Transcript Foreign Nationals 2014

Tax Info for Foreign Nationals
February 24, 2014
Prepared by:
Kiran Samran
Manager of Tax Services
1715 Canal Street (Mondo Building)
Merced, CA 95340
Agenda
Tax Updates
Residency for tax purposes
GLACIER
Income and Withholding at U.C. Merced
Tax Reporting
Resources
Tax Update
 Delayed filing (Beginning Jan. 31)
– American Opportunity Credit (up to $2,500)
– Lifetime Learning Credit (up to $2,000)
Taxing Authorities to Know
• Federal Government = Internal Revenue
Service (IRS)
– Income Tax
– Employment Tax
• State Government = Franchise Tax Board
(FTB)
– Income Tax
– Employment Tax
Residency
There are 3 types of Residency
1. Residency for Immigration purposes
2. Residency for Tuition purposes
3. Residency for Tax purposes
Determining Residency for Tax Purposes
 The IRS determines residency status with 2
tests:
1. Green Card Test
2. Substantial Presence Test
The Green Card Test
 You are a resident for tax purposes if you are a Lawful
Permanent Resident of the U.S. at any time during the
year.
 You are a Lawful Permanent Resident if:
 You have been given the privilege of residing permanently in the
U.S., according to immigration laws
 You generally would have this status if you were issued an alien
registration card (Form I-551) a.k.a. a “green card”.
 Your residency start date is the first day on which you are
a Lawful Permanent Resident.
 You would also have the option of choosing to be treated as a
resident alien for the entire year.
The Substantial Presence Test
Method used by the IRS to count the physical presence in
the U.S. each year for all non-immigrants.
 You must be physically present in the U.S. on at least
– 31 days during the current year, and
– 183 days during the 3 year period that includes the current year and
the 2 years before that.
– How to calculate days for residency:
 Current year – 100% of days present
 First preceding year – 1/3 of days present
 Second preceding year – 1/6 of days present
The Substantial Presence Test
Exemptions from the Substantial Presence Test:
(days are not yet counted toward residency)
 F1/J1 Visas (Student)
 The first 5 years of U.S. presence are exempt from counting
toward residency for tax purposes
 You will be considered a non-resident alien during these 5 years
 This is a one-time lifetime exemption.
 J1 Visas (Exchange Visitors)
 Any 2 years of presence (not counting the current year) within a
6 year look back period are exempt from counting toward
residency for tax purposes
F1 or J1 Students
Excluding 2013, list each year you have been in
the U.S. If the total number of years is less than 5
years, you are a non-resident for tax purposes.
Years Present in the U.S.
2010 – present 90 days
2011 – present 90 days
2012 – present 365 days
2013 – present 365 days
Total number of years present = 4 (Non-resident for tax purposes)
J1 Scholars
(non-student category)
For each year below, indicate days present in the U.S. If you were
exempt for 2 of the 6 preceding years, then you will no longer be
exempt from counting days toward your residency.
In this example:
 The J1 Scholar was exempt in
2 of the 6 preceding years and
therefore would no longer be
exempt
 The current year would then
be counted toward their
residency
 They meet the substantial
presence test (31 days in the
current year and at least 183
days from the last 3 years)
Years
Days Present in the U.S.
2008
30 days (you were exempt this year)
2009
2010
2011
2012
30 days (you were exempt this year)
2013
183 days (you are no longer exempt)
Total
3rd year in U.S. (resident for tax purposes)
All Other Visa Holders
(H1, O1, TN, RF, etc.)
Since there is no exemption rule, the Substantial Presence Test
is applied immediately upon arrival to the U.S.
•
You must be physically present in the U.S. on at least
– 31 days during the current year, and
– 183 days during the 3 year period that includes the current year and the 2 years
before that.
Year
Days Present
in the U.S.
%
Days counted
2nd year
before the
current year
2011
120
0.167
(only 1/6 counts
this year)
20
1st year
before the
current year
2012
120
0.333
(only 1/3 counts
this year)
40
Current year
2013
120
1.000
(all of it counts
this year)
120
Total
180 (non-resident for 2013)
If the number of days counted is less than 183, you are a non-resident for tax purposes.
What is GLACIER?
A non-resident alien tax compliance
software system that resides on a secure
server and is accessible via the Internet
Maintains data entered by foreign national
Used to determine tax residency and
tax withholding rates
Manages paper forms
Creates a Tax Summary report with all the
required information for tax compliance
What is GLACIER Required for?
