International Students - Income Tax Information
While you are attending Pomona College, you are subject to two taxing authorities. The first is the Internal Revenue Service (IRS), the taxing department of the United States government. The second is the California Franchise Tax Board (FTB), the California state taxing authority. It is essential that international students studying in the United States comply with the taxing regulations that apply to their status.
Failure to pay required income tax when due can subject you to additional fines and interest imposed by the IRS and can potentially impact future travel to the US and immigration benefits including work visas and green cards.
Complying with U.S. tax laws is complicated. To assist you in completing and filing these forms, the college purchases and provides you access to Sprintax, a software program for the preparation of non-resident tax returns for both the federal and state income taxes. When using Sprintax, there is no charge for the completion of the documents required for your federal filing obligation. There is a charge for the completion of the California documents. Watch for an email in February to get your login.
The following is provided to help you to better understand the U.S. tax system
Are you a Resident or Non-Resident for taxes?
U.S. tax-payers are divided into 2 categories –
- Residents for taxes
- Non-residents for taxes
(Please note that this terminology does not relate to your immigration status.)
Residents for taxes are U.S. citizens and Lawful Permanent Residents (green card holders). Most non-immigrants in the U.S. on work visas - H-1’s, L-1’s, TN’s, etc. are also residents for taxes by application of the Substantial Presence Test. Why is this important? Residents for taxes pay U.S. taxes on their world-wide income.
F-1 International students are allowed to claim exemption from applying the Substantial Presence Test for 5 years and thereby are classified as non-residents for taxes. See additional notes below concerning the 5-years calculation. To claim this exemption for each of those 5 years, every F-1 student is required to complete and file the IRS Form 8843, Statement for Exempt Individuals. Please note that this is an information document. It is not actually a tax return.
Additional Notes Relating to Five-Year Calculation
- The 5 years are cumulative. If you have previously studied in the U.S. on an F-1 visa to attend high school or other short-term program, that time is added to your current F-1 time.
- Any number of days you are in the U.S. in F-1 status during a year is considered to be the whole year. For example, if your first arrival as an F-1 is August, then that is year #1 of your 5 years.
Taxable Income
If you have received any income from U.S. sources while studying in the U.S., that income could be subject to both federal and state income tax. What is considered to be taxable income? Following are some of the common types of taxable income.
- Financial Aid – Any Pomona College Financial Aid that exceeds the cost of tuition and fees and other required classroom expenses – books, lab fee, etc. - is taxable income. Information on this income is reported to you on a 1042-S form which will be sent to you by U.S. mail, usually in February. Watch for it in your campus PO Box.
- On – Campus Employment - If you have an on-campus job and receive a paycheck, that is taxable income. This income is reported on a W-2 form which you will access through Workday after January 30th of each year
- Funding or Stipend from CDO - If you receive funding or a stipend from the Career Development Office while participating in an unpaid internship to assist you with travel, housing and/or food expenses, that is taxable income. This income is also reported on a 1042-S and may be combined with scholarship income if you have both.
- Pay From an Employer While on an Internship - If you are authorized for an internship under CPT and receive payment from your employer, that is taxable income. If you were actually placed on a payroll and taxes were withheld, this income will be reported on a W-2. If you were paid a stipend or a lump sum from which there was no withholding, this will be reported on either a 1099-MISC or a 1042- S from that employer.
- Other Taxable Income – Other types of taxable income are royalties, honorariums, financial prizes from competitions, etc. For this type of income, sometimes the payer has withheld taxes, sometimes not. The payer might provide you a reporting form, a 1099-Misc or not. Regardless of whether or not you receive a reporting form, you are still required to report the income on your tax return and pay any resulting taxes.
Preparation of the Tax Returns
Assuming you are a non-resident for taxes, it is strongly recommended that you use the Sprintax software to prepare your tax documents. There are other complicated aspects of non-resident tax calculations that are not discussed here including factoring in possible tax treaties between your country and the United States, determining if you are eligible for a refund of Social Security tax withheld in error, preparing other state tax returns if you worked outside of California while on an internship, etc. The Sprintax software provides for these additional calculations or returns.
Filing Your Tax Returns
Whether you use Sprintax or prepare your tax return yourself, please note that the documents have to mailed to the relevant tax offices. There is no functionality for electronic filing of non-resident tax returns. The due date for filing is April 15 for income received during the previous calendar year. Occasionally the date is extended by holiday observances.
Beware of scams!
Please note that the Internal Revenue Service will NEVER call you about your taxes. All communication with the IRS is by mail. Never give out any information about yourself to any caller who claims to be from IRS and who asks you for personal information or threatens you in any way. Just hang up! If you do receive any inquires in the mail and have any question as to whether the inquiry is legitimate, feel free to bring the papers to the International Office for further analysis
Final Steps – Keeping Records
Be sure to retain copies/records of your tax returns. Information from previous year returns is helpful in preparing returns is succeeding years. In addition, it is highly probably that when applying for future immigration benefits that you will have to prove that you have complied with all the tax laws of the US while you were studying. This includes retaining records of having filed the 8843 for those years when you had no income from US sources while studying.