Year End
FAQs | 1040NR EZ & 1040NR | Form 8843 | VA 760 & 763 | W-2 | 1042-S | W-7 | Residents for Tax Purposes
NOTE: Step-by-Step directions for completing the 2008 1040NR EZ and the Form 8843 are now available.
A nonresident alien is subject to U.S. and State tax on U.S. source income. Many types of U.S. source income received by a foreign person are subject to a U.S. tax. A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. The tax is generally withheld (NRA withholding) from the payment made to the foreign person.
Nonresident aliens, and resident aliens for tax purposes, are required to file both state and federal tax returns on US source income. This income includes employment income (personal compensation income) and non-qualified scholarship income (the amount of a scholarship above the cost of tuition, books and health insurance.)
Nonresident aliens, only, must also file a Form 8843 with the IRS. This form is required of all NRAs in the US, even those who do not have to file a tax return.
The Office of International Taxation, Payroll and International Education Office are neither qualified nor permitted to give individual tax advice. Please consult the IRS website, State of Virginia's Department of Taxation website, a tax preparation service, or a professional tax accountant or tax attorney who is knowledgeable about nonresident tax law. Basic contact information can be found on the IRS Websites and Phone Numbers List and the Virginia Tax Websites and Phone Numbers List.
FAQ
- Why do I have to file a federal tax return? I'm not a US citizen.
Anyone who receives US-source income is required by law to file a federal tax return.
- Why do I have to file a state tax return? I'm not a US citizen.
Anyone who receives US-source income while living in the US must file a tax return for the state in which they reside when the income was received.
- I'm a nonresident alien (NRA). I have no income at all. Do I file a tax return?
You need to file a Form 8843 with the IRS. This is the only form you need to file if you earned no income (no wages and/or no nonqualified scholarship) or only earned bank interest.
- I'm a new student for the Spring semester but I arrived in the US in December. Do I have to file a tax return?
Yes. If you are in F-1 or J-1 status, or a F-2 or J-2 dependent, and you were in the US for any part of 2008, even if it was for a few days, or a few hours of one day, you will need to file a tax form. If you had no income in December, you will only need to file Form 8843.
- How do I know if I can complete the shorter 1040NR EZ or the longer 1040NR?
Your best bet is to consult the direction booklets for each form. However, most international students will complete the 1040NR EZ because they only have wages and/or nonqualified scholarship/fellowships, do not have dependents, are not being claimed as a dependent on another person's tax return, their taxable income was less than $100,000.00 and the only itemized deductions they can claim are for state and local taxes.
- I was a visiting scholar who was paid an honorarium. Do I have to file a tax return?
Yes, you must also file a US tax return. The federal form is the 1040NR (not the 1040NR EZ). If you are at another US institution on a visa, you may or may not have to complete a Form 8843. You would file Form 760 or 763 with the Virginia tax department.
- I'm stuck and I can't figure out what I'm supposed to fill out on my tax returns. Can you help me?
I'm sorry, but the Office of International Taxation, Payroll nor the International Education Office are neither qualified nor permitted to give individual tax advice. You can look over the Step-by-Step document for advice on how to complete the 104-NR EZ. Otherwise, your best bet is to contact either the IRS or the VA Department of Taxation to receive correct answers to your questions.
- My friend who is an international student got a W-2 and a 1042-S. I worked too, but I only got a 1042-S. Why?
Depending on the type of income you had, you will receive different forms. A W-2 lists employment income (the IRS calls it compensation) that is not tax treaty exempt.. A 1042-S lists employment income that is tax treaty exempt and nonqualified scholarship money that is taxed or tax treaty exempt. So, if your employment income is tax treaty exempt and your friend's is taxable employment income, you will see that each of you will have the information reported in a different way.
- What tax forms do I have to fill out?
There is more detailed information below on each tax form. However, NRA (nonresident alien) students usually fill out Form 1040NR EZ, attaching Form 8843. The two most often filed VA tax returns are Form 760 or Form 763.
- You mentioned nonresident alien (NRA) tax returns above, but I'm a resident alien for tax purposes (RA). What tax form do I fill out?
Resident Aliens for tax purposes complete the same tax form as US citizens -- Form 1040 EZ or Form 1040 (depending on the deductions taken.)
- Do Resident Aliens for Tax Purposes complete the Form 8843?
No. This is a form only completed by visa holders who are exempt from counting the days they are in the US.
- I don't know if I am an NRA or an RA. Can you help?
Contact the OIT to find out.
- What is a tax year in the US?
The fiscal tax year in the US is January 1 - December 31.
- What are the due dates for filing my tax return?
The federal tax return must be postmarked by April 15th and the Virginia tax return must be postmarked by May 1st.
- When will I receive my W-2 and/or 1042-S?
The W-2 must be mailed by law by January 31st of the new year. For example, the W-2 listing 2008 income will be mailed by January 31, 2009. The 1042-S must be mailed by March 15th of the new year. However, the 1042-S will be mailed by January 31st; same as the W-2.
- I didn't receive my W-2 and/or 1042-S. How can I get a copy?
The Payroll department can print a new W-2 for you. The Office of International Taxation can print a new 1042-S for you. Please know that address changes in Banner are not reported to OIT, so if you have graduated or left UR, the address that will be used is your home country address, unless you contacted OIT directly to update your address.
- What do I do with all the copies of my W-2 and or 1042-S that I received?
Staple one copy of each W-2 and/or 1042-S to your federal tax return and one of each to your Virginia tax return. Retain the rest for your records.
- I ran out of copies of my W-2 and/or 1042-S. Can I submit a photocopy?
Yes. As long as the copy is completely legible, you may submit a photocopy along with your tax return(s).
- How can I find out if there is a tax treaty between my country and the US?
You can consult IRS Publication 901 or review individual tax treaties A-Z on the IRS website.
- I received a tax treaty. Do I have to file a federal tax return?
Yes. You must still file a tax return. This is because NRA students in the US on an "F,""J,""M," or "Q" visa are considered engaged in a trade or business in the United States. NRAs must file a tax return if they have income that is subject to tax, such as wages, tips, scholarship and fellowship grants, even if a tax treaty reduces the withholding to 0%.
- I received a tax treaty. Do I have to file a Virginia tax return?
Yes. You must still file a tax return. Virginia recognizes tax treaties, so you will not owe any tax. However, you must report the tax exempt income.
- I have to list my treaty article on my tax return. Where can I find out this information.
You can contact the OIT, or you can look up the treaty article in IRS Publication 901.
- I've moved back to my home country and I am no longer living in the US. Do I need to file tax returns since I'm no longer living in the US?
Yes. If you have US income in a particular year, you need to file tax returns, even if you have moved out of the country and do not plan to return to the US in the near future. You will have to file with the federal goverment (probably a Form 1040NR EZ and also Form 8843) and with Virginia (Form 760PY).
- I worked over the summer for a company in a different state than Virginia, what do I do?
You must file a tax return for each state that you lived in during that particular tax year. You will not be taxed by one state for the income earned in another state, however, you must report your full income earned during the year. Each state will give you credit on your tax return for taxes paid in the other state(s).
- What happens if I do not file a federal tax return with the IRS?
UR's International Tax and Payroll departments report all types of income earned by nonresidents to the IRS annually. The IRS will be aware of who files, and who does not. At the least, nonresident individuals who do not file appropriately are liable for penalties and fees (which accrue interest.) If you do not file a tax return, you may not be able to obtain another US visa at a later date. Also, if you plan at some time in the future to apply for permanent residency in the US (i.e. a green card), it will count against you if you were not responsible in filing your tax returns. With all things being computerized now, and more so in the future, Customs and Immigration Services will be able to access IRS information to learn if a person filed tax returns appropriately.
- What happens if I do not file a Virginia tax return?
Virginia receives a file from the IRS that tells them which VA residents filed federal tax returns. If a VA resident filed a federal tax return, VA expects that individual to file a VA tax return, even if taxes are not owed.