A completed GLACIER record is required
prior to disbursement of payment to a
foreign national for:
Taxable Fellowship/Scholarship awards
Wages for employment
Wages for guest lecturer
Royalties
Other payments not exempted by IRS
Code
Where to Submit
GLACIER Paperwork
 UCLA is the office of record for payments issued by
U.C. Merced
 GLACIER is administered by UCLA Payroll Services
– UCLA Payroll Services
10920 Wilshire Blvd, Suite 620
Los Angeles, CA 90025
Fax: (310) 794-8751
GLACIER Lead Administrator:
Mike Sattin [email protected] (310) 267-5774
GLACIER – Employee Tax Treaties:
Heather Kira-Hoeke [email protected] (310) 794-8707
UC Merced GLACIER Process
1.
2.
3.
4.
5.
6.
The dept. requests a GLACIER record be set up by UCLA
Payroll Services
Once the record is set up, you will receive an e-mail from
[email protected] with instructions to access
GLACIER. This e-mail is not SPAM. Please look for it in
your e-mail.
Access GLACIER and complete your record
Print the forms as indicated on the Tax Summary
Send the forms to UCLA Payroll Services (see slide #13)
As changes occur, update your GLACIER record, print the
updated forms, and send to UCLA Payroll Services.
Sample GLACIER email
Dear Student,
The Internal Revenue Service (IRS), the U.S. government tax authority, requires Regents - University of California, Los Angeles (UCLA) to collect
information from all non-U.S. citizens and non-permanent resident aliens to determine the appropriate rate of tax withholding and reporting for any
payments that may be made to such individuals.
You have received this email because you may receive payments from Regents - University of California, Los Angeles (UCLA). For your convenience,
Regents - University of California, Los Angeles (UCLA) allows you to provide the required information and complete the necessary forms via the Internet
from any web-accessed computer using the GLACIER Online Tax Compliance System. The information and forms must be provided prior to any payment
so that the correct tax withholding and reporting decisions are made; failure to do so may result in the maximum rate of tax withholding and/or delayed
payment. Information provided to GLACIER is transmitted and stored securely and will only be used by Regents - University of California, Los Angeles
(UCLA) for purposes of tax withholding and reporting.
You must access GLACIER and provide the requested information within 10 days of receiving this message. If you do not provide the requested
information within 10 days, the maximum amount of U.S. tax will be withheld from any payments made to you.
To login to GLACIER, follow the steps below:
Click on the following web link: http://www.online-tax.net ; if the link does not automatically open, simply open your Internet Browser (preferably Internet
Explorer) and enter the website address http://www.online-tax.net.
Click on the GLACIER logo to enter the website.
At the login screen, enter your temporary access information from below; you will be required to select a new UserID and Password at the time of first
access to GLACIER.
UserID: XXXXXXXX
Password: XXXXXXXX
If you have any questions or need additional information about why you have been asked to use GLACIER, please contact me.
Thank you and have a great day.
Regents - University of California, Los Angeles (UCLA)
GLACIER Tax Summary Report
All information entered into GLACIER is
summarized on this report and will
automatically determine:
 Residency for Tax purposes
 Tax Treaty Eligibility
 FICA Eligibility
 Required Forms and Documents.
Sample Tax Summary Report
Federal Tax Reporting for
Fellowship Income
Non-residents with fellowship income may
have part of their income reported to the IRS
on Form 1042-S.
The portion of the fellowship that was applied
toward educational expenses (fees, tuition,
etc.) will not be reported on Form 1042-S.
Wages Received
Income paid as wages can be treated in 1 of
3 ways:
Excludable
– i.e. Employer paid benefits
Exempt due to treaty
– Must submit forms to UCLA Payroll Services
and qualify for treaty
Taxable
Employment Taxes
All employees must contribute to FICA unless
exempted by law
2 exemptions possible at UC Merced
F1/J1 – must be a nonresident for tax purposes
and working to further the purpose for which the
visa was issued.
Student – must be enrolled in a half-time course
load
Federal Income Tax
 Exemption to Federal Taxes by tax treaty
– An agreement between the U.S. and another country which
reduces or exempts the individual from tax withholding.
