Top International Tax Questions Answered

Top 25 International Tax Questions.

Please feel welcome in the USA. Fear NOT the paper tiger that is the US Tax Code or the rhetoric of pantywaist politicians!

Much of maintaining compliance with the US Tax Code distills down to understanding among other things these 3 simple concepts:

1. the tax obligations of your current visa
2. what country you are effectively connected
3. whether you meet the substantial presence test in the USA

I am happy to discuss this in more detail with you as you see fit. Simply reach out to me.

My team and I receive international tax questions all the time. We appreciate and respect good people from all over the world and I thought it might be beneficial to post some of the more common questions we find ourselves routinely addressing for hire.

Hopefully you find some of these examples enlightening…

• Sr. Mary Catherine Hypodermic-Needle is an international student from Ireland treated as an F-1 non resident alien for federal income tax purposes with a 2021 W-2 that shows amounts withheld for Social Security and Medicare taxes – that should NOT have been withheld.

The good nun must first try to obtain a refund from her employer along with a corrected 2021 W-2. Should that fail she can file IRS Form 843 to request a refund.

• Tsolak, a student from Bulgaria, had $8,000 in wages reported to her on IRS Form 1042-S in 2021.

Although all of her wages are excluded from tax by treaty, she is required to file a US income tax return.

• Eduardo came to the U.S. in 2012 for graduate studies. He took out a student loan to help pay the tuition and graduated in December 2014, but remained in the U.S. for seven years of practical training. He began repaying the loan in July, 2015 and paid $4,900 in interest during 2021.

He can INDEED claim this student loan interest as an adjustment to his income.

• Bjorn from Norway, earned $8,000 in 2020 and had $95 withheld for Colorado state income taxes. He listed the taxes as a deduction on his 2014 federal income tax return lowering his taxable income.

Bjorn received a Colorado refund of $57 in 2020 from the 2019 tax return that he must include as income on his 2015 federal income tax return.

• Siobhan is a single, nonresident alien who began studying in the U.S. in the fall of 2020 under F-1 immigration status from Ireland. She has wages of $16,700, interest income from her savings account of $230, and sold a few U.S. shares of stock that her family left to her for $6,000. She donated $2,000 of the proceeds to a local charity.

Unfortunately she must file IRS Form 1040NR and cannot recognize the charitable donation.

• Juan is in F-1 immigration status from Chile. He entered the United States in September 2019 and enrolled as a full time undergraduate student at UC Boulder to pursue a degree in mathematics.

Unfortunately he cannot take his education expensesas an itemized deductions.

• A graduate student of physics who wishes to remain anonymous first arrived in the U.S. on July 22, 2021 from Sweden and is presently in F-1 immigration status.

He has made numerous charitable donations to qualified charities but unfortunately cannot claim them on IRS Form 1040-NR.

• Phillip arrived in the U.S. in August, 2020 on a J-1 visa accompanied by his wife and one child. He is a visiting scholar from England. Since his arrival, his second child was born in the U.S. He earned $70,000 in 2021 from Colorado State University.

Unfortunately he cannotclaimthe exemptions for his wife and children on Form 1040NR.

• Dovid, his wife and son entered the United States in 2020 from Poland on F-1 immigration status. Dovid’s wife won $500 at the local casino.

The gambling winnings are reported as income on IRS Form 1040NR.

• Li an international student from People’s Republic of China, received $13,000 of interest and dividend income in 2020 from accounts she opened when she first arrived in the U.S. in 2009.

This income is reported on IRS Form 1040 Schedule B.

• Ralphie is in the United States under J-2 immigration status as the spouse of a J-1 scholar.

He worked at a local brew pub in 2021 and his Form W-2 shows Social Security and Medicare withholding that he cannot get refunded.

• Liu, an F-1 student from Japan, is on a collegiate rowing team in the United States on a full athletic scholarship that includes room and board.

Unfortunately the amount of her scholarship for room and board is taxable.

• Bogie is in the United States under J-1 immigration status as of August, 2020. Under the terms of his visa, he is permitted to earn up to $5000.

Because Bogie already has a Social Security number he does not need an Individual Taxpayer Identification Number (ITIN).

• Mei is a J-1 student from the People’s Republic of China. She earned $4,995 in wages in 2021. Her wages are reported to her on Form 1042-S (box 1, Income Code 19).

Mei will not have to report these as taxable wages.

• Thelma and Greg are a married nonresident alien couple in the U.S. on F-1 immigration statuses in 2020. They paid $1,500 in child care expenses for their child who was born in the United States and is a U.S. citizen.

Unfortunately they can NOT file and claim these expenses on a joint U.S. tax return.

• Marta a non-resident alien in the United States under a J-1 immigration status, spent $3,000 on qualifying tuition and educational expenses.

She is NOT eligible to claim as education credits on her tax return.

• Jeba is a visiting professor at the University of Denver. He was previously a graduate student from August 2018 to July 2020 on F-1 immigration status re-entering the United States in December, 2020 with J-1 immigration status.

For federal income tax purposes, Jeba is a resident alien for 2015.

• Anika served as a visiting scholar in F-1 immigration status from December 2017 through June 2019. In January of 202020, Anika returned to the United States as a graduate student.

For federal income tax purposes, Anika is a resident for 2020.

• Liam came to the United States on F-2 immigration status with his wife on August 20, 2021. He has not changed his immigration status.

For federal income tax purposes, Liam is a nonresident alien for 2021.

• Jocquim lived with her parents in F-2 immigration status in the United States from August 2016 to June 2020. She returned to the U.S. to attend college on F-1 immigration status in August, 2020.

She does not need to file IRS Form 8843 for 2021.

• Liv entered the United States in August, 2010 with J-1 immigration status. In December, 2013, her husband Peter joined her with J-2 immigration status.

Peter needs to file Form 8843 for 2015 if he chooses to fileseparately from her.

• Ines is an F-1 student and her husband, Tomas, is also an F-1 student. They have a daughter who was born in the United States.

Ines and Tomas do not need to file a Form 8843 for their daughter.

• Luca is from Austria and is a Ph.D. student in astrophysics who is going to defend his dissertation in June. He arrived in the U.S. as a student in 2018.

Luca is a resident alien for tax purposes.

• Arthur is a junior majoring in chemical engineering. He arrived in the U.S. on F-1immigration status from South Africain August2015. He telecommuted for a company in New York and will graduate in May 2016. The company issued him Form 1099-MISC.

Just because the stupid company issued him a 1099-misc does not make him a defact-o resident alien.

• Li is from the Republic of China who arrived on F-1 immigration status in April, 2021. She does not have a Social Security Number or an ITIN. She did not work or receive a scholarship in 2021.

Li must file Form 8843 by June 15, 2022.