YOUNG TAX & ACCOUNTING SERVICES
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YOUNG
&
ASSOCIATES
TAX & ACCOUNTING SERVICES
Young & Associates, LLC presents:
US TAXATION OF
INTERNATIONAL STUDENTS
AND SCHOLARS
FEBRUARY 23, 2023
WHAT WE WILL COVER • FILING REQUIREMENTS • RESIDENCY STATUS/TAXATION • TYPES OF INCOME • TAX FORMS • COMPLETION OF TAX RETURNS • COVID-19 IMPACT • RESOURCES
AM I REQUIRED TO FILE ANYTHING?
YES NO
• PRESENT IN THE US IN 2022 • NO DAYS OF PRESENCE IN
FOR ANY LENGTH OF TIME THE US DURING 2022
• US SOURCE INCOME • NO US SOURCE INCOME
Exception for tourists
RESIDENCY STATUS
VISA RESIDENCY STATUS IS NOT THE SAME AS TAX RESIDENCY STATUS
RESIDENCY STATUS
• FULL YEAR NONRESIDENT ALIEN
• FULL YEAR RESIDENT ALIEN
• DUAL STATUS (PART-YEAR RESIDENT/PART-YEAR
NONRESIDENT)
• USUALLY OCCURS IN THE YEAR AFTER
STUDENT/SCHOLAR HAS EXHAUSTED EXEMPT YEARSRESIDENCY STATUS
• RESIDENCY TESTS:
• US CITIZENSHIP
• LAWFUL PERMANENT RESIDENT (GREEN CARD HOLDER)
• SUBSTANTIAL PRESENCE TEST (SPT)
➢ PRESENT IN THE US AT LEAST 31 DAYS DURING THE CURRENT YEAR, AND;
➢ IF THE SUM OF:
• 100% OF TOTAL TAX YEAR IN QUESTION DAYS +
• 1/3 OF FIRST PRECEDING YEAR +
• 1/6 OF SECOND PRECEDING YEAR
• >183 DAYS = RESIDENT ALIENRESIDENCY STATUS
EXCEPTIONS TO SPT
• F OR J STUDENTS RECEIVE 5 “EXEMPT” YEARS. NOT EXEMPT FROM TAX, BUT OF
COUNTING PHYSICAL DAYS OF PRESENCE IN THE US TOWARDS THE SPT. SO, FOR THE
FIRST 5 YEARS, THE SPT TOTAL WILL BE “0”.
• J NON-STUDENTS RECEIVE 2 “EXEMPT” YEARS (OF THE PAST 6 YEARS). GENERALLY, FOR
THE FIRST 2 YEARS, THE SPT WILL BE “0” – UNLESS INDIVIDUAL HAS HAD PREVIOUS
ENTRIES TO THE US AS AN F, J, M OR Q VISA HOLDER.
• “EXEMPT” YEARS ARE CALENDAR YEARS, NOT YEARS FROM DATE OF ARRIVAL.SUMMARY OF EXEMPTION FROM
SUBSTANTIAL PRESENCE TEST
Number of years exempt FICA Exemption
F-1 5 Y
F-2 (Spouse /dependent) 5 Y
J1 Student, non degree 5 Y
J1 Student, Bachelor’s 5 Y
J1 Student, Doctorate 5 Y
J1 Student, Masters 5 Y
J1 Au pair and EduCare 2 of 6 Y
J1 Camp Counselor (summer camp) 2 of 6 Y
J1 Student Intern 2 of 6 Y
J1 Summer Work/Travel 2 of 6 Y
J1 Teacher 2 of 6 Y
J1 Trainee 2 of 6 Y
J1 Alien Physician 2 of 6 Y
J1 Government Visitor 2 of 6 Y
J1 International Visitor 2 of 6 Y
J1 Professor 2 of 6 Y
J1 Short-Term Scholar 2 of 6 Y
J1 Specialist 2 of 6 Y
J1 Research Scholar 2 of 6 Y
J2 (Spouse / dependent) 2 of 6 NExempt Individual/
Are you an exempt individual? – Decision Tree
Residency
If you are temporarily present in the United States on an F, J, M, or Q visa, use this chart to deter-
mine if you are an exempt individual for the Substantial Presence Test (SPT).