- I don't have an SSN (social security number) or an ITIN (individual tax payer identification number)? Do I still have to file?
Yes. You still have to file a tax return. If you had non-employment income only, attach to your federal tax return an application for an ITIN -- a Form W-7. This form is found on the IRS website or by contacting the Office of International Taxation. If you had employment income, you really should have gotten your SSN. You will still need to submit the tax forms, just without an SSN.
- I've been working, and getting paid, but I didn't get my SSN before the end of the year. What do I do?
Even if you don't have an SSN, you must still file your tax returns as required. Not having an SSN does not exempt you from filing tax returns.
You really should have applied for an SSN as soon as you started working on campus. However, if you haven't gotten your number, do so as quickly as you can. In about May of each year, the IRS will send a letter to the Office of International Taxation asking why some of the previous year's income information was sent to the IRS without an SSN or ITIN. The answer back to the IRS will be that the individual was asked on several occasions to obtain an SSN or ITIN, but declined to do so. This information remains on file with the IRS and can count against you in future visa applications or the green card process. So, it is important to follow through on this step as quickly as possible.
- I didn't file a tax return last year and should have done so, what do I do?
You can go to the IRS and VA tax websites and obtain blank tax returns for previous tax years. Complete the forms and mail them as instructed in the directions to each form. If you owe money, you may have to pay a penalty and/or fine. If you are owed a refund, it will be mailed to you. As stated above, you may affect your future ability to obtain visas or permanent residency in the US if you do not file. As the saying goes, better late than never. And, penalties and fines never stop accruing interest. If you do not file for a number of years, you will find that if you owe money the penalties and interest may be quite high.
- I did not work and I do not have a nonqualified scholarship. I didn't receive a W-2 or a1042-S. I guess I don't have to do anything. Is that correct?
If you are an NRA, you must still submit a Form 8843 to the address listed in the form's directions. If you are an RA, you do not need to submit any forms.
- I didn't work, but I did receive a non-qualified scholarship. On the 1042-S, it shows that I paid federal tax (charged on my student account as ITAX.) Do I have to file a Virginia tax return?
Yes. You need to file a VA tax return, even if the 1042-S does not show taxes paid to VA. (Don't forget you also need to file a federal tax return.)
- I earned money this year, but my W-2 does not show that I paid any or only very little in taxes (federal and state.) Why is that?
Taxes are calculated on each individual paycheck. If each paycheck was a small amount, then no, or very little, taxes would have been withheld. However, when the total amount earned for the year is added up, taxes may be owed on the total.
- I didn't make a copy of my tax return before I sent it to the IRS or the Virginia Department of Taxation. Can you get a copy for me?
No, I'm sorry, I can do that. Your tax information is private. You may be able to get a copy from the IRS or VA Department of Taxation. The other option is to obtain copies of your W-2 and/or 1042-S and try to recreate what you submitted.
Remember to make a copy of anything you submit, and keep it on file with your important documents. The IRS recommends that copies of tax returns be kept for at least 3 years. However, copies of tax returns should be kept indefinitely if you think you might be applying to switch to another visa status or for permanent residency.
- Where do I mail my tax returns and my Form 8843?
The directions to the forms will have the mailing address(es) that you need. If you go to the IRS website or the VA Tax website, there will be a pdf file of instructions for your specific tax form. The pdf file will have the address listed. Importantly, if you have completed an IRS tax return, attach the 8843 to the tax return and mail both together to the IRS tax return address.
- What is the personal exemption amount?
For 2008, it was $3500. For 2009, it is $3650. (It is adjusted each year for inflation.) This is a specific deduction that is available to all taxpayers including nonresidents. This amount is not subject to income tax. The deduction is taken on one's tax return. Basically, it means that the first $3500 earned (in 2008) is not taxable.
- I have no income at all. Do I file a tax return?
You need to file a Form 8843 with the IRS. This is the only form you need to file if you earned no income (no wages and/or no nonqualified scholarship) or only earned bank interest.
1040NR EZ and 1040NR
Receipt of a W-2 and/or a 1042-S both require that the nonresident alien file an income tax statement (1040NR or 1040NR EZ.) A resident alien should file a 1040 or 1040 EZ.
