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Tax Responsibilities for International Students

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  1. Tax Responsibilities for International Students Office of International Affairs; International Student Services The School of the Art Institute of Chicago, March, 2009

  2. Who should file a tax return? • SAIC students in F-1 or J-1 visa status who were in the U.S. in 2008. • Whether you worked or not, you are required to file a tax return. • Spouses and children on F-2 or J-2 visas who were in the U.S. in 2008. • If you were not physically present in the United States during 2008, you have no tax filing requirement this year!

  3. Why file a tax return? • To maintain your F-1 / J-1 immigration status. • To comply with U.S. Internal Revenue Service (IRS) laws. • To get a refund! $$ • To support public libraries, parks, education, research, and anything else that the U.S. government funds.

  4. How do you file a tax return? • First, determine which forms you must complete for your personal situation. • Complete all forms yourself or with the help of online or professional assistance. • Mail forms and any required payment to the correct address. TIP! A list of resources and links is located at the end of this presentation.

  5. Remember… • Completing a tax return is YOUR responsibility. • This presentation is designed to help you get started and point you toward helpful forms, documents and resources that you should utilize when completing your tax return. • International Affairs staff are not qualified as tax experts and legally cannot advise you on your personal tax return.

  6. The first step is to determine if you are a RESIDENT or NON-RESIDENT for Tax Purposes. • The IRS determines your U.S. residency status for tax purposes, not immigration purposes. • Your residency for tax purposes will determine which tax forms you will complete.

  7. You are a NON-RESIDENT for Tax Purposes if… • You arrived in the U.S. in F or J status for the first time between 01/01/2005 – 12/31/2008.

  8. If you determine that you are a NON-RESIDENT for Tax Purposes… • You will complete the following forms: • IRS Form 8843 (all students) • IRS Form 1040NR – EZ or 1040NR* • IL Form 1040* • IL Schedule NR* *These forms are ONLY for those students who have worked and earned income.

  9. You are a RESIDENT for Tax Purposes if… • You are a U.S. citizen. • You are a U.S. Permanent Resident or “Green Card” holder. • You arrived in the U.S. as student anytime before 12/31/2004. > You may be a “resident” for tax purposes > You must take the Substantial Presence Test.

  10. Substantial Presence Test

  11. If you arrived in the U.S. before 12/31/2004, take out your passport. • Count the number of days that you were physically present in the U.S. during 2008, 2007 and 2006. • It may help to look at the arrival and departure dates stamped in your passport.

  12. Substantial Presence Test cont… • Use the number of days that you were present each year to complete the following math: • 2008 days present ____ x 1 = _____ • 2007 days present ____ x .333 = _____ • 2006 days present ____ x .166 = _____ • Add the totals together = _____* *If the final total is LESS that 183, you are a NON-RESIDENT FOR TAX PURPOSES. *If the final total is MORE that 183, you are a RESIDENT FOR TAX PURPOSES.

  13. If you determine that you are a RESIDENT for Tax Purposes • You will use the following forms to complete your tax return: • IRS Form 1040 or 1040EZ • Illinois Form 1040 • Residents for Tax Purposes should not continue with this presentation. The remainder of the presentation is for Non-Residents for Tax Purposes ONLY. • Residents for Tax Purposes may skip to Slide 44 for suggested tax preparation assistance and resources.

  14. Federal Forms

  15. OK, let’s start with IRS Form 8843 • This form establishes that you are a non-resident for immigration purposes. • Download the form and instructions at www.irs.gov • Should be completed by: • ALL F-1 and J-1 students who were present in the U.S. during 2008 (and their F-2 or J-2 dependents) regardless of whether or not they worked or earned income. TIP! If you worked and earned money in 2008, you may want to complete Form 8843 using the online programs to be discussed later such as CINTAX or International Student Taxes.

  16. IRS Form 8843 cont… • To complete Form 8843 you will need: • Your address in your home country. • Your address in Chicago. • Your Social Security Number (if you have one). • Your passport. • Your I-94 card.