Student Teacher or Trainee
F, J, M, or Q Visa J Visa
Are you a full-time student? Are you a student?
No Ye s Ye s No
Are you in substantial Are you in substantial
compliance with your visa? compliance with your visa?
No Ye s Ye s No
Have you been in the U.S. for You are Have you been in the U.S. for
any part of more than 5 calendar an exempt any part of 2 of the preceding 6
years? individual for the calendar years?
Ye s No Substantial No Ye s
Presence
Test
Were you exempt as a teacher,
Do you choose to claim a Closer trainee, or student for any part of 3
Connection exception to the (or fewer) of the 6 preceding years,
Substantial Presence Test? AND Did a foreign employer pay all
your compensation during the tax year
No Ye s in question, AND Were you present
in the U.S. as a teacher or trainee in
In order to claim the exception, all the any of the preceding 6 years, AND
following must apply: Did a foreign employer pay all your
A. You do not intend to reside permanently in the US compensation during each of the
B. You must have complied with your Visa. preceding 6 years you were present in
C. You must not have taken steps to become a the U.S. as a teacher or trainee?
Resident Alien.
D. You must have a closer connection to a foreign
country.
Ye s No
No Ye s
* You must apply the Substantial Presence Test
* Substantial Presence Test (SPT) - You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for
calendar year 2022. To meet this test, you must be physically present in the United States on at least:
1. 31 days during 2022 and
2. 183 days during the 3-year period that includes 2022, 2021, and 2020, counting:
a. all the days you were present in 2022 and
b. 1/3 of the days you were present in 2021, and
c. 1/6 of the days you were present in 2020.
1NONRESIDENT ALIEN TAXATION
• FILING STATUS: SINGLE, MARRIED FILING SEPARATELY, OR QUALIFIED SURVIVING
SPOUSE (QSS)
• NO PERSONAL EXEMPTIONS
• MUST ITEMIZE DEDUCTIONS
• STATE AND LOCAL INCOME TAXES
• GIFTS TO US CHARITIES
• STUDENT/SCHOLAR ADJUSTMENTS TO INCOME
• SCHOLARSHIP AND FELLOWSHIP GRANTS
• STUDENT LOAN INTEREST (SINGLE FILERS ONLY)RESIDENT ALIEN TAXATION • FILING STATUS: SINGLE, MARRIED FILING JOINTLY (MFJ), MARRIED FILING SEPARATELY (MFS), HEAD OF HOUSEHOLD (HOH), QUALIFYING SURVIVING SPOUSE (QSS) • NO PERSONAL EXEMPTIONS • INCOME: WORLDWIDE INCOME • DEDUCTIONS: ABOVE THE LINE ADJUSTMENTS (EDUCATOR EXPENSES, ALIMONY PAID, EXPENSES OF PERFORMING ARTISTS, STUDENT LOAN INTEREST, HEALTH SAVINGS ACCOUNT) & SCH A ITEMIZED DEDUCTIONS • CREDITS: FOREIGN TAX CREDIT (FTC), CHILD TAX CREDIT (CTC), EARNED INCOME CREDIT (EIC), EDUCATION CREDITS, CHILD CARE CREDIT