To Explain:
- Step-by-Step directions for the 2008 1040NR EZ are available.
- Nonresident aliens must file an annual income tax statement with the IRS using either Form 1040-NR or Form 1040-NR EZ.
- Form 1040-NR is a long form and is usually not used by nonresident alien students to file their income tax statement.
- Form 1040-NR is used by those who have received honorarium payments (i.e. self-employment income).
- Form 1040-NR EZ is a short form and is usually sufficient to be used by nonresident alien students to file their income tax statement.
- Must have no passive income (dividends, royalties, etc.)
- No additional personal exemptions
- Instructions are available for both the 1040-NR and the 1040-NR EZ. The mailing addresses for each form are listed in the instruction booklets.
- The US Government under Internal Revenue Code Sec. 1441 requires that all universities and colleges withhold federal taxes from the income of non-resident alien students. Two possible sources of income for students are:
- Scholarship or grant money received in excess of tuition, books and fees (i.e. health insurance.) This is taxed at 14%.
- On campus student employment earnings are subject to tax at the standard graduated tax rates. This is the single rate with NRA written on Line #6 of the W-2. The attached document from Windstar Technologies has further details on how the tax is calculated.
- Nonresident alien students who are temporarily present in the United States on an "F,""J,""M," or "Q" visa, are considered engaged in a trade or business in the United States. NRAs must file Form 1040-NR (or Form 1040-NR EZ) if they have income that is subject to tax, such as wages, tips, scholarship and fellowship grants, etc.
- If an NRA does not owe tax because of a tax treaty, he must still file a 1040-NR or 1040-NR EZ.
- Treaty articles are found in Table 2 in IRS Publication 901.
- An NRA must file an income tax return if he wants to claim a refund of overwithheld or overpaid tax.
- The IRS requires that a nonresident alien filing a tax return must have an ITIN or a Social Security number.
- The IRS requires that you file your 1040-NR or 1040-NR EZ by April 15th.
- The information on where to mail Form 1040-NR EZ and Form 1040-NR can be found in the instruction booklet that accompanies the form.
- An individual who wishes to claim a treaty benefit who did not claim an exemption from withholding (i.e. does not have a Form 1042-S) should submit with his return the same kind of information that he would have submitted to claim the exemption from tax under the treaty. He should attach the certification statement that would have been attached to Form 8233 since this statement certifies to his facts that support the treaty claim. (For a copy of the statement, see the Appendix to the IRS Publication 519.)
- A Resident Alien for tax purposes must file a Form 1040 (the same form used by US citizens.)
- If treaty income is reported on a 1042-S with exemption code 4, then there is no need to report the income on Form 1040. However, if the individual expects to be in an immigration proceeding in which the immigration service will ask for tax returns, then he should file the return. (Record the income on the appropriate line and take the treaty exempt amount out as a negative on the Other Income Line noting the Exempt Income [country and article].) The immigration service personnel will understand tax returns that were filed.
- Treaty exempt wages reported on a W-2 and taxable scholarship income reported on a 1042-S must be reported on a 1040 (as well as taxable wages.)
- Dependents must have SSNs or ITINs in order to be claimed as dependents on a tax return.
- Failure to comply with IRS regulations can produce serious consequences. Even if no taxes are owed, it is required by law to comply with filing procedures.
- Penalties range from additional costs plus interest for any tax not paid to incarceration if convicted of tax fraud or evasion. One's visa status, and ability to re-enter the US at a future date, may also be put at risk.
- F-1 visa holders who apply for a change to H1-B status can be asked by US Citizenship and Immigration Service (CIS) to submit copies of previous years' income tax forms as part of their H1-B application.
- Applicants for permanent residency (green card) status can be asked to show tax forms filed for previous years.
- A person who appears at a US consulate abroad for consular processing of a permanent residency visa application may be asked to produce US income tax forms from their previous years in the US.
