Tax Return Related
Xiang Yin 03/12/2008
Disclaimer
• I'm not a professional tax person, not am I a paid tax preparer. Any information in my talk is for general information only and does not represent personal tax advice either express or implied. I do not guarantee the information contained in the talk is 100% correct. You are encouraged to seek professional tax advice for personal income tax questions and assistance. If you see errors in the talk, please let me know and I appreciate your help.
Tax System
• U.S. Tax System
– Federal tax + state tax + local tax – Employer “withholding”
• Based on forms you fill out (W-4, 8233)
– Individual “reporting” at end of year
• 2007 Deadlines
– Federal tax: April 15, 2008
June 16, 2008 (if not subject to U.S. income tax withholding)
– Virginia state tax: May 1, 2008
Forms From Univ.
• W-2
– lists wage income and tax taken for federal, state, and local governments (if applicable)
• 1042S
– lists non-service scholarship and treaty income
• 1098T
– lists school tuition paid, cannot be used as deduction by tax non-residents
Other Forms
• 1099-INT
– Form which reports earned interest – Bank sends to you if over $10
• 1099-DIV
– Form which reports earned dividends – Financial institution sends to you
• 1099-MISC
– Reports honoraria or contractor income
Official Sites
• Federal Tax: http://www.irs.gov
– Publication 519, U.S. Tax Guide for Aliens http://www.irs.gov/pub/irs-pdf/p519.pdf
• State Tax: http://www.tax.virginia.gov/
Remember
• Rule No 1: Do it timely and don’t cheat!!!
– Otherwise, you could
• • • • Lose overpaid tax money Be subject to fines Risk your future green card application Risk your legal immigration status
• Everyone should copy and keep files for 7 years or until you become a permanent resident (if applicable)
Federal Tax Return
Resident or Non-Resident
• Usually better benefits if you can file as R
– – – – – – (+) More deductions (+) File jointly (+) Usually China-US treaty still apply (+) Claim dependents (-) Pay SS/Med tax (-) Pay tax on bank interest and dividend
•
AOS, Permanent Resident: R
•
F visa holders (F-1 and F-2 including OPT)
– – NR for the first 5 calendar years including partial year R if you came here before 01/01/2003 and remained in F visa
• •
J visa holders (J-1 and J-2)
– NR for the first 2 years
Other visa holders
– Check Pub 519, substantial presence test
Resident or Non-Resident
• • • • For all the following situations, check Pub 519 for details NR spouse treated as R
– If your LG/LP is R, file jointly as R
If you were R at the end of last year, file as R for the whole last year
– You only have this choice if you are married and file jointly with your spouse as R
First year choice
– – If you can be treated as R at the time of filing the tax forms, you can make this choice and be treated as R for last year To take the first year choice, one must be R for at least 31 days last year
•
F1 to H1B
– Substantial presence test
•
Dual Status
– For single
Tax Treaty
• China-US Treaty
– Publication 901
• 20(b): Non-Service Scholarship Exempt • 20(c): $5000, Earned Income Exempt
•
For F1 students from China
– Not related with his/her filing status – Continue to benefit even if become R for tax purpose when studying
• F1 for 5 years • AOS, Green card • Treated as R as NR spouse
– Cannot benefit from tax treaty if you switch to F1 within US
•
Chinese citizens from other country or region cannot benefit from China-US tax treaty
– Can benefit tax treaty between US and the country you are from
Common Questions for NR
• Two NRs can't file jointly
• NR can't claim any dependents
• NR can't claim deduction on tuitions (1098T) • NR doesn't pay tax on bank interest • NR doesn’t pay SS/Med tax • From 2005, NR can claim child tax credit for children born in US, use form 1040NR and form 8901 • File W-7 with tax return to apply ITIN if you don’t have SSN
Social Security / Medicare Tax
• Non-residents and full time students do not need to pay SS/Med tax • If already been withheld for SS/Med tax
– Ask payroll / human resource office to refund – File form 843 after IRS has processed your NR tax return
Non F1 visa holders
• J1 from China
– Exempt income tax for 3 years (36 months) – No SS/Med tax for the first two calendar years
• H1 visiting scholars from China
– Exempt income tax for 3 years (36 months)
• Check Pub 519, 901, 520 etc.