DUAL-STATUS TAXPAYER
STUDENT/SCHOLAR EXEMPT YEARS EXHAUSTED BUT STILL IN US
RESIDENCY STATUS
January December
Nonresident prior to SPT applied, resident thereafter
(Ex. Change from F-1 to H-1B)
Student/Scholar Departure Year
January December
Resident until departure, Nonresident thereafter
(Ex. F-1 student departs after June 30)TYPES OF INCOME
WAGES/EMPLOYMENT/COMPENSATION PROVIDE SERVICES TO THE UNIVERSITY FOR PAYMENT– PAID ON A MONTHLY, BI- WEEKLY OR CASUAL BASIS NORTHWESTERN EMPLOYMENT TAXES: • FEDERAL – TAXES ARE ASSESSED BY THE INCOME TAX WITHHOLDING TABLE • IL STATE – WITHHOLDING RATE – 4.95% • FICA/OASDI – 6.20% (ONLY APPLICABLE TO RESIDENTS FOR TAX PURPOSES) • MEDICARE – 1.45% (ONLY APPLICABLE TO RESIDENTS FOR TAX PURPOSES)
SCHOLARSHIP/FELLOWSHIP/STIPENDS FUNDS GIVEN TO SUPPORT EDUCATION/ACADEMIC ADVANCEMENT OR ACHIEVEMENT NORTHWESTERN SCHOLARSHIP/FELLOWSHIP TAXES: • FEDERAL – TAXES ARE WITHHELD AT 14% FOR NONRESIDENTS AND 0% FOR RESIDENTS. RESIDENTS MAY BE REQUIRED TO MAKE QUARTERLY ESTIMATED TAX PAYMENTS. • ILLINOIS STATE – TAXES ARE NOT WITHHELD AT SOURCE, BUT INDIVIDUALS MAY BE REQUIRED TO PAY QUARTERLY ESTIMATED TAX PAYMENTS AND/OR PAY TAXES WHEN FILING A TAX RETURN. • FICA/OASDI & MEDICARE – NOT APPLICABLE
OTHER
INCOME?
• Singing in a bar!
• Gambling winnings
• Focus group – gift card
• Rental income (over 14
nights)
• Selling art/design works
• All reportableINDEPENDENT CONTRACTOR SIMILAR TO EMPLOYMENT BUT PROVIDING SERVICES INDEPENDENTLY FOR BUSINESS UNDER TERMS OF A CONTRACT. NORTHWESTERN INDEPENDENT CONTRACTOR TAXES: • FEDERAL – TAXES ARE WITHHELD AT 30% FOR NONRESIDENTS AND 0% FOR RESIDENTS. RESIDENTS MAY BE REQUIRED TO PAY QUARTERLY ESTIMATED TAX PAYMENTS AND/OR PAY TAXES WHEN FILING A TAX RETURN. • ILLINOIS STATE – TAXES ARE NOT WITHHELD AT SOURCE, BUT INDIVIDUALS MAY BE REQUIRED TO PAY QUARTERLY ESTIMATED TAX PAYMENTS AND/OR PAY TAXES WHEN FILING A TAX RETURN. • FICA/OASDI & MEDICARE – NOT WITHHELD
TAX FORMS
FORM W-2: WAGE AND TAX STATEMENT MAILED TO ADDRESS ON FILE NO LATER THAN JANUARY 31ST UNLESS SOMEONE HAS REQUESTED TO RECEIVE THEM ONLINE BY CONTACTING PAYROLL AT (847) 491-7362 OR (312) 503-9700 OR AT (HTTP://WWW.NORTHWESTERN.EDU/MYHR/). 1. WAGES 2. SALARY 3. COMPENSATION
FORM 1042-S: FOREIGN PERSON’S U.S. SOURCE INCOME SUBJECT
TO WITHHOLDING
MAILED TO ADDRESS ON FILE NO LATER THAN MARCH 15TH. REPRINTS
OF FORMS ARE AVAILABLE MARCH 31ST. CONTACT PAYROLL AT (847)
491-7362 OR (312) 503-9700 OR AT
(HTTP://WWW.NORTHWESTERN.EDU/MYHR/).