− To be eligible:
− A tax treaty must exist between the U.S. and your resident country
− You must be a nonresident of the U.S.
− Primary purpose of visit and job must meet the requirements listed in
the tax treaty
− such as professor or researcher pay, or amounts received for
studies by a foreign student
− Time and dollar constraints of the tax treaty must be met
− You must have a taxpayer ID# (Social Security # or ITIN)
− Must complete appropriate paperwork (GLACIER documentation)
NOTE: California does not conform to Federal tax treaty laws
State Income Tax
 Income earned while living and working in
California is subject to withholding
 Income earned outside of California may also be
subject to withholding if the employee is a
resident of California
 State Income Tax Withholding is based on
information from the DE-4 withholding form (for
employees)
– http://www.ucop.edu/financial-accounting/_files/ucw4de4.pdf
Year End Tax Forms
W-2
Wage and Tax Statement
1042-S
Foreign Person’s U.S. Source Income Subject to Withholding
1098-T
Tuition Statement
1099-MISC
Miscellaneous Income
1099-INT
Interest Income
592-B
California Nonresident Withholding Tax Statement
Understanding your W-2
2013
Who Must File?
In the U.S., it is the individual’s
responsibility to know what taxes must be
filed with the government
Everyone who receives compensation
while living in California may be required
to file a California Income Tax Return
2013 Federal Filing Requirements
(under age 65)
If your filing status is…
File if your gross income
was at least…
Single
$10,000
Head of Household
$12,850
Qualifying Widow(er)
$16,100
Married Filing Jointly
$20,000
Married Filing Separately
$3,900
2013 California Filing Requirements
(under age 65)
If your filing status is…
File if your gross
income was at
least…
(if you had no
dependents)
(if you had 1
dependent)
(if you had 2 or
more dependents)
Single
$15,702
$26,569
$34,719
Head of Household
$15,702
$26,569
$34,719
N/A
$26,569
$34,719
Married Filing Jointly/RDP
$31,406
$42,273
$50,423
Married Filing Separately
$31,406
$42,273
$50,423
More than your
standard deduction
More than your
standard deduction
More than your
standard deduction
Qualifying Widow(er)
Dependent of another
person
What tax forms do I need to file?
Federal:
 Form 8843 – Statement for Exempt Individuals
(Mandatory for all nonresidents)
 Possibly Form 1040NR or 1040NR-EZ
California:
 Possibly Form 540NR
When and Where to File?
The last day to file your income tax return is April 15th.
• Individual Federal Return must be mailed to:
Type of Return
Refund or No-Pay
Payment with Return
1040NR, 1040NR-EZ
Department of Treasury
Internal Revenue Service
Austin, TX 73301-0215
Internal Revenue Service
PO Box 1303
Charlotte, NC 28201-1303
• Individual State (California) Return must be mailed to:
Type of
Return
Refund or No-Pay
Return
Payment with Return Other
Correspondence
540NR,
540NREZ
Franchise Tax Board
PO Box 942840
Sacramento, CA
94240-0001
Franchise Tax Board
PO Box 942867
Sacramento, CA
94267-0001
Franchise Tax Board
PO Box 942840
Sacramento, CA
94240-0040
Useful IRS Publications
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Pub 515 Withholding of Tax on Nonresident Aliens
Pub 519 U.S. Tax Guide to Aliens
Pub 901 U.S. Tax Treaties
Pub 970 Tax Benefits for Education
Useful Resources
Telephone Numbers:
Internal Revenue Service (IRS)
Franchise Tax Board (FTB)
Employment Development Dept. (EDD)
Social Security Administration (SSA)
(800) 829-1040
(800) 852-5711
(800) 795-0193
(888) 632-7069
Websites:
Internal Revenue Service (IRS) http://www.irs.gov/
Franchise Tax Board (FTB) http://www.ftb.ca.gov/
Campus Resources
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Tax Services [email protected] (209) 228-4075
Student Business Services [email protected] (209) 228-4114
Graduate Division [email protected] (209) 228-4622
Financial Aid [email protected] (209) 228-4243
Human Resources [email protected] (209) 228-8586
Accounting Services [email protected]
Contracts and Grants Accounting [email protected] (209) 222-8043
International Affairs Office [email protected] (209) 228-4722
Payroll Services [email protected] (209) 228-2729
Comments or Suggestions
Please submit your comments and/or
suggestions to:
[email protected]