Tax Info for Foreign Nationals February 24, 2014 Prepared by: Kiran Samran Manager of Tax Services

1. Tax Info for Foreign Nationals February 24, 2014 Prepared by: Kiran Samran Manager of Tax Services 1715 Canal Street (Mondo Building) Merced, CA 95340

2. Agenda • Tax Updates • Residency for tax purposes • GLACIER • Income and Withholding at U.C. Merced • Tax Reporting • Resources

3. Tax Update • Delayed filing (Beginning Jan. 31) • American Opportunity Credit (up to $2,500) • Lifetime Learning Credit (up to $2,000)

4. Taxing Authorities to Know • Federal Government = Internal Revenue Service (IRS) • Income Tax • Employment Tax • State Government = Franchise Tax Board (FTB) • Income Tax • Employment Tax

5. Residency • There are 3 types of Residency • Residency for Immigration purposes • Residency for Tuition purposes • Residency for Tax purposes • Determining Residency for Tax Purposes • The IRS determines residency status with 2 tests: • Green Card Test • Substantial Presence Test

6. The Green Card Test • You are a resident for tax purposes if you are a Lawful Permanent Resident of the U.S. at any time during the year. • You are a Lawful Permanent Resident if: • You have been given the privilege of residing permanently in the U.S., according to immigration laws • You generally would have this status if you were issued an alien registration card (Form I-551) a.k.a. a “green card”. • Your residency start date is the first day on which you are a Lawful Permanent Resident. • You would also have the option of choosing to be treated as a resident alien for the entire year.

7. The Substantial Presence Test Method used by the IRS to count the physical presence in the U.S. each year for all non-immigrants. • You must be physically present in the U.S. on at least • 31 days during the current year, and • 183 days during the 3 year period that includes the current year and the 2 years before that. • How to calculate days for residency: • Current year – 100% of days present • First preceding year – 1/3 of days present • Second preceding year – 1/6 of days present

8. The Substantial Presence Test Exemptions from the Substantial Presence Test: (days are not yet counted toward residency) • F1/J1 Visas (Student) • The first 5 years of U.S. presence are exempt from counting toward residency for tax purposes • You will be considered a non-resident alien during these 5 years • This is a one-time lifetime exemption. • J1 Visas (Exchange Visitors) • Any 2 years of presence (not counting the current year) within a 6 year look back period are exempt from counting toward residency for tax purposes

9. F1 or J1 Students Excluding 2013, list each year you have been in the U.S. If the total number of years is less than 5 years, you are a non-resident for tax purposes.

10. J1 Scholars (non-student category) For each year below, indicate days present in the U.S. If you were exempt for 2 of the 6 preceding years, then you will no longer be exempt from counting days toward your residency. • In this example: • The J1 Scholar was exempt in 2 of the 6 preceding years and therefore would no longer be exempt • The current year would then be counted toward their residency • They meet the substantial presence test (31 days in the current year and at least 183 days from the last 3 years)

11. All Other Visa Holders(H1, O1, TN, RF, etc.) Since there is no exemption rule, the Substantial Presence Test is applied immediately upon arrival to the U.S. • You must be physically present in the U.S. on at least • 31 days during the current year, and • 183 days during the 3 year period that includes the current year and the 2 years before that. If the number of days counted is less than 183, you are a non-resident for tax purposes.

12. What is GLACIER? • A non-resident alien tax compliance software system that resides on a secure server and is accessible via the Internet • Maintains data entered by foreign national • Used to determine tax residency and tax withholding rates • Manages paper forms • Creates a Tax Summary report with all the required information for tax compliance

13. What is GLACIER Required for? A completed GLACIER record is required prior to disbursement of payment to a foreign national for: • Taxable Fellowship/Scholarship awards • Wages for employment • Wages for guest lecturer • Royalties • Other payments not exempted by IRS Code

14. Where to Submit GLACIER Paperwork • UCLA is the office of record for payments issued by U.C. Merced • GLACIER is administered by UCLA Payroll Services • UCLA Payroll Services 10920 Wilshire Blvd, Suite 620 Los Angeles, CA 90025 Fax: (310) 794-8751 GLACIER Lead Administrator: Mike Sattin msattin@finance.ucla.edu (310) 267-5774 GLACIER – Employee Tax Treaties: Heather Kira-Hoeke hhoeke@finance.ucla.edu (310) 794-8707

15. UC Merced GLACIER Process • The dept. requests a GLACIER record be set up by UCLA Payroll Services • Once the record is set up, you will receive an e-mail from support@online-tax.net with instructions to access GLACIER. This e-mail is not SPAM. Please look for it in your e-mail. • Access GLACIER and complete your record • Print the forms as indicated on the Tax Summary • Send the forms to UCLA Payroll Services (see slide #13) • As changes occur, update your GLACIER record, print the updated forms, and send to UCLA Payroll Services.