1. Scholarships
2. Fellowships
3. Foreign Independent Contractor Services
4. Tax Treaty Benefits
5. Foreign Prize/Award/Miscellaneous foreign paymentsFORM 1099-MISC: MISCELLANEOUS INCOME RECEIVED FOR PAYMENTS TOTALING AT LEAST $600 IN THE FOLLOWING CATEGORIES. ISSUED NO LATER THAN JANUARY 31ST. CONTACT PAYROLL SERVICES AT (847) 491-7362 OR (312) 503-9700 OR (HTTP://WWW.NORTHWESTERN.EDUE/MYHR/) TO REQUEST A REPRINT. 1. Rent 2. Royalties (minimum of $10) 3. Other Income 4. Services 5. Legal Fees 6. Prizes and Awards
FORM 1099-NEC: NONEMPLOYEE COMPENSATION RECEIVED FOR PAYMENTS TOTALING AT LEAST $600 IN THE FOLLOWING CATEGORIES. ISSUED NO LATER THAN JANUARY 31ST. CONTACT PAYROLL SERVICES AT (847) 491-7362 OR (312) 503-9700 OR (HTTP://WWW.NORTHWESTERN.EDUE/MYHR/) TO REQUEST A REPRINT. 1. Services performed by someone who is not an employee 2. Cash payments for fish purchased from anyone engaged in trade or business of catching fish 3. Payments to an attorney
TAX FILINGS
TAX RETURN CYCLE
Income
Wages, Scholarships, Fellowships
Tax Payments
Withholdings, Estimated Tax Payments
Tax Return
Form 1040, 1040-NR, 8843SPRINTAX TAX PREP – FOR NONRESIDENTS • AVAILABLE THROUGH THE OFFICE OF INTERNATIONAL SERVICES’ WEBSITE: WWW.NORTHWESTERN.EDU/INTERNATIONAL/ • PLEASE READ ALL TAX INFORMATION ON WEBSITE BEFORE ACCESSING SPRINTAX TAX PREP AND HAVE ALL NECESSARY PAPERWORK AVAILABLE • GLACIER TAX PREP PROCESS: ✓ CREATE INDIVIDUAL LOG IN ✓ DETERMINE U.S. TAX RESIDENCY STATUS ✓ WHICH TAX FORM TO USE ✓ TAX TREATY ✓ REFUND (CHECK OR DIRECT DEPOSIT) ✓ READ ALL INSTRUCTIONS ✓ DOWNLOAD FORMS ✓ MAIL FORMS
ADDITIONAL NONRESIDENT TAX DETAILS • CAN USE SPRINTAX TAX PREP • CAN ALSO FILE ON YOUR OWN OR USE A CERTIFIED PUBLIC ACCOUNTANT (CPA), ENROLLED AGENT (EA), VOLUNTEER INCOME TAX ASSISTANCE (VITA) OR TAX PREPARATION FIRM. ENSURE THAT PREPARER HAS SUFFICIENT KNOWLEDGE OF NONRESIDENT ALIENS/FOREIGN TAX MATTERS. • DUE DATE OF APRIL 18, 2023 – (FORM 8843 DUE BY JUNE 15, IF FILING SEPARATELY). • FILE USING FORM 1040-NR (U.S. NONRESIDENT ALIEN INCOME TAX RETURN) AND/OR FORM 8843 (STATEMENT FOR EXEMPT INDIVIDUALS). • DO YOU NEED TO FILE? WWW.IRS.GOV/INDIVIDUALS/INTERNATIONAL-TAXPAYERS “WHO MUST FILE” • OFFICE OF INTERNATIONAL STUDENT AND SCHOLARS SERVICES’ WEBSITE: WWW.NORTHWESTERN.EDU/INTERNATIONAL
ADDITIONAL NONRESIDENT TAX DETAILS - SPOUSES • IF SPOUSE IS WORKING (J2): WILL NEED TO FILE OWN FEDERAL TAX RETURN, STATE TAX RETURN AND FORM 8843 • IF SPOUSE IS NOT WORKING (F2, H4): WILL ONLY FILE FORM 8843. MUST DOWNLOAD THE FORM 8843 FROM HTTP://WWW.IRS.GOV/PUB/IRS- PDF/F8843.PDF AND COMPLETE BY HAND. DO NOT SUBMIT THIS FORM IN THE SAME ENVELOPE AS F1 OR J1 VISA HOLDER.
