Student 2015 Income Tax Seminar: Student Tax seminar handouts
Foreign Students: Resident or Non-Resident Aliens for tax purposes
Submit form 8843 to the federal government each year: "Statement for Exempt Individuals and Individuals With a Medical Condition" must be submitted to the IRS each year (even if you received no income) if an individual is a nonresident alien for tax purposes and is present in the U.S. under F-1, F-2, J-1, or J-2 status. This is not an income tax return. Form 8843 is an informational statement required by the U.S. government for nonresident aliens holding certain visa types (including the spouses or dependents of nonresident aliens). For students, the focus of the statement is the number of days they were preset in the US and the days that are exempt from counting in the substantial presence test (see Part 1 question 4).
Students with jobs: At the time of receiving an hourly job offer (SWA form) or a graduate student contract, the student will have their work eligibility verified by the Budget and Analysis dept as part of the I-9 process.(See the section below on the I-9 form.) The next step for the student is to schedule a meeting with the Federal Compliance Mgr (who is also the NRA tax coordinator) to perform the substantial presence test, complete a W-4 form, and determine whether tax treaty benefits are allowed. Foreign students may be either a resident or a non-resident for tax purposes. This tax classification is determined by the number of years in the US, and affects your tax rate.
Exemption from certain taxes: All individuals who are non-resident aliens for tax purposes and hold a F-1, J-1, M-1 or Q-1 visa are exempt from paying social security tax (also called FICA tax) and Medicare tax on their wages when you are engaged in activities that are allowed under your visa. These taxes are over 7% of your wages. The exemption is defined in section 3121 (b) (19) of the tax law. Employers often are not aware of this section of the tax law, and you should provide them with this information during the hiring process. If your summer employer, your OPT employer, or Tech's payroll department withheld those taxes from your paycheck check in error you should contact them and ask for a refund. If they do not refund the taxes, you should apply to the IRS for a refund. Complete IRS forms 843 and 8316 for your refund request and mail them to the same address you mailed your income tax return. A step by step guide to the refund process is here:Step by step guide to request a refund
NRA Student Scholarships/Grants/Fellowships:The Federal Tax Compliance manager reviews grant and scholarship awards to foreign nationals to determine whether a portion is taxable as income. The IRS guidelines on qualified and unqualified education expenses are applied to the student's account. The recipient will be notified if they have a tax liablity, and tax treaty benefits to avoid taxation will be granted based on the student's country of tax residency and their eligibility. All income taxes owed are processed as a charge to the student's account.
Form I-9: Employment Eligibility Verification : I-9 ver Mar_2013
- New Mexico Tech will issue form I-9, Employment Eligibility Verification, to all graduate and undergraduate students with campus employment. They must have a completed form I-9 before their first day of work.
- The student worker shall review the form instructions and determine which document(s) they will present to prove identity and work eligibility :I-9_document_list.jpg
- Bring original versions of the document(s), the I-9 form with section 1 completed, and your signed work authorization (or grad student contract, or one time pay document) to the Budget and Analysis department in Brown Hall, Room 100. (Note that the payroll department is no longer issuing I-9's to students working on campus)
Application for a Social Security card: SS-5 form
- A social security card is required for all employees. The social security number on the card is used in the payroll and income tax filing processes.
- If you do not yet have a social security card, you may still start work, and you will receive paychecks. You will be issued a temporary number that is used in the payroll system until you receive a social security number.
- The federal government's Social Security Administration (SSA) issues the card after you present the original versions of your identity and work authorization documents, and a completed application. You may call them with questions: (800) 772-1213 Their nearest location is in Albuquerque: 4300 Cutler Ave NE Albuquerque, NM 87110
- Office hours and driving directions can be found on their web site: http://www.socialsecurityofficelocation.net/albuquerque-new-mexico-social-security-office-so897
Annual Income Tax Return preparation
- The Tech payroll system withholds income tax from your paychecks, per government regulations
- Once a year you complete a report called your 'tax return' that reconciles the tax that you owe to the amount that was withheld from your paychecks. These tax returns are required for the State of New Mexico and the US federal government (IRS). The due date is April 15th.
- A free tax return preparation service called Tax Help New Mexico will prepare any student's tax returns. See their web site for locations and operating hours:http://www.cnm.edu/depts/taxhelp
A student who is participating in a REU program (research experience for undergraduates) is given funding to cover tuition, living expenses, travel, and a personal stipend. The funds are posted to the student account, and the transaction is classified as a scholarship since no services are owed to the university. The tax obligation is the same as other scholarships: a) citizens and resident aliens for tax purposes receive a 1098-T form at year end and calculate the taxable amount on their tax return, b) non-resident aliens have 14% income tax withheld from the nonqualified portion of payment in their student account and receive a 1042-S form at year end.
More detail is provided in the restricted funds document named “Budgeting, Pricing and Charging Sponsored Agreements”.
1098T Compliance- Reporting Tuition Payments
The business office sends the 1098-T tax form to US and resident alien students at year end that documents the tuition and qualified fee payments, and the scholarships funds that were posted to the student account. The procedures are documented here: 1098-T Procedures