred method of contact is by email.

Global Tax Network, LLC (GTN) provides income tax consulting, income tax preparation and service. They have both U.S. and international offices - please visit their website for contact information. 

IRS Forms and Publications

IRS Publication 901, U.S. Tax Treaties. This publication will tell you whether a tax treaty between the United States and a particular country offers a reduced rate of, or possibly a complete exemption from, U.S. income tax for residents of that particular country. Tables in the back of this publication show the countries that have income tax treaties with the United States, the tax rates on different kinds of income, and the kinds of income that are exempt from tax. You should use this publication only for quick reference. It is not a complete guide to all provisions of every income tax treaty.

Text of Income Tax Treaties, IRS website.

Text of Tax Treaties. This site includes the text of all income tax treaties with articles relevant to foreign national students and scholars. IRS Tax Topic: Resident and Non-Resident Aliens provides a description of the substantial presence test, exceptions to the test for exempt individuals and tax return filing obligations for nonresidents.

Office of the International Tax Counsel. U.S. Government office that assists in developing international tax policy.

IRS Tax Topic: Foreign Nationals. Foreign students and scholars who are claiming tax treaty benefits must file a U.S. Federal individual income tax return to report their total income and tax treaty claims.

A resident alien's income is generally subject to tax in the same manner as a U.S. citizen. If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report these amounts whether from sources within or outside the United States.

2. DESCRIPTIONS OF DIFFERENT TYPES OF TAXES

There are different types of taxes in the United States tax system (e.g. Social Security tax, income tax, sales tax, personal property tax) and different layers of taxation (local, state, and federal). You may have obligations at several levels. To learn about your state and local income-tax responsibilities, consult local tax authorities or the local telephone book for the appropriate government listings. Alternatively, UCAR's payroll department can provide you with additional information.

Payroll Taxes: Taxes that are automatically deducted from your paycheck if you are on payroll.

Social Security Tax: There are often questions about payment of a U.S. tax called "Social Security tax" or "FICA." FICA is a taxation system that provides benefits to retired workers. You can get more information about this tax from the UCAR payroll office or by visiting the IRS web site. Depending on their visa status, some visitors may be exempt from paying social security tax for the first two years of their appointment.

Income Tax: You are generally only taxed on your U.S.-based income. Sources of U.S. income include: on-campus employment, scholarships, fellowships, graduate assistantships, practical or academic training, and any compensation received for labor. Note that "income" is not limited to wages paid to you in cash, but also includes that portion of your scholarship, fellowship, or assistantship that is applied to your housing and meal expenses. The portion applied to your tuition fees, books, and supplies is not counted as income. The payroll office (or if applicable, the foreign student advisor at your university) will help you make these distinctions. Be sure to inquire about the applicability of any tax treaty that may exist between your country and the United States.

Other Taxes:

Sales Tax: is on goods and services and is set by each of the fifty states, and state entities (such as cities and counties), not by the U.S. government. Each state and state entity determines what the sales tax will be (always a percent of the purchase price) and what items will and will not be assessed a sales tax.  The sales tax is not included in the advertised price of goods.

Please note: sales tax is not the same as value-added tax (VAT).  The state sales tax is a small tax on purchases or services, calculated at the time of purchase, which individual states assess and which the U.S. Federal government neither determines nor receives. The VAT, on the other hand, is a national tax commonly applied in foreign countries that is included in the actual sales price rather than at the time of purchase. The United States does not have a VAT, and the Federal government cannot refund state sales taxes. Also, many states do not charge tax on items shipped out of state. Ask about state sales tax policies in the state where you make your purchases.  (Information garnered from the U.S. Customs and Border Protection site:  http://www.cbp.gov/xp/cgov/home.xml)

Personal Property Tax: a tax on the purchase or licensing of automobiles and other valuable property and is paid at the time of purchase.

3. TAX REPORTING REQUIREMENTS FOR DEPENDENTS

F-2 and J-2 dependents, regardless of age, are expected to file Tax Form 8843 annually in the United States, even if they have no income from a U.S. source. In the case of F-2s (who cannot work in the United States), the completion of a tax form is simple. J-2 dependents, who may get permission to work in the United States, are taxed on their earnings and must file their own tax returns.

4. IMPORTANT TAX FILING DATES TO REMEMBER

April 15: The last day on which residents and nonresidents who have earned wages from U.S. sources may file their U.S. federal income tax returns for the previous year.

June 15: The last day on which nonresident visitors, scholars and their dependents who have no wage income from U.S. sources in the previous year may file Form 8843 and/or 1040NR-EZ or 1040NR returns.

Helpful IRS Publications: You can download these guides and forms at: http://www.irs.ustreas.gov/formspubs/index.html.

IRS Publications: Publication 519: "U.S. Tax Guide for Aliens." US Federal Income Tax Guide for Aliens and US Federal Income Tax Guide for International Students and Scholars. Helpful when preparing a nonresident tax return (1040NR or 1040NR-EZ).

Publication 901: "U.S. Tax Treaties." Essential for individuals from nations having tax treaties with the United States.

Form 8843: "Statement for Exempt Individuals and Individuals with a Medical Condition." This one-page document must be completed and returned with the 1040NR and 1040NR-EZ. It verifies nonresident alien tax status.

Form 1040NR: "U.S. Nonresident Alien Income Tax Return." The longer version of the return completed by many nonresidents. This form is distinct from the 1040, 1040A, or 1040EZ filed by residents for tax purposes. It is not interchangeable with those forms. The IRS publishes an instruction booklet to accompany the form.

Form 1040NR-EZ: "U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

February 2006

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