RESIDENT ALIEN TAX DETAILS • CANNOT USE SPRINTAX • CAN USE ANY AVENUE FOR FILING SUCH TAX FILING SOFTWARE, CPA, EA, TAX PREPARATION FIRM, IRS FREE FILE (IF AVAILABLE), VITA, ETC. • FILE USING 1040; – DUE DATE OF APRIL 18, 2023 • DO YOU NEED TO FILE? WWW.IRS.GOV/HELP/ITA/DO-I-NEED-TO-FILE-A-TAX- RETURN • CAN FILE JOINTLY WITH A SPOUSE AND CLAIM DEPENDENTS (CHILDREN) • AS RESIDENTS FOR TAX, GENERALLY ABLE TO CLAIM ANY DEDUCTION/ALLOWANCE/BENEFIT AVAILABLE TO U.S. CITIZENS • OFFICE OF INTERNATIONAL STUDENT AND SCHOLARS SERVICES’ WEBSITE: HTTP://WWW.NORTHWESTERN.EDU/INTERNATIONAL/
RESIDENT ALIEN TAX DETAILS • RESIDENT TAX FORMS DO NOT SPECIFICALLY ADDRESS CLAIMING TAX TREATIES AS RESIDENTS FOR TAX. HOWEVER, YOU SHOULD DO THE FOLLOWING: • A RESIDENTS FOR TAX MUST COMPLETE FORM 1040 • ENTER ALL WAGE INCOME ON LINE 1 • ON SCHEDULE 1, LINE 8 INDICATE THE AMOUNT OF TAX TREATY BENEFIT IN PARENTHESIS (WHICH INDICATES SUBTRACTION) • ON THE DOTTED LINE INDICATE THE TREATY ARTICLE (E.G. US-CHINA ARTICLE 19) • COMPLETE AND ATTACH FORM 8833 (TO INCLUDE DETAILS OF TREATY USED)
RESIDENT ALIEN TAX DETAILS
• INCLUDING A SPOUSE AND/OR DEPENDENTS THAT DO NOT HAVE A SOCIAL
SECURITY NUMBER (SSN) OR INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER
(ITIN)
• INDIVIDUALS WHO ARE NOT WORKING ARE NOT ELIGIBLE FOR AN SSN MUST
APPLY FOR AN ITIN
• COMPLETE FORM W-7 (APPLICATION FOR ITIN) AND ATTACH APPROPRIATE
DOCUMENTS PER INSTRUCTIONS FOR EACH INDIVIDUAL WHO NEEDS AN ITIN
• COMPLETE FEDERAL TAX RETURN
• MUST MAIL COMPLETED W-7 APPLICATIONS AND COMPLETED TAX RETURN TO
THE W-7 ADDRESS. ITIN APPLICATIONS WILL BE PROCESSED FIRST, THEN THE
FEDERAL TAX RETURN WILL BE FORWARDED FOR PROCESSING.