- Hints on filing your 1040-NR or 1040-NR EZ:
- Always make a copy of your completed form before mailing it to the IRS
- Always write your social security number or ITIN number on anything you send to the IRS
- Sign and date your tax forms
- Staple all attachments to your tax form, including your W-2 or 1042-s, so that nothing is separated from your tax return.
- If you receive any inquiries from the IRS after filing your tax return, be sure to respond to the IRS by the stated deadline. If you can not meet the deadline, be sure to send a letter to the IRS stating what is delaying your response. This will prevent extra penalty actions from being taken for not responding at all.
- One may contact the IRS with general questions or specific questions related to completing a tax form.
8843
Nonresident international students and scholars must file Form 8843 (Statement for Exempt Individuals and Individuals with a Medical Condition) to report their presence in the United States. There is no monetary penalty for failure to file Form 8843. However, in order to be compliant with federal regulations one must file Form 8843.
To Explain:
- Step-by-Step directions are available for completed the Form 8843 (page down past the information on the 1040NR EZ.)
- Form 8843 is an information return which nonimmigrants who are "exempt individuals" are required to file annually to support their noncountable US days for purposes of the 183-day residency formula determinations (SPT.) Exempt individuals include F and J students in their first 5 calendar years in the US and J nonstudents in 2 of the current 7 years in F, J, M, or Q status.
- It is the individual's responsibility to complete and submit this form. It should be attached to the back of the Form 1040NR or 1040NR-EZ tax return, or, if they have not tax return filing obligation, it should be signed and submitted to the IRS by June 15th.
- The Office of International Taxation can make Form 8843 available to those who request it; however this form is not a requirement of employers and payers.
- Form 8843 must be completed and submitted to the IRS by all nonresident aliens who are exempt from counting days in the US whether income was earned or not. The obligation to submit a Form 8843 is not related to the fact that the individual received a qualified scholarship or had a tax treaty benefit.
- Students on F-1 and J-1 visas must submit it during each of the first 5 calendars years in US. (i.e. until the visa holder becomes a resident alien for tax purposes.)
- Dependents must also each file Form 8233
- The form must be submitted even if the visa holder does not have an SSN or ITIN. (Leave that line blank.)
- If the visa holder received interest income from a U.S. bank account and has no other U.S. source income in 2007, Form 8843 may still be used. (U.S. bank interest received by nonresidents is considered foreign source of income.)
- J-1 Non-Students must submit it during each the first 2 calendar years in US. (i.e. until the visa holder becomes a resident alien for tax purposes.)
- Dependents must also each file Form 8233
- The form must be submitted even if the visa holder does not have an SSN or ITIN. (Leave that line blank.)
- If the visa holder received interest income from a U.S. bank account and has no other U.S. source income in 2006, Form 8843 may still be used. (U.S. bank interest received by nonresidents is considered foreign source of income.)
- If a non resident alien submits a 1040-NR or 1040-NR EZ, a Form 8843 must also be submitted. Staple Form 8843 to the tax return and mail to the tax return address.
- If the visa holder does not have to file an income tax return, send Form 8843 to the Internal Revenue Service Center indicated in the Form 8843 instructions. The form must be submitted by the due date for filing an income tax return.
VA 760 and VA 763
The Commonwealth of Virginia law requires that virtually all residents must file an income tax return.
To Explain:
- The Payroll Office at UR will send to you by January 31st, a W-2 listing taxable income for the previous year.
- The Office of International Taxation will send to you, by January 31st, a 1042-S listing non-employment income (i.e. scholarship/fellowship grants) and tax exempt income (both employment and scholarship.)
- Non-qualified scholarship (listed as income code #15; exempt code #0 on the 1042-S) needs to be reported on a VA tax return, as well as the federal tax return.
- Qualified scholarship (listed as income code #15, exempt code #2) does not need to be reported on a VA tax return.
- Tax exempt employment income (listed as income code #19, exemption code #4) or tax exempt non-qualified scholarship (listed as income code #15, exemption code #4) needs to be reported on the VA tax return.