  17. 8843 page 1 Enter your Social Security # or ITIN Enter your first name then your last (family) name Enter your address here in Chicago Enter your address in your HOME COUNTRY Enter F1, J1, B2, E2 etc. and the date you entered the US for the first time on that visa. If you changed status to F1/J1 while IN the US, enter your new visa status and the date of change. 4a. For each year, enter the number of days you were physically present in the U.S. (for all visa types). Do not count any days you were outside the U.S. You may want to refer to the stamps in your passport. Enter country of citizenship 3a. Enter the country that issued your passport. 3b. Enter your passport number 4b. Enter number of days you were in the U.S. for 2008. Answer should match number listed for 2008 in 4a. Skip Part II Enter information as shown, unless you attended a different school during 2008. If you attended two schools, list both schools’ information 11. Enter your Visa type for each year present in the U.S. For most students, this will be F-1. Check no Check yes or no If you checked yes on line 13, explain steps you have taken to apply for Permanent Residency

  18. 8843 page 2 Skip Part IV Skip Part V Sign and date here only if you are filing Form 8843 by itself

  19. Students who did not work in the U.S. in 2008 are done! If you did not work in 2008, print and sign your completed Form 8843 and send to: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If you are sending Form 8843 only, it is due on or before June 15, 2009! TIP! Don’t forget to make a copy of your form before sending!

  20. For students who worked and earned money in 2008: • In total, your tax return will include 4 forms. • The good news: you’ve already done one! • Remaining forms: One Federal government tax form and two Illinois state tax forms. Federal: IRS Form1040NR or 1040NR - EZ State: IL Form 1040 and Schedule NR • Due date for all 4 forms:April 15, 2009

  21. When completing the federal forms, you may need to refer to the following documents Form 1042-S Form W-2 These forms will be explained on the follow slides.

  22. Form 1042-S • Form 1042-S is an official report of taxable scholarships, awards or grants. • SAIC Merit Scholarships ARE NOT taxable and you will not receive a 1042-S for this type of scholarship. • Receipt of a 1042-S means that the award, scholarship or grant you received WAS taxable and must be reported on your federal tax return.

  23. Form W-2 • The W-2 is an official report of your earnings from a particular employer. • You will need a W-2 from each employer you had in 2008 when filling out your tax forms. • If you did not receive a W-2 from one or any employers, contact them for a “re-print” immediately.

  24. Did you work for SAIC or AIC in 2008? • W-2’s for SAIC and AIC employees were sent out on January 29, 2009. • If you worked for SAIC and/or AIC and did not receive your W-2, contact Mike Maurello at the AIC Payroll Office to request a reprint: mmaurello@saic.edu 312.499.4052

  25. Once you have gathered the necessary documents, you are ready to complete the next form • IRS Form 1040NR or 1040NR-EZ • “EZ” indicates a simplified version of the regular form for unmarried individuals with less complicated tax returns. • Use this form to calculate and claim your refund from the federal government (or calculate and pay what you owe). • This form can be particularly complicated and you may want to use special online or professional assistance.* *Most U.S. citizens pay to have their taxes completed online or by a professional.

  26. Options for completing IRS Form 1040NR or 1040NR-EZ that require payment • Online tax preparation software specific for international students. • International Student Taxes: http://www.istaxes.com/ • CINTAX: https://www.arcticintl.com/cintax.asp#demo • Professional tax preparation by a trained individual with experience in “non-resident returns”.

  27. Options for completing the 1040NR or 1040NR-EZ that do not require payment • Complete the form on your own. • You can download the form and instructions from www.irs.gov or see the end of this presentation for links. • Again, remember that International Affairs legally cannot assist you in completing this form.

  28. Where do I send the federal forms when I’m done? • Print your completed IRS Forms 8843, 1040NR, or 1040NR-EZ and mail to: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0125 Forms are due on or before April 15th, 2009! TIP! Don’t forget to sign and make copies of your forms before sending!

