Us individual income tax
At Dartmouth the International office is working to make tax filing easy for international students, scholars and faculty. This International office does not provide any information about individuals specific tax benefits.
U.S Income tax system
It is important to define some basic concepts and terms associated with U.S Tax system as it is confusing and complicated. Employer is required to calculate U.S income tax at a graduated level based on the amount he receives through his employment. 30% Tax is levied on prizes, awards and all other payments and 14% tax is levied on nonqualified scholarships and fellowships of F and J visa holders at the time of payment of tax.
To calculate the liability for the year you need to combine all the income received from all the sources in that year. This whole process requires the preparation of federal Income tax return. Once this is prepared and if you find that you have many income taxes withheld than the actual amount you earned in that year then you can apply for refund. Incase you observe too little income tax with held that year you need to pay additional income tax due.
Requirements for Tax filing in U.S
Non Resident F and J visa holders need to submit a statement to substantial nonresident status with internal Revenue Service which includes J-2 and F-2 spouse and children or must file an annual tax return.
Non Resident Aliens whose income is less than the personal exemption need not file tax return. They must file a return to claim refund tax if there is any tax levied on them. Form 8843 must be filed by nonresident students and scholars who are filing a tax return. It is a statement of exempt individuals. The purpose of this document is to verify the tax statement of non resident aliens.
Form 8843 need to be submitted by non resident students and scholars, F-2 and J-2 spouses and children though they need not file any return.
Resident Aliens, Non resident Aliens and Dual mode Aliens
Resident aliens are taxed same as the U.S citizens where as nonresident aliens are taxed as per the special rules in the U.S tax code. There is a special case Dual mode Aliens who are both Resident aliens and non resident aliens i.e. they are Resident aliens for some period and non resident aliens for the remaining part of the year. In this case they will be taxed as per their mode in that particular part of the year.
All Aliens are basically divided into three categories based on immigration law. Tax residency laws are based on immigration law. The three categories of immigration law are immigrants, non immigrants and illegal aliens. If you meet Green Card test or substantial presence test for the calendar year you are considered as a resident alien for taxing purpose.
Conditions to meet Green Card Test and considered as a resident alien you must fulfill the following:
31 days during the current year
183 days in three years which include the current year and two years before that year which counts the following days:
a.) all the days you were present in the current year, and
b.) 1/3 of the days you were present in the first year before the current year, and
c.) 1/6 of the days present the second year before the current year.
Students:
A student is an individual, who substantially compiles requirements of F, J, Q or M visa. They are temporary residents of U.S.A and their immediate residents like spouses or unmarried children below 21who reside with students are considered as students for this purpose. Students are exempt from substantial test for 5 years.
Non Resident Tax Rules
Non resident Tax rules are much different than tax rules of U.S citizens or residents.
The foremost general rule is that they need to pay the tax for their U.S source income only. They need not consider any income that is not from U.S source. They are exempt from interest.
Interests received from deposits held in banking business need not report any non resident tax return. In U.S.A all unmarried non resident status must use single filing status. Similarly all the married non residents must file married filing status although spouse is not present in U.S.A.
There are two types of deductions in U.S.A namely Standard Deduction and itemized deduction. Itemized deduction is exception for students from India, nonresident aliens can not take the standard deduction.
Social Security Number and Individual Tax Payer Identification Number (ITIN)
The Internal Revenue Service requires taxpayer identification number is incorporated on all tax returns, statements and other tax related documents. Non Residents and J-1 visa holders are eligible to apply for SSN number based on immigration policy.F-1 and J-1 status is eligible for applying SSN number if they have received an Employment Authorization document. F-1 and F-2 students who are not working on or off campus are not eligible to apply for SSN number. They need to apply for ITIN number To apply for an ITIN, an individual need to file IRS Form W-7, Application for IRS Individual Taxpayer Identification Number. An original, completed tax return (s).An ITIN is needed tot be attached to the W-7. Otherwise the applicant is not qualified for an exception. W-7 must be filed with original or certified proof of identity documents.
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