- It is important to note that if a student has only tax treaty exempt employment income and/or tax treaty exempt non-qualified scholarship (i.e. the student did not pay and does not owe any tax) the student must still file a VA tax return as well as a federal tax return. The VA Department of Taxation examines all the federal tax returns of all VA residents (including international students.) If the department discovers that a student filed a federal tax return but not a state tax return, the student could be charged large fines for what the department interprets as tax owed by the student to the state. This can be a mess to fix.
- Complete the federal 1040NR-EZ before completing the appropriate VA tax return. You will need to use your W-2 and/or your 1042-S to determine tax information to file on the VA income tax return (as you did with the federal tax return.)
- Which form to file?
- Residents of Virginia must file a Form 760. (A person is considered a resident if they have been living in VA for more than 183 days in a calendar year.) An instruction booklet, with return mailing address is also available.
- Nonresidents of Virginia must file a Form 763. (A person is considered a nonresident of Virginia if they lived in VA for less than 183 days in a calendar year.) An instruction booklet with return mailing address is also available.
- Part-Year Residents of Virginia file a Form 760PY. (A person is considered a part-year resident of Virginia if they lived in VA for less than 183 days AND did not return once they left. For example: An NRA student who graduated from UR in May and left the country and did not return in the fall.) An instruction booklet with return mailing address is also available.
- The due date for the Virginia income tax return is May 1. If the due date falls on a Saturday, Sunday or legal holiday, the return must be filed by the next business day. The United States Postal Service postmark is used to verify the date the return is mailed.
- Maintain tax records for at least three years from the due date of the return or the date the return was filed, whichever is later. If the Internal Revenue Service requires you to keep your federal records for a longer period, keep your state records for the same period of time.
- One may contact the Virginia Department of Taxation with general questions or specific questions related to completing a tax form.
W-2
If a payment to a nonresident alien consists of taxable employee compensation payments, the same rules applicable to employee compensations payments made to US citizens will also apply -- that is, the wages are subject to graduated tax withholding and the withholding agent must report the payments made and the tax withheld on Form W-2.
To Explain:
- Form W-2 is filed by the withholding agent (University of Richmond) with the IRS on an annual basis. It summarizes the income paid and tax withheld.
- Form W-2 is the form each taxable employee receives annually from UR's Payroll Office to report income received.
- The W-2 will be mailed by the Payroll Office by January 31st.
- Reports all compensation payments made to nonresident alien employees that are subject to graduated tax withholding. This can include:
- employee compensation
- teacher / researcher compensation
- student / trainee compensation
- If an individual claims an income tax treaty exemption for compensation that has a maximum dollar limit and his annual earnings exceed that limit, tax will begin to be withheld on the amount over the treaty limit. The amount taxed at a graduated tax withholding rate will be reported on a W-2 (not 1042-S.)
- If an individual does not have a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) the income is taxable and is reported on a W-2.
- Based on a person's type of income, he may receive both a 1042-S and a W-2.
- Click here for an explanation of W-2 codes.
- Click here for a sample W-2.
1042-S
With an exception for employee compensation payments subject to graduated tax withholding, all other payments made to nonresident aliens that are subject to reports, regardless of whether taxable or tax exempt, are required to be reported on Forms 1042 and 1042-S.
To Explain:
- The Office of International Taxation will generate Form 1042-S for each individual NRA who will be required to report withholding.
- Non-employment compensation payments made to an NRA regardless of whether the payment is subject to tax withholding or exempt from tax.
- Employment compensation payments made to an NRA for which an exemption from tax withholding is claimed based on an income tax treaty.
- Amounts reported on Form 1042-S are amounts paid to NRAs that are subject to withholding, even if no amount is deducted and withheld from the payment because of a treaty or Code exception to taxation. This includes:
- Royalties
- Compensation for independent personal services performed in the US
- Cancellation of indebtedness
- Non-qualified scholarship or fellowship income (housing, board, travel or stipends)
- Amounts that are exempt from tax under section 117 of the Internal Revenue Tax Code, and are not subject to reporting, include Qualified Scholarship money used by an NRA to pay for tuition, fees, (including health insurance), books, supplies, and equipment required for courses.