16. Sample GLACIER email Dear Student, The Internal Revenue Service (IRS), the U.S. government tax authority, requires Regents - University of California, Los Angeles (UCLA) to collect information from all non-U.S. citizens and non-permanent resident aliens to determine the appropriate rate of tax withholding and reporting for any payments that may be made to such individuals. You have received this email because you may receive payments from Regents - University of California, Los Angeles (UCLA). For your convenience, Regents - University of California, Los Angeles (UCLA) allows you to provide the required information and complete the necessary forms via the Internet from any web-accessed computer using the GLACIER Online Tax Compliance System. The information and forms must be provided prior to any payment so that the correct tax withholding and reporting decisions are made; failure to do so may result in the maximum rate of tax withholding and/or delayed payment. Information provided to GLACIER is transmitted and stored securely and will only be used by Regents - University of California, Los Angeles (UCLA) for purposes of tax withholding and reporting. You must access GLACIER and provide the requested information within 10 days of receiving this message. If you do not provide the requested information within 10 days, the maximum amount of U.S. tax will be withheld from any payments made to you. To login to GLACIER, follow the steps below: Click on the following web link: http://www.online-tax.net ; if the link does not automatically open, simply open your Internet Browser (preferably Internet Explorer) and enter the website address http://www.online-tax.net. Click on the GLACIER logo to enter the website. At the login screen, enter your temporary access information from below; you will be required to select a new UserID and Password at the time of first access to GLACIER. UserID: XXXXXXXX Password: XXXXXXXX If you have any questions or need additional information about why you have been asked to use GLACIER, please contact me. Thank you and have a great day. Regents - University of California, Los Angeles (UCLA)

17. GLACIER Tax Summary Report All information entered into GLACIER is summarized on this report and will automatically determine: • Residency for Tax purposes • Tax Treaty Eligibility • FICA Eligibility • Required Forms and Documents.

18. Sample Tax Summary Report

19. Federal Tax Reporting for Fellowship Income Non-residents with fellowship income may have part of their income reported to the IRS on Form 1042-S. • The portion of the fellowship that was applied toward educational expenses (fees, tuition, etc.) will not be reported on Form 1042-S.

20. Wages Received Income paid as wages can be treated in 1 of 3 ways: • Excludable • i.e. Employer paid benefits • Exempt due to treaty • Must submit forms to UCLA Payroll Services and qualify for treaty • Taxable

21. Employment Taxes • All employees must contribute to FICA unless exempted by law • 2 exemptions possible at UC Merced • F1/J1 – must be a nonresident for tax purposes and working to further the purpose for which the visa was issued. • Student – must be enrolled in a half-time course load

22. Federal Income Tax • Exemption to Federal Taxes by tax treaty • An agreement between the U.S. and another country which reduces or exempts the individual from tax withholding. • To be eligible: • A tax treaty must exist between the U.S. and your resident country • You must be a nonresident of the U.S. • Primary purpose of visit and job must meet the requirements listed in the tax treaty • such as professor or researcher pay, or amounts received for studies by a foreign student • Time and dollar constraints of the tax treaty must be met • You must have a taxpayer ID# (Social Security # or ITIN) • Must complete appropriate paperwork (GLACIER documentation) NOTE: California does not conform to Federal tax treaty laws

23. State Income Tax • Income earned while living and working in California is subject to withholding • Income earned outside of California may also be subject to withholding if the employee is a resident of California • State Income Tax Withholding is based on information from the DE-4 withholding form (for employees) • http://www.ucop.edu/financial-accounting/_files/ucw4-de4.pdf

24. Year End Tax Forms

25. Understanding your W-2 2013

26. Who Must File? • In the U.S., it is the individual’s responsibility to know what taxes must be filed with the government • Everyone who receives compensation while living in California may be required to file a California Income Tax Return

27. 2013 Federal Filing Requirements(under age 65)

28. 2013 California Filing Requirements(under age 65)

29. What tax forms do I need to file? Federal: • Form 8843 – Statement for Exempt Individuals (Mandatory for all nonresidents) • Possibly Form 1040NR or 1040NR-EZ California: • Possibly Form 540NR

30. When and Where to File? The last day to file your income tax return is April 15th. • Individual Federal Return must be mailed to: • Individual State (California) Return must be mailed to:

31. Useful IRS Publications • Pub 515 Withholding of Tax on Nonresident Aliens • Pub 519 U.S. Tax Guide to Aliens • Pub 901 U.S. Tax Treaties • Pub 970 Tax Benefits for Education

32. Useful Resources Telephone Numbers: Internal Revenue Service (IRS) (800) 829-1040 Franchise Tax Board (FTB) (800) 852-5711 Employment Development Dept. (EDD) (800) 795-0193 Social Security Administration (SSA) (888) 632-7069 Websites: Internal Revenue Service (IRS) http://www.irs.gov/ Franchise Tax Board (FTB) http://www.ftb.ca.gov/

33. Campus Resources • Tax Services tax@ucmerced.edu (209) 228-4075 • Student Business Services sbs@ucmerced.edu (209) 228-4114 • Graduate Division gradfunding@ucmerced.edu (209) 228-4622 • Financial Aid finaid@ucmerced.edu (209) 228-4243 • Human Resources hr@ucmerced.edu (209) 228-8586 • Accounting Services accounting@ucmerced.edu • Contracts and Grants Accounting cga@ucmerced.edu (209) 222-8043 • International Affairs Office international@ucmerced.edu (209) 228-4722 • Payroll Services payroll@ucmerced.edu (209) 228-2729

34. Comments or Suggestions Please submit your comments and/or suggestions to: ksamran2@ucmerced.edu