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JOHN LENIK

JOHN LENIK. Senior Tax Consultant Internal Revenue Service Greensboro, NC. FORMS YOU DO NOT NEED FORM 1099 INT (interest income) FORM 1098T (tuition costs) You do not have to report your interest income and you are not entitled to any educational credits or adjustments.

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JOHN LENIK

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  1. JOHN LENIK Senior Tax Consultant Internal Revenue Service Greensboro, NC

  2. FORMS YOU DO NOT NEED • FORM 1099 INT (interest income) • FORM 1098T (tuition costs) • You do not have to report your interest income and you are not entitled to any educational credits or adjustments.

  3. FOREIGN STUDENT ISSUES • Filing Requirements • All F and J VISA holders must file a Form 8843. • All F and J VISA holders must file a Form 1040NR or a Form 1040NR-EZ when their U.S. source income is above $3,650.

  4. FILING STATUS • Single individuals will file as single • Married non-resident’s must file as MFS unless he/she is married to a U.S. citizen and they elect to file as MFJ based on their world-wide income.

  5. SPOUSAL EXEMPTION CANADA & MEXICO • Spouse can be claimed if the spouse had no U.S. income and is not claimed as a dependent on another U.S. return.

  6. SPOUSAL EXEMPTION SOUTH KOREA • Spouse can be claimed but must live with student in U.S. • If the student has foreign and U.S. income the exemption must be prorated.

  7. SPOUSAL EXEMPTION INDIA • A student can claim an exemption for a spouse who has no gross income and cannot be claimed on someone else’s U.S. return. • The spouses information goes on line 7c.

  8. Dependency Exemption • You cannot claim an exemption for your dependents unless your from one of the following countries

  9. 1. Canada and Mexico*2. S. Korea – The dependent must live w/the non-resident for part of the tax year. If the non-resident has U.S. and foreign income the exemption must be prorated.3. India – Dependent child can be claimed if born in the U.S.

  10. WHO CAN USE A FORM1040NR-EZ • No dependents claimed • Cannot be claimed as a dependent on a U.S. tax return • the only income is from wages, state tax refunds and scholarships or fellowship grants.

  11. 1040NR-EZ cont’d • Taxable income is under $100,000 • The only adjustments to income are student loan interest or scholarship exclusion. • No tax credits are claimed.

  12. 1040NR-EZ cont’d • No exemption is claimed for spouse • The only itemized deduction is state and local taxes • The only taxes owed are income taxes

  13. U.S. source income includes • Wages (Code 19 Form 1042-S or Box 1 Form W-2) • Wages for Teachers and Researchers (Code 18 Form 1042-S) • Scholarships, Fellowships & Grants that exceed tuition, fees, books and required supplies and equipment (Code 15 Form 1042-S)

  14. WAGE INCOME • Add up all Form W-2, Box 1’s, plus all Form 1042-S, Box 2’s. • See Table 4 Countries With Tax Treaty Benefits for Student Wages. (last page of handout) • Reduce the total by the amount shown for your country.

  15. WAGE INCOME cont’d • Report that $ amount shown for your country on line 6 Form 1040NR-EZ, or line 22 Form 1040NR • Show the net amount on line 3 Form 1040NR-EZ, or line 8 Form 1040NR

  16. STATE TAX REFUND • If you filed a state tax return in 2008 and received a refund report your refund on Form 1040NR-EZ line 4. • Report it on Form 1040NR line 11.

  17. SCHOLARSHIP INCOME • See Table 2 Countries with Treaty Benefits for Scholarship Income: (page 2 of handout)

  18. SCHOLARSHIP INCOME cont’d • If you are from one of the countries listed enter Zero (-0-) Form 1040NR-EZ on line 5 and the Code 15 amount on line 6. • If filing Form 1040NR enter Zero on line 12 and the code 15 amount on line 22.

  19. ADJUSTMENTS TO INCOME • Student Loan Interest – may be reported to you on a Form 1098-E. Report it on line 9 Form 1040NR-ez or line 32 Form 1040NR.

  20. DEDUCTIONS • State and Local Taxes (Box 17 & 19 Form W-2). Add them up and report them on Form 1040NR-EZ line 11 • If using 1040NR report them on page 3 line 1 or 2. • Contributions to U.S. charities can only be shown on Form 1040NR line 4 or 5.

  21. Personal Exemption • Everyone can claim a personal exemption for his/her self unless they can be claimed as a dependent on someone else’s U. S. tax return. • Put $3,650 on Form 1040 NR-EZ line 13. Form 1040NR line 39.

  22. INCOME TAX TABLE • If line 14 Form 1040NR-EZ or line 40 Form 1040NR is > then 0. Look up the amount on that line in the instruction booklet. • The tax tables start on Page 17of 1040NR-EZ and Page 45 of 1040NR. Place the amount found on line 15 NR-EZ or line 41 of NR.

  23. CHILD TAX CREDIT • If your child was born in the U.S. and is under 17 years old complete Form 8901 and enter the amount on line 47 of Form 1040NR. • If line 41 is < $1,000 and your wages are > $3,000 you will need to complete a Form 8812 and enter that amount on line 61, 1040NR.

  24. REFUND or BALANCE DUE • Take all Box 2’s of Form W-2 add them up and enter that amount on line 18 NR-EZ or line 58a NR. • On EZ compare line 17 and 18 • On NR compare line 57 and 58

  25. Refund and Balance cont’d • If 8 is > 7, subtract 7 from 8 and put the difference on EZ line 22 & 23a, and line 67 & 68a NR. You get a refund. • If 7 is > 8, subtract 8 from 7 and enter the difference on EZ line 25 and line 70 NR. You owe.

  26. UNUSUAL TREATY PROVISIONS • China – students are entitled to the $5,000 wage exemption for the time necessary to complete their education. They would still be entitled to the exemption after 5 years.

  27. UNUSUAL TREATY PROVISIONS • CANADA • Exempts all earned income up to $10,000. • Once that amount is exceeded all the income is taxable.

  28. FORM 8843 • Must be filed whether or not the student has any U.S. income. If it is not filed the IRS could tax the individual on their worldwide income. • Students must complete Part 1 and 3.

  29. FORM 8843 top portion • List the family name and personal name in the correct space. • The taxpayer space needs to be filled in with the Soc. Sec. No. or an ITIN, if no number leave this space blank. • The address section is only completed if this form is filed by itself.

  30. FORM 8843 Part 1 • Ques. 1a & b are asking is what immigration status the individual is in. Generally, the control number is the VISA number. • Ques. 2 If > one country, what country is the person closer to. • Ques. 3 self-explanatory • Ques. 4a & b are the same number.

  31. FORM 8843 Part 3 • Ques. 9 name and address of school. • Ques. 10 name, address & phone # of someone at school the IRS can contact to determine you are enrolled there. • Ques. 11 - 14 self-explanatory

  32. SOCIAL SECURITY TAXES • Wages paid to students which are related to their purpose here in U.S. are not subject to Soc. Sec. Or Medicare taxes. • If these taxes were withheld in error the student should contact the payer and ask for a refund. • File Form 843 with Form 8316 if the payer refuses.

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