- Form 1042-S lists:
- Type of income paid (NOTE: If there is more than one type of income, there will be separate income lines listing each type, amount and income code.)
- Total amount of income paid
- Applicable tax rate OR reason for tax exemption
- Total amount of income tax withheld, if any
- Country of tax residence
- Form 1042-S has several copies:
- Form 1042-S, copy A, is filed by the withholding agent (University of Richmond) with the IRS on an annual basis.
- Form 1042-S, copies B, C and D, are distributed by UR to individual NRAs to report income received.
- Form 1042-S, copy E, is kept on file at UR for a minimum of 3 years.
- Forms 1042 and 1042-S will be filed with the IRS by March 15th of the following year, AND individual Forms 1042-S will be furnished to NRAs, through the mail, by January 31st.
- If an individual claims an income tax treaty exemption for compensation that has a maximum dollar limit and his annual earnings exceed that limit, tax will begin to be withheld on the amount over the treaty limit. The amount taxed at a graduated tax withholding rate will be reported on a W-2 (not 1042-S.)
- Based on person's type of income, he may receive both a 1042-S and a W-2. (A W-2 lists employment income not exempt by tax treaty.)
- Click here for an explanation of the 1042-S codes.
- Click here for a sample 1042-S.
W-7
A nonresident alien must obtain an Individual Taxpayer Identification Number (ITIN) if he/she is not otherwise eligible to receive a Social Security number but is required to file a US tax return to claim a refund.
To Explain:
- An ITIN is an identifying number for individuals who are unable to obtain a social security number because they are not authorized to work in the US.
- The IRS assigns ITINs, not the Social Security Administration.
- An alien individual will need to file Form W-7 to apply for an ITIN.
- Without a tax reason, the IRS will not issue a number -- i.e. it can't be used to obtain a credit card or cell phone.
- An ITIN is used for federal tax purposes only; it cannot be used for work.
- An ITIN will not be issued if an individual is otherwise eligible to receive a SSN
- An ITIN digit configuration is 9##-##-####. (It always starts with the number 9.)
- If a nonresident alien later becomes eligible to receive a Social Security number, the ITIN must be relinquished.
- Treaty benefits on noncompensatory payments can not be allowed without an ITIN (or an SSN). IRS tax rules require recipients claiming exemption from withholding on US-source income under an income tax treaty to submit to the payer prior to payment a withholding certificate that includes a TIN. Two categories of treaty exempt income require such a withholding certificate:
- FDAP Income -- Rents, royalties, certain interest, gains, gambling income, prizes and awards.
- W-8BEN required
- W-9 with treaty annotation for resident aliens for tax purposes
- No US tax return filing is required if this is the payee's only US source income AND when the proper amount of tax is withheld.
- Exception: Passive income now provides generally that individuals claiming tax treaty benefits for an exemption from, or reduced rate of, withholding on passive income may submit evidence on the Form W-7 application that they are entitled to claim treaty benefits.
- ECI Income -- Effectively connected to a US trade or business -- i.e. income from personal services, employment, self-employment, scholarships and fellowships paid to or on behalf of recipients in F, J, M, or Q immigration status
- Form 8233 required for income from personal services
- W-8BEN required for scholarship and fellowship income
- W-9 with treaty annotation for resident aliens for tax purposes
- US tax return filing is required
- Exception: Other Income now provides that an individual claiming tax treaty benefits for an exemption from tax on income from non-compensatory scholarship and fellowship grants may submit evidence of the treaty exemption. Evidence includes
- Copy of Form W-8BEN submitted to withholding agent
- Letter or official notification from educational institution awarding the scholarship or fellowship grant.
