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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. - PowerPoint PPT Presentation
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Tax Info for Foreign NationalsTax Info for Foreign NationalsFebruary 24, 2014February 24, 2014
Prepared by:Prepared by:
Kiran SamranKiran Samran
Manager of Tax ServicesManager of Tax Services
1715 Canal Street (Mondo Building)1715 Canal Street (Mondo Building)
Merced, CA 95340Merced, CA 95340
AgendaAgendaTax UpdatesResidency for tax purposesGLACIERIncome and Withholding at U.C. MercedTax ReportingResources
Tax UpdateTax Update
Delayed filing (Beginning Jan. 31)– American Opportunity Credit (up to $2,500)– Lifetime Learning Credit (up to $2,000)
Taxing Authorities to KnowTaxing Authorities to Know
• Federal Government = Internal Revenue Service (IRS)– Income Tax– Employment Tax
• State Government = Franchise Tax Board (FTB)– Income Tax– Employment Tax
ResidencyResidencyThere are 3 types of Residency
1. Residency for Immigration purposes2. Residency for Tuition purposes3. Residency for Tax purposes
Determining Residency for Tax Purposes The IRS determines residency status with 2
tests:1. Green Card Test2. Substantial Presence Test
The Green Card TestThe 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 TestThe 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 TestThe 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 StudentsF1 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 J1 Scholars (non-student category)(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.
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)
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)
All Other Visa HoldersAll Other Visa Holders(H1, O1, TN, RF, etc.)(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?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 nationalUsed to determine tax residency and
tax withholding ratesManages paper forms
Creates a Tax Summary report with all the required information for tax compliance
What is GLACIER Required for?What is GLACIER Required for?
A completed GLACIER record is required prior to disbursement of payment to a foreign national for:Taxable Fellowship/Scholarship awardsWages for employmentWages for guest lecturerRoyaltiesOther payments not exempted by IRS Code
Where to Submit Where to Submit GLACIER PaperworkGLACIER Paperwork
UCLA is the office of record for payments issued by U.C. Merced
GLACIER is administered by UCLA Payroll Services– UCLA Payroll Services10920 Wilshire Blvd, Suite 620Los Angeles, CA 90025Fax: (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 UC Merced GLACIER Process
1. The dept. requests a GLACIER record be set up by UCLA Payroll Services
2. 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.
3. Access GLACIER and complete your record4. Print the forms as indicated on the Tax Summary5. Send the forms to UCLA Payroll Services (see slide #13)6. As changes occur, update your GLACIER record, print the
updated forms, and send to UCLA Payroll Services.
Sample GLACIER emailSample GLACIER emailDear 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 ReportGLACIER Tax Summary Report
All information entered into GLACIER is summarized on this report and will automatically determine:Residency for Tax purposesTax Treaty EligibilityFICA EligibilityRequired Forms and Documents.
Sample Tax Summary ReportSample Tax Summary Report
Federal Tax Reporting for Federal Tax Reporting for Fellowship IncomeFellowship 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 ReceivedWages 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 TaxesEmployment Taxes
All employees must contribute to FICA unless exempted by law
2 exemptions possible at UC MercedF1/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 TaxFederal 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 TaxState 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/ucw4-
de4.pdf
Year End Tax FormsYear 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-2Understanding your W-2
2013
Who Must File?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 Requirements2013 Federal Filing Requirements(under age 65)(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 Requirements2013 California Filing Requirements(under age 65)(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
Qualifying Widow(er) 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
Dependent of another person
More than your standard deduction
More than your standard deduction
More than your standard deduction
What tax forms do I need to file?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?When and Where to File?The last day to file your income tax return is April 15th.
•Individual Federal Return must be mailed to:
•Individual State (California) Return must be mailed to:
Type of Return
Refund or No-Pay Return
Payment with Return Other Correspondence
540NR, 540NR-EZ
Franchise Tax BoardPO Box 942840Sacramento, CA94240-0001
Franchise Tax BoardPO Box 942867Sacramento, CA94267-0001
Franchise Tax BoardPO Box 942840Sacramento, CA94240-0040
Type of Return Refund or No-Pay Payment with Return
1040NR, 1040NR-EZ Department of TreasuryInternal Revenue ServiceAustin, TX 73301-0215
Internal Revenue ServicePO Box 1303Charlotte, NC 28201-1303
Useful IRS PublicationsUseful IRS Publications
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 ResourcesUseful Resources
Telephone Numbers:
Internal Revenue Service (IRS) (800) 829-1040
Franchise Tax Board (FTB) (800) 852-5711
Employment Development Dept. (EDD) (800) 795-0193
Social Security Administration (SSA) (888) 632-7069
Websites:
Internal Revenue Service (IRS) http://www.irs.gov/
Franchise Tax Board (FTB) http://www.ftb.ca.gov/
Campus ResourcesCampus Resources
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 SuggestionsComments or Suggestions
Please submit your comments and/or suggestions to: