Taxes, Taxes, Everyone Pays
Taxes!!!
by Jon Cleary
This is the truth; everyone pays taxes including
International Students.
Since this is a fact of life that each of you
will have to deal with I wanted to share a few bites
of information and a pound of advice.
While you are here in the U.S. as a student
participating in the Curriculum Practical Training
(CPT) Program you need to know what your tax
responsibilities are.
There are a number of taxes that are normally
withheld from an employees pay in the United States.
A few of the most common are;
1.
U.S. Federal Income Taxes; this is a progressive tax
and the percentage withheld progressively increase
as an employee makes more money. The tax ranges from
10% to 35%. These rates are subject to change each
year as subscribed by Congress. Federal taxes are
affected by different treaties that are in place
between the U.S. and different countries. Some
countries that currently enjoy benefits from such
treaties are China, Korea, Thailand, and the
Philippines. Be sure to mention this to your tax
preparer.
2.
State Income Taxes; These fluctuate greatly from one
state to another and range from 0% to 11%. This is
in addition to your Federal Income Tax and most
states base their calculations on those you provide
on your Federal Income Tax return.
3.
Social Security Tax (FICA); the current tax rate for
Social Security is 7.65% and will show up on your
pay stub as FICA.
As an International Student working in the United
States you are NOT required to pay this tax.
However, often employers are not aware of this.
Quite often once they are made aware they can
discontinue the withholding of FICA from you check
resulting in more money in your weekly check. Often
though due to a number of circumstances (i.e.
outsourcing of payroll or limitation of payroll
software) they are unable to not withhold it from
your check. Do not worry you will not lose this
money. Instead, at the end of the year you will
submit an application for refund to the Federal
Government.
4.
Medicare Tax; The current Medicare tax rate is
1.45%. This tax is collect so that when a U.S.
citizen reaches the age of 65 they will become
eligible for Government Health Care. Again, as an
International Student you are not required to pay
this tax since you will not be eligible to receive
benefits from the program. You will probably have to
submit an application for refund at the end of each
tax year that you work in the U.S., unless your
employer is able to discontinue collection at their
end.
5.
Local Taxes; certain states allow cities and
counties to impose additional taxes on income earned
in those cities or counties. This differs throughout
the United States but in very uncommon and will
apply to very few students but is something to keep
on eye on.
These are the primary taxes that you will be
responsible for paying via payroll deduction
throughout the year as you work.
Each year during the month of January employers are
required to provide the Federal Government, the IRS,
and the employee with a IRS Form W-2. This form
reports the total amount of wages paid and the
amounts of Federal, State, FICA and Medicare taxes
withheld from the employees pay.
This is the form that you will need to file you
State and Federal tax return. All students earning
income are required to file their State and Federal
tax returns each year prior to the April 15th
deadline.
You can complete and file you tax return yourself
for free or you can hire a tax professional to
complete them for you. I fully recommend that you
seek out a reputable tax professional. Due to the
complexity of the U.S. tax code the time necessary
to research and prepare your return is significant
and often results in not receiving the full amount
entitled to. Using a tax professional that is
familiar with the tax requirements of the
International Student community will result in you
receiving a full refund of all monies, including
Social Security and Medicare taxes, that you are
entitled to.
International student should be aware of those
documents that they are required to submit to the
Federal Government (IRS) each year.
Those forms will include the following:
This form is normally required by ALL INTERNATIONAL
STUDENT and must be submitted each year by the April
15th deadline.
This is the form used to request a tax refund.
First you are required to request a refund from your
employer. If your employer is unable to refund the
full amount you will need to submit IRS Form 843.
You will need to attach the following items to the
Form 843;
·
Copy of your W-2 to substantiate you FICA
and Medicare taxes withheld
·
Copy of the page from your passport showing the visa
stamp
·
INS Form I-94
·
If applicable INS Form I-538, Certification by
Designated School Official, and
o
Statement from employer indicating the amount of
reimbursement provided and the amount of the credit
or refund your employer claimed. If you are not able
to obtain this statement from your employer, you
must provide this information on your own and
explain why your are not attaching a statement from
your employer.
o
IRS Form 8316, if unable to obtain statement from
employer.
·
Mail Form 843 (with all attachments) to the IRS
office where your employer’s returns were filed. If
you do not know where your employer filed their
returns mail to: Internal Revenue Service Center,
11601 Roosevelt Blvd, DPE 351, Philadelphia, Pa
19255.
·
There is a three-year statute of limitations for
claiming tax refunds.
So,
let me wrap this article up with a few up beat
notes. While you are here in the United States the
opportunities are truly unlimited. You will benefit
not only from the education you receive but through
the access you will have to U.S. corporate
philosophies and cultural knowledge gain through
your participation within the local communities.
While taxes are confusing and complex they are not
overwhelming. You have a number of resources
available to assist you with your filing
requirement. Contact the Student Services
Representative at your College or University or the
HTIR representative for additional guidance or
assistance. They will be more than happy to help
you.