- Exception: The instructions indicate that recipients of treaty-exempt honorarium payments submit with their Form W-7:
- A copy of the completed withholding agent's portion of Form 8233
- A letter form an authorized school official at the institution making the honorarium payment
- A letter requesting the recipient's presence for a speaking engagement
- Evidence on the Form W-7 application displaying the name of the educational institution
- Exception: Recipients of US-source taxable scholarship and fellowship grants of nonresident aliens are subject to withholding at either a 14% or 30% rate. Evidence required to be submitted includes:
- A letter from the DSO or RO, on official letterhead, stating that they are receiving income from scholarship or fellowship grants subject to tax withholding and information reporting requirements
- A letter or official notification from the educational institution awarding the scholarship or fellowship grant
- Evidence on the Form W-7 application displaying the name of the educational institution
- Notes: F, J, M and Q recipients who are not employed are not required to first apply for an SSN. However, they must submit a letter from their DSO or RO stating that they will not be securing employment in the US or receiving any type of income form personal services.
- An individual may apply for an ITIN with the submission for their tax return. The return and Form W-7 and documents go to the ITIN unit.
- As of January 1, 2007, the ITIN unit will be issuing pre-tax return ITINS for taxable grants.
- The IRS ITIN unit will not process pre-tax return ITIN applications for taxable travel grants.
- ITIN Offices:
- Program Office (PO): Located in Georgia -- Assists taxpayers and acceptance agents with questions relating to the AA program and ITIN policy issues
- Forms Processing Office: Located at the IRS Service Center in Austin, TX -- Assists with questions regarding the status of an ITIN.
- When submitting a W-7 application for self-employment (honorarium) income, a letter must be included stating what work the individual did. The IRS needs to have an exception evidence substantiating document.
- Once an individual receives a social security number, the ITIN must be surrendered to the IRS. The notice the ITIN holder receives with the ITIN number states what to do if an SSN is received. The individual should make a copy of the ITIN notice and the SSN card and send it to the ITIN unit at the address specified on the ITIN notice. (NOTE: Form 8233 will have to be refilled.)
- In Order to Proceed:
- Visit the Office of International Taxation at UR to gather together your forms and fill out the W-7 application and Form 8233 (Exemption from Withholding on Compensation for Independent Services of a Nonresident Alien Individual.)
- Required Forms:
- Completed W-7 application
- Completed Form 8233
- Passport
- I-94 with Customs & Boarder Protection entry stamp
- I-20 (for F-1 visa holders)
- DS-2019 (for J-1 visa holders)
- Letter from Office of International Taxation certifying above documents
- The W-7 Acceptance Agent certification letter will be mailed to the IRS by the Office of International Taxation.
- After an ITIN number has been give to you by the IRS, please bring the letter from the IRS to the Office of International Taxation so that the number can be properly recorded and a tax treaty can be granted.
Residents for Tax Purposes
NOTE: For further details on how one becomes a Resident for Tax Purposes (RA), please see the RA/LPR section of this website.
Foriegn nationals who are immigrants (i.e. green card holders) or who are substantially present under the 183-day residency formula are resident aliens (RA) and may submit their tax return using the same rules as US citizens.
To Explain:
- You must determine if you were a RA for the full calendar year. The tax return you file depends on your tax residency status on December 31st of the year for which you are filing. Please contact OIT for your residency start and change dates.
- If you were a resident for the full calendar year, you may submit Form 1040 or Form 1040 EZ using the same rules as a US citizen.
- If your residency change date occured in the tax year for which you are filing, you will have to file a "Dual-Status" return. Please see IRS Publication 519 for further information.
- An RA is subject to US income tax on worldwide income (like a US citizen.)
- An RA with a taxable (non-qualified) scholarship or fellowship grant should record the amount on the Form 1040 EZ on the line for "wages, salaries, tips, etc." indicating SCH (for scholarship) on the dotted line.
- A schedule (breakdown) listing the calculation of the taxable portion of the scholarship should be attached to the tax returns. OIT can help with creating this schedule.
- An RA with a scholarship should also request a 1098-T from the Bursar's Office. The 1098-T lists qualified scholarship amounts to be used by US citizens and RAs in support of the Hope and Lifetime Learning Credits. The tuition tax credits may help to reduce down the amount owed in taxes on the scholarship. Include the 1098-T as part of the tax return.
- RAs with treaty-exempt grants or personal service income (wages) must follow the instructions in IRS Publication 519 for such claims.
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