  29. State Forms

  30. Illinois State Tax forms • The final two forms! • IL-1040: to be completed by anyone who worked and earned money in Illinois. • Schedule NR: to be completed by nonresident aliens. • These forms cannot be completed online at CINTAX or International Student Taxes. • Download the forms and instructions at http://www.revenue.state.il.us or use the links at the end of this presentation.

  31. TIPS for completing IL- 1040 and Schedule NR • You will need information from the federal forms (8843 & 1040NR-EZ), so do those first. • You will start with IL-1040, switch to IL-Schedule NR, and then back to IL-1040. Follow the presentation slides.

  32. IL-1040 page 1 Enter your SPOUSE’S social security number (if needed) Enter YOUR social security number Enter YOUR name Enter your SPOUSE’S name (if needed) Enter your Chicago mailing address. LINE 1: Enter your “federal adjusted gross income”. This is located on line 10 of the IRS Form 1040NR – EZ. Enter the same filing status you listed on your federal return. LINE 4: Add lines 1 through 3. LINE 9: Enter the amount from line 4. Skip LINE 5 – LINE 8. LINE 12a: If you listed “1” enter $2,000 here. LINE 10a: Most students will enter “1”, but you should refer to the instructions first. LINE 10: Add lines a – d, most students will have a total of $2,000. LINE 11: Do not enter anything. LINE 12: Check “Nonresident” and then write the amount from line 46 of IL-Schedule NR. This amount can’t be zero. LINE 14: Enter the amount from LINE 52 of your IL-Schedule NR. This amount can’t be zero.

  33. Schedule NR page 1 Enter your Social Security Number. Enter your name as you wrote it on IL-1040. LINE 1: If you do not have a spouse, check “NO” and skip to Step 3. Skip 2a and 2b If you were living in any of these states during 2008, refer to the Schedule NR instructions on how to complete line 3 and 4. LINE 5 column B: Enter the amount of Illinois earnings from box 1 of your W-2 form(s). LINE 5 column A: Enter the amount from LINE 3 of your IRS From 1040 NR or 1040NR-EZ. Skip LINE 6 – LINE 19. LINE 20: Enter the amount from LINE 7 column B.

  34. Schedule NR page 2 LINE 21: Write the amount from LINE 20. Skip LINES 22 – LINE 36. LINE 37: Enter your “adjusted gross income” as indicated on line 10 of IRS Form 1040NR-EZ. LINE 38: Enter the amount from LINE 21. LINE 41: Enter the amount from LINE 38. LINE 45: Most students will enter “0” since they will not have any of the subtractions listed in line 42, 43 and 44. LINE 46: Enter the amount from LINE 41. LINES 47 - 52: Follow the calculation instructions and refer to IL-1040 as needed. You may need a calculator! When you get your total for line 52, return to page one of IL-1040 and write that amount in line 13.

  35. IL-1040 page 2 LINE 16: Enter the amount from IL-1040 page one LINE 15. Skip LINES 17 – LINE 19. LINE 21: Enter the amount from line 16. LINE 22: Enter the amount listed in box 17 of your W-2 form(s). LINE 24: Add lines 22 – 25 and enter the total. Most students will have an amount equal to line 22. LINE 27 and LINE 28: Compare the amounts listed on lines 21 and 26 and follow the instructions. If you have an “overpayment” in line 27, you might receive a refund! LINE 29-31: Refer to the IL-1040 Instructions to complete this section. LINE 32: If you have a “overpayment” in line 27, enter this amount in line 32 and 33. LINE 34: If you want your refund faster, complete this section for direct deposit. Read the IL-1040 instructions for help. LINE 36: If you have an “underpayment” in line 28, enter that amount here. This is the tax you owe. See the IL-1040 instructions for help on how to pay. Don’t forget to date and sign the form!