Forms for NR
• Form 1040NR
– – U.S. Nonresident Income Tax Return http://www.irs.gov/pub/irs-pdf/f1040nr.pdf Instructions for 1040NR http://www.irs.gov/pub/irs-pdf/i1040nr.pdf
•
Form 1040NR-EZ (1040NR easy version)
– – U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents http://www.irs.gov/pub/irs-pdf/f1040nre.pdf 1040NR-EZ Instruction http://www.irs.gov/pub/irs-pdf/i1040nre.pdf
•
Form 8843
– – Statement for Exempt Individuals and Individuals with a Medical Condition Must be completed by all F and J students, scholars, and dependents who are non-residents for tax purpose
• • •
Form W-7 (No use if you have SSN)
– Application for Individual Taxpayer Identification Number
Preparation Software: CINTAX, etc. Filing method: paper (no e-file)
– Attach W-2 and 1042-S with paper filing
Forms for R
• Form 1040
–
–
–
U.S. Individual Income Tax Return http://www.irs.gov/pub/irs-pdf/f1040.pdf 1040 Instruction http://www.irs.gov/pub/irs-pdf/i1040gi.pdf 1040 Tax Table http://www.irs.gov/pub/irs-pdf/i1040tt.pdf
•
Also forms 1040EZ, 1040A, etc.
•
Form 8833
– – Claim Treaty Benefits through 1040 http://www.irs.gov/pub/irs-pdf/f8833.pdf
•
Preparation software: TurboTax, TaxCut, etc.
•
Filing method: paper or e-file
– Attach W-2 and 1042-S with paper filing
Example
• F1 within 5 years • Not married or married with NR • File as NR • Tax exemption
– Scholarship/fellowship, income code 15, article 20(b) – Wages up to $5000, income code 19, article 20(c)
• if you didn't get $5000 or more salary last year, change the amount to what you got
Where to File
• Sign and Date • Attach copies of W-2, 1042-S • Mail to:
– Internal Revenue Service Center Austin, TX 73301-0215
State Tax Return
• Filing Status
– Resident – Part-Year Resident – Non-resident
• Filing Method
– Paper filing – i-file – e-file
Form for Resident
• Form 760
– Individual Tax Filing Form http://www.tax.virginia.gov/taxforms/Individual/Income%20Tax/2007/760.pdf – 760 Instructions http://www.tax.virginia.gov/taxforms/Individual/Income%20Tax/2007/760Instr.pdf – Tax Rate Table http://www.tax.virginia.gov/web_pdfs/taxtable.pdf
•
Schedule ADJ
– Virginia Schedule ADJ http://www.tax.virginia.gov/taxforms/Individual/Income%20Tax/2007/Schedule%2 0ADJ.pdf
• For couples:
– If you file federal tax jointly, you are usually required to file state tax jointly – If you file federal tax separately, generally you cannot file state tax jointly
• Standard deduction vs. itemized deduction
– Must use the deduction type for your federal tax return
• Low income credit
– Attach Schedule ADJ
Where to File
• Sign and Date • Attach copies of W-2, 1042-S • Mail to:
– Charlottesville City - 540 P.O. Box 9031 Charlottesville, VA 22906
Extension and Correction
• Extension
– For federal:
• use form 4868 for 6 months extension http://www.irs.gov/pub/irs-pdf/f4868.pdf
– For VA: automatically 6 months – Must pay estimated tax first
• Correction
– For federal:
• Amended U.S. Individual Income Tax Return http://www.irs.gov/pub/irs-pdf/f1040x.pdf
– For VA:
• Just use form 760