What You Should Know About Taxes
All summer work/travel participants must pay state, federal and local taxes (approximately 10-14%). However, you have the right and opportunity to complete forms obtained from the Internal Revenue Service (IRS) so that you can get most of the taxes refunded to you at the end of the tax (calendar) year that you worked. Taxes you will not have to pay:
- Social Security
- Federal Unemployment
After receiving your first paycheck, make sure the 3 above taxes have not been taken out of your paycheck. If you see any deductions under words “FICA”, “SS” or “Soc Sec”, or “Medicare” or “Med”, or “FUTA”, then the employer has made a mistake. You should speak to the employer about this since the law is different for J-1 students and the employer may be unaware that you are exempt from these three taxes. Go to www.irs.gov for IRS Publication 519 which tells about this exemption.
When you begin your job, the employer will ask you to complete a W-4 Form (Employee’s Withholding Allowance Certificate) to ensure that you are not over-taxed. If you do not fill out the W-4 properly, you may have to pay more tax in the future. The following instructions on filling out your W-4 Form are from the IRS Publication 515, ‘Withholding of Tax on Nonresident Aliens and Foreign Corporations.’
- Check only “single” marital status on Line 3 (even if you are married or divorced).
- Claim only one withholding allowance on Line 5
- Write”Nonresident Alien” or “NRA” on the dotted line on Line 6.
- Do not claim “Exempt” withholding status on Line 7.
Everyone who earns income in the USA is required to file a tax return after the end of the calendar year. Your tax return will reflect your earnings for the previous year, the amount of taxes you paid and the total amount of taxes owed or refunded. To file your taxes you will need your W-2 Form and Form 1040NR-EZ. At the beginning of the year following your summer work/travel program, your employer will send you a W-2 Form (required by law to mail it to you by February 15). Make sure you provide your employer with your correct address in your home country before you leave the USA so that they can mail the W-2 Form to you. After you receive your W-2 Form, complete a 1040NR-EZ tax form. You can obtain the 1040NR-EZ form (with instructions) at the US Embassy in your home country or on the Internet at www.irs.gov. You must file your tax return no later than April 15.Once you have completed the form, mail it to: United States Internal Revenue Service Center Philadelphia, PA 19255 USA