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Taxes & Treaties for International Student Employees. Amanda Maines UB International Employment Tax Unit Suzanne Reusch New York State Department of Taxation & Finance. AGENDA. Tax Vocabulary Income Tax Treaties How To Claim a Tax Treaty Benefit U.S. Income Tax Withholding

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taxes treaties for international student employees

Taxes & Treaties for International Student Employees

Amanda Maines

UB International Employment Tax Unit

Suzanne Reusch

New York State Department of Taxation & Finance

agenda
AGENDA
  • Tax Vocabulary
  • Income Tax Treaties
  • How To Claim a Tax Treaty Benefit
  • U.S. Income Tax Withholding
  • New York State Income Taxes
tax vocabulary
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
background on u s taxation
BACKGROUND ON 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 vocabulary5
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
income tax treaties
INCOME TAX TREATIES
  • Exist between the United States and 47 foreign countries
    • 31 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
DIFFERENCES IN TAX TREATIES
  • Most income tax treaties exempt earnings from income taxes while others reduce income taxes.
  • There is a dollar limit on the amount of earnings that can be exempt from income tax.
    • Wages earned over the exempt dollar limit will have income tax withheld.
  • There is a time limit on the number of years that a foreign employee can benefit from the income tax treaty
    • Begins from date of arrival in the United States
differences in tax treaties9
DIFFERENCES IN TAX TREATIES
  • Retroactive clauses
    • If the exempt dollar or time limit is exceeded, the wages may be taxed back to the first dollar earned.
  • To find out more about a specific income tax treaty, see the Student Income Tax Treaties handout and IRS Publication 901.
forms used to claim a tax treaty benefit
FORMS USED TO CLAIM A TAX TREATY BENEFIT
  • FORM 8233 = “Exemption from Withholding on Compensation based on a Tax Treaty”
    • Use this form to claim a tax treaty exemption.
  • REVENUE PROCEDURE = Required statement that is attached to Form 8233 verifying your exempt status
form 8233 sign part iii
FORM 8233: SIGN PART III

Youra Name

1/10/08

revenue procedures
REVENUE PROCEDURES
  • The Revenue Procedures require Students, Teachers and Researchers to attach a statement to Form 8233.
form 8233 or form w 4
FORM 8233 OR FORM W-4?
  • 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., then you will complete Form W-4 instead.
slide23

W-4 Form

Youra Name

1/10/2008

u s taxation tax withholding
U.S. TAXATIONTAX WITHHOLDING
  • Salaries, wages, or any other compensation for work paid to a nonresident alien employee are subject to tax.
  • Withholding = automatic deduction of income taxes from an individual’s paycheck
  • Your income taxes will be withheld from your paycheck by UB’s Human Resource Services.
new york state taxes
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 which form to use
NEW YORK STATE TAXESWhich form to use?
  • For New York State Taxes, you will give to your new employer either:
  • IT2104 – Employee’s Withholding Allowance CertificateORIT2104E – Certificate of Exemption from Withholding
new york state taxes which form to use29
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
NEW YORK STATE TAXES - Form IT-2104

1/13/2008

Youra Name

DO NOT FILL THIS IN or ANY BOXES BELOW YOUR SIGNATURE & date

new york state taxes which form to use31
NEW YORK STATE TAXESWhich form to use?

IT2104E – Certificate of Exemption from Withholding

Use this form if all three of these exist:

1) You are a full-time student under the age of 25AND

2) You had no New York State tax liability in 2006AND

3)You DO NOT expect a tax liability for 2007

NOTE: If you are unsure complete IT-2104

new york state taxes form it 2104 e
New York State Taxes Form IT-2104-E

X

x

x

x

x

Youra Name

DO NOT FILL in this BOX or any boxes BELOW SIGNATURE and DATE

contact information
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
  • International Employment Tax Unit (UB)
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