• PROCESSING OF TAX RETURN WILL TAKE 8-12 WEEKS (4-6 FOR ITINS TO BE
ASSIGNED)
• FOR ILLINOIS STATE TAX FILING:
➢ WAIT FOR THE ITINS TO BE ASSIGNED (MAY NEED TO FILE AN ILLINOIS TAX FILING
EXTENSION)
➢ DEPENDENTS MUST QUALIFY TO BE CLAIMEDILLINOIS STATE TAX
FILINGSILLINOIS STATE TAX FILINGS
• DO YOU NEED TO FILE? SEE ILLINOIS STATE WEBSITE FOR FILING
REQUIREMENTS
• 2022 FORM IL-1040 INSTRUCTIONS (ILLINOIS.GOV)
• LIVED/WORKED IN IL AND ANOTHER STATE
• A PART-YEAR RESIDENT TAXPAYER MUST FILE FORM IL-1040 AND SCHEDULE NR
IF:
- YOU EARNED IL INCOME FOR SERVICES PERFORMED IN IL STATE
- YOU EARNED INCOME FROM ILLINOIS SOURCES WHILE YOU WERE
NOT A RESIDENT, OR YOU WANT A REFUND OF ANY ILLINOIS INCOME
TAX WITHHELD.
• START WITH FORM IL-1040 – BEGIN THE IL-1040 WITH THE FEDERAL ADJUSTED
GROSS INCOME (AGI).ILLINOIS STATE TAX FILINGS
• NONRESIDENT
➢ GENERALLY, INDIVIDUALS WHO SPEND LESS THAN 183 DAYS IN ILLINOIS DURING
THE YEAR
➢ NOT DOMICILED IN ILLINOIS
• RECEIVED INCOME FROM ILLINOIS SOURCES
• IF ILLINOIS TAXES WITHHELD IN ERROR, MUST FILE RETURN AND ATTACH A
LETTER OF EXPLANATION FROM YOUR EMPLOYER (MUST BE ON EMPLOYER’S
LETTERHEAD).
• IF YOU WERE IN ILLINOIS (AS A NONRESIDENT) AND DID NOT HAVE ANY
INCOME FROM ILLINOIS SOURCES, YOU MAY NOT HAVE AN ILLINOIS FILING
REQUIREMENT
• APRIL 18, 2023 DUE DATECOVID-19 IMPACT • CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT (CARES) • PHYSICAL DAYS OF PRESENCE • DELAYED PROCESSING
QUALITY REVIEW CHECKLIST • WAS RESIDENCY STATUS FOR TAX PURPOSES PROPERLY DETERMINED? • DOUBLE-CHECK NAME, ADDRESS, AND PHONE NUMBER ARE CORRECT • ARE ALL ALLOWABLE DEPENDENTS PROPERLY LISTED (IF APPLICABLE)? • ARE ALL INCOME AND DEDUCTION ITEMS CORRECTLY LISTED? • HAVE THE RETURNS BEEN SIGNED? • HAVE THE CORRECT DOCUMENTS (W-2, 1042-S) BEEN ATTACHED? • HAS THE PROPER TREATY ARTICLE BEEN CITED AND REPORTED?
RESOURCES FOR FEDERAL TAX RETURNS IRS: WWW.IRS.GOV (800) 829-1040 IRS - CHICAGO OFFICE: JOHN C. KLUCZYNSKI FEDERAL BUILDING 230 S. DEARBORN ST. CHICAGO, IL 60604 (312) 566-4912 MONDAY-FRIDAY - 8:30 A.M.-4:30 P.M. TAXPAYER ADVOCATE: (312) 566-3800 OR (877) 777-4778
RESOURCES FOR ILLINOIS TAX RETURNS ILLINOIS STATE REVENUE OFFICE HTTP://WWW.REVENUE.STATE.IL.US/INDIVIDUALS/INDEX.HTM (217) 782-3336 CHICAGO OFFICE: JAMES R. THOMPSON CENTER CONCOURSE LEVEL 100 WEST RANDOLPH STREET CHICAGO, ILLINOIS 60601-3274 (800) 732-8866 HOURS: 8:30 A.M. TO 5:00 P.M.
RESOURCES FOR UNIVERSITY PAYROLL QUESTIONS
PAYROLL
(HTTP://WWW.NORTHWESTERN.EDU/MYHR/)
MYHRHELP@NORTHWESTERN.EDU
(847) 491-7362 OR (312) 503-9700CONTACT US
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