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INTERNATIONAL EMPLOYEES’ TAXES PowerPoint PPT Presentation


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INTERNATIONAL EMPLOYEES’ TAXES. Internal Revenue Service - Barbara Dawkins Foreign National Tax Unit (UB) – Claudia Samulski Amanda Maines New York State - Suzanne Reusch. TAX VOCABULARY. IRS = Internal Revenue Service

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INTERNATIONAL EMPLOYEES’ TAXES

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INTERNATIONAL EMPLOYEES’ TAXES

Internal Revenue Service - Barbara Dawkins

Foreign National Tax Unit (UB) – Claudia Samulski Amanda Maines

New York State - Suzanne Reusch


TAX VOCABULARY

  • IRS = Internal Revenue Service

  • Income Tax Return = form which all employees send to the IRS each year

    • to file an income tax return = to send it to the IRS

  • Income: money earned from a job, bank interest or investments

  • Wages or compensation: money earned only from a job


U.S. TAXATION

  • There are two types of income tax that employees in the U.S. pay:

    • Federal (U.S.) tax

    • State (New York) tax


TAX VOCABULARY

  • To withhold income taxes (tax withholding)

    • to subtract income taxes directly from the employee’s paycheck

  • Exempt from paying income tax (tax exemption)

    • excused from paying income tax due to an income tax treaty


FOREIGN NATIONAL INFORMATION WORKSHEET

  • All foreign employees should complete this Worksheet.

  • Gives us the information that we need to determine how to withhold income taxes

  • A new Worksheet needs to be completed each year that you are employed at UB.

http://www.business.buffalo.edu/hrs/foreign_national_worksheet.pdf


FOREIGN NATIONAL INFORMATION WORKSHEET


FOREIGN NATIONAL INFORMATION WORKSHEET


FOREIGN NATIONAL INFORMATION WORKSHEET


FOREIGN NATIONAL INFORMATION WORKSHEET


FOREIGN NATIONAL INFORMATION WORKSHEET


INCOME TAX TREATIES

  • Exist between the United States and 47 foreign countries

    • 32 apply to students

  • Either reduce or exempt income tax on a portion of earnings

  • Apply only to federal and state tax

  • Based on country of foreign residence not citizenship


DIFFERENCES IN TAX TREATIES

  • Most income tax treaties exempt earnings from income taxes while others reduce income taxes.

  • Exempt dollar limits = the amount of earnings that can be exempt from income tax withholding

    • Wages earned over the exempt dollar limit will have income tax withheld.

  • Exempt time limit = the number of years a foreign employee can use the income tax treaty

    • Begins from date of arrival in the United States


DIFFERENCES IN TAX TREATIES

  • Retroactive clauses

    • If the exempt dollar or time limit is exceeded, exempt wages may be taxed back to the first exempt dollar earned.

  • To find out more about a specific income tax treaty, see the Student Income Tax Treaties handout.


STUDENT INCOME TAX TREATIES


TAX TREATY ELIGIBILITY


TAX TREATY ELIGIBILITY


TO CLAIM A TAX TREATY EXEMPTION

  • Complete required forms

    • Foreign National Information Worksheet

    • Form 8233

    • Revenue Procedure

  • Submit forms to Foreign National Tax Unit

  • Forms can be accessed from our websites

    • Refer to the Resource Sheet provided in your packet.


CONTACT THE FOREIGN NATIONAL TAX UNIT

  • If you have any questions, please contact us.

  • Contact information is on the Resource Sheet.


U. S. TAX EXEMPTION & WITHHOLDING FORMS

  • FORM 8233 = “Exemption from Withholding on Compensation based on a Tax Treaty”

  • REVENUE PROCEDURE = Required statement that is attached to Form 8233 verifying your exempt status

  • W-4 = U.S. Income Tax Withholding form


U.S. TAXATION INTERNAL REVENUE SERVICE

Form 8233

A nonresident alien individual should use this form to claim a tax treaty exemption from withholding on some or all compensation.


U.S. TaxationFORM 8233


U.S. TaxationFORM 8233


U.S. TaxationForm 8233 Part I

Youra Name

400-00-0000

A Street

Bejing

China

1 University Lane

Amherst, New York 14228

F-1 19983361828005

China

899503662

January 10, 2003

January 2006

x


U.S. Taxation Form 8233 Part II

Teaching assistantship (income code 19)

$5000

U.S./China Tax Treaty, article 20(c)

all

People’s Republic of China


U.S. TAXATION PUBLICATION 901


U.S. Taxation Form 8233 Parts III & IV

Youra Name

1/21/03


Revenue Procedure87-8, 87-9 OR 93-22

Required Statement

  • The Revenue Procedures require Students, Teachers and Researchers to attach a statement to Form 8233.


U.S. TAXATION

  • To summarize, Form 8233 is used to claim exemption from income taxes because of a tax treaty.

  • If there is no tax treaty between your country and the U.S. OR you are not eligible to exempt your earnings from income tax, then you must fill out Form W-4.


Sample Statement


U.S. TAXATIONTAX WITHHOLDING

  • Salaries, Wages, or any other pay for personal services (work) paid to a nonresident alien employee is subject to the graduated withholding method. This is the same method used for U.S. citizens and residents.


U.S TaxationForm W-4


U.S. Taxation Form W-4 Work Sheet


U.S. Taxation Form W-4

Name

x

Youra

1 University Lane

Amherst, NY 14228

400 00 0000

1

15.30

Youra Name

1/20/03


FICA WITHHOLDING(Federal Insurance Contributions Act)

  • Deductions appear as:

    • - Social Security tax

    • - Medicare tax

  • Nonresident alien J -1 and F-1 students and scholars engaged in authorized employmentare exempt.(Examples: campus work, practical training and economic hardship employment)

  • H-1B and TN visa holders are not exempt.


NEW YORK STATE TAXES

  • New York State complies with ALL Federal (United States) Tax treaties in accordance with the Internal Revenue Codes.


NEW YORK STATE TAXES

  • For New York State Taxes, you will give to your new employer either:IT2104 –Employee’s Withholding Allowance Certificate ORIT2104E – Certificate of exemption from Withholding


NEW YORK STATE TAXESWhich form to use?

  • IT2104 – Employee’s Withholding Allowance Certificate Use this form if:1) You intend to earn MORE than $7500 in gross income in New York State OR2) You can be claimed on another individual’s federal income tax return and you intend to earnMORE than $3000 in gross income in New York State.


New York State Taxes Form IT-2104

Youra Name

400-00-0000

x

1 University Lane

Amherst, New York 14228

1

0

0


NEW YORK STATE TAXES Which form to use?IT2104E – Certificate of Exemption from WithholdingUse this form if:1) You intend to earn LESS than $7500 in gross income in New York State OR2) You can be claimed on another individuals federal tax return and you intend to earnLESS than $3000 in gross income in New York State.


New York State Taxes Form IT-2104-E

Youra Name

400-00-0000

X

1 University Lane

05-30-81

Amherst, New York 14228

x

x

x

x

Youra Name

1/21/03


CONTACT INFORMATION

  • Internal Revenue Service

    • 1-800-829-1040

    • http://www.irs.gov

  • New York State

    • 1-800-225-5829

    • http://www.tax.state.ny.us/pit

  • Foreign National Tax Unit (UB)

    • (716) 645-5000 ext. 1286 or 1025

    • http://ubbusiness.buffalo.edu

      Click on “Employee.” Scroll down to “Tax Facts.” Either choose “RF” or “State.” Click on “Foreign National Tax Unit.”


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