  36. Where do I send the state forms when I’m done? • Print your completed IL-1040 and IL-Schedule NR and send to: (If you have NOT enclosed a payment and expect a refund) Illinois Department of Revenue P.O. Box 1040 Galesburg, IL 61402-1040 (If you have enclosed a payment) Illinois Department of Revenue Springfield, IL 62726-0001 Forms are due on or before April 15th, 2009! TIP! Don’t forget to sign and make copies of your forms before sending!

  37. Congratulations! You’re done! • Again, don’t forget to sign and date your forms before sending. • Make copies of all forms for your personal records. • See the following resources and links for more information.

  38. Resources and Links

  39. Resources and Links Federal Government • Main website for the IRS: http://www.irs.gov/ • FORMS • IRS Form 8843: http://www.irs.gov/pub/irs-pdf/f8843.pdf • IRS Form 8843 instructions: • IRS Form 1040NR-EZ: http://www.irs.gov/pub/irs-pdf/f1040nre.pdf • IRS Form 1040NR-EZ instructions: http://www.irs.gov/pub/irs-pdf/i1040nre.pdf • IRS Form 1040NR: http://www.irs.gov/pub/irs-pdf/f1040ez.pdf • IRS Form 1040NR instructions: http://www.irs.gov/pub/irs-pdf/i1040ez.pdf

  40. Resources and Links cont.. Federal Government • Publications • IRS Publication 519 (Tax guide for aliens): http://www.irs.gov/pub/irs-pdf/p519.pdf • IRS Publication 901 (US Tax treaties guide): http://www.irs.gov/pub/irs-pdf/p901.pdf • IRS Publication 678FS (Advising Guide for Foreign Students & Scholars): http://www.irs.gov/pub/irs-pdf/p678fs.pdf

  41. Resources and Links cont… State Government • Main website for the Illinois Dept. of Revenue:http://www.revenue.state.il.us/ • FORMS • IL FORM 1040 -http://www.revenue.state.il.us/taxforms/Incm2008/Individual/IL-1040.pdf • IL Form 1040 instructions - http://www.revenue.state.il.us/taxforms/Incm2008/Individual/IL-1040-Inst.pdf • IL Schedule NR -http://www.revenue.state.il.us/taxforms/Incm2008/Individual/IL-1040-NR.pdf • IL Schedule NR instructions - http://www.revenue.state.il.us/taxforms/Incm2008/Individual/IL-1040-NR-Instr.pdf

  42. Resources and Links cont… Online Resources* • Online tax filing programs for federal forms. • International Student Taxes • $9.99 to file IRS Form 8843 & $19.99 to file IRS Form 1040NR-EZ • http://www.istaxes.com/ • CINTAX • $39.99 for individual access • https://www.arcticintl.com/cintax.asp#demo • University of Texas • Great university website with detailed explanations, FAQ’s and examples. • http://www.utexas.edu/international/taxes/index.html

  43. Resources and Links cont… Professional tax assistance* • Mary Fahey, CPA • 9933 Lawler Ave, Ste 525, Skokie, IL  60077 • Phone: 847-673-2330 • Tod Edwards • 1317 W. Taylor, Chicago, IL 60607 • Phone: 312-942—0850 • Email: iiitax@sbcglobal.net • IRS Chicago Office • http://www.irs.gov/localcontacts/article/0,,id=98273,00.html • Check the link for address and specific services provided. *Individuals and/or online resources listed are for reference only and does not indicate an endorsement by the International Affairs office.

  44. Resources and Links cont… Resources for RESIDENTS for Tax Purposes • Online Resources • IRS Free File • This website will help you locate the forms or find an online company to assist you with your return. • http://www.irs.gov/efile/article/0,,id=118986,00.html?portlet=6 • Volunteer Tax Assistance • Center for Economic Progress • Visit a number of sites around Chicago for free volunteer assistance on your tax return. • See the website for eligibility requirements and locations. • http://www.economicprogress.org/zipcode/index.php • Professional Tax Assistance • Certified Personal Accountants (CPA) • Hire a CPA to complete more complicated returns. • Two are listed on the previous slide and more can be found by doing an online search.