Individuals who come from abroad to learn and work at the university could have special tax considerations depending on their visa or resident status. Similarly, campus departments and off-campus employers should be aware of these tax considerations when processing paperwork related to these employees.
Two U.S. government agencies, the U.S. Citizenship and Immigration Services (USCIS) and the Internal Revenue Service (IRS), use the terms “resident alien” and “nonresident alien.”
Persons who reside temporarily in the United States in non-immigrant status are known by USCIS as nonresident aliens. The most common non-immigrant statuses at the university include F-1, J-1, J-2, and H-1B.
For IRS purposes, a nonresident alien is any non-citizen or lawful permanent resident who has not resided in the U.S. for more than 182 days in any given year, as calculated by the substantial presence test.
Students on F or J visa status are exempt from counting days toward the substantial presence test for a period of five calendar years. Persons in J non-student status are exempt from counting days toward the substantial presence test for a period of two calendar years out of every seven. All F-1 and J-1 visa holders are exempt from FICA during any year in which they are a nonresident.
Persons who are considered resident aliens for U.S. tax purposes meet either the green card test or the substantial presence test for the calendar year. Your worldwide income is subject to U.S. income tax the same way as a U.S. citizen. Persons who meet the substantial presence test will be treated as tax residents (which may include withholding of Social Security and Medicare tax, known as FICA, from employment compensation).
The IRS uses different types of identification numbers for processing tax returns and other information.
An Individual Taxpayer Identification Number (ITIN) is another type of identification available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN).
If you are a nonresident alien who can claim dependents on your tax return (applies only to residents of Canada, Mexico, South Korea, and students from India), or you are a resident alien for tax purposes, your dependents must have either a Social Security Number or Individual Taxpayer Identification Number to be included on your tax return.
An ITIN application may be included with your tax return for the purpose of claiming a dependent. Please visit the Resident Alien Tax Information webpage for additional information and contact the Nonresident Alien Taxation Office if you or a dependent need to apply for an ITIN.
A Social Security Number (SSN) is a nine-digit number used as an identifier for many government purposes in the United States, including taxation.
A Social Security Number is not required from nonresident alien employees before they are allowed to begin work. However, a Social Security Number is required before a nonresident alien employee can benefit from a tax treaty exemption from withholding tax.
Individuals who earn income in the United States, including international students and researchers, are required to file income tax returns: reports filed with the government to determine the total tax owed for that tax year. The result of a tax return may be a refund of tax withheld, or an additional amount of tax to pay. Below is an explanation of the different tax forms used to calculate and file a tax return.
This form shows taxable income received in the form of wages. It lists the total income and all the taxes that have been withheld, which may include federal, state, local, and Social Security and Medicare taxes.
W-2 forms are specific to each employer, so if you had a job anywhere during the tax year other than the university, you should have a W-2 from that employer. All W-2s are required to correctly file your return.
You may opt-in to receive the form electronically through myHR, otherwise the form will be sent to you by mail.
If you do not have a W-2 from the University of Missouri, there could be several reasons, including:
- You had no job income during the tax year. If you began working at the end of last calendar year, but your first paycheck was received this year, you will not receive a Form W-2 for last year.
- Your income was paid through the student account as a scholarship, which means it will be reported on Form 1042-S, rather than a W-2. (See Form 1042-S explained below.)
- Your income was exempt from all withholding during the year because of a tax treaty between the United States and your country of tax residency. Tax treaty-exempt income is reported on form 1042-S.
If the W-2 you received shows no federal or state withholding, but shows Social Security and Medicare withholding, this is normal for persons who are residents for tax purposes but who are still exempt from federal and state withholding because of a tax treaty.
If the W-2 you received shows Social Security and Medicare withholding, but you are in F-1 or J-1 status AND are a nonresident alien for tax purposes, you may be eligible for a refund of this withholding.
If a nonresident alien was employed at another U.S. location during the tax year, it is important to make sure that the other employer has a current address so that the W-2 from that employer is received.
This form is issued primarily to document two sources of income:
- Scholarship income
- Any income that is exempt from withholding because of a tax treaty
All nonresident aliens who have scholarships that are greater than the amount of their fees, have tax treaty exempt wages, or received prizes or awards, will receive a 1042-S from the university. Persons with these types of income may not file a tax return until after they have received their 1042-S. For many nonresidents at the university, the 1042-S will be accessible through your account with FNIS.
Persons who have only a fee waiver, or a scholarship less than their semester fee charges, will not be issued a 1042-S.
If you are eligible for a tax treaty exemption, but you did not sign and return the necessary forms during the tax year, all of your income will have been taxed and reported on a W-2, so you will not have a 1042-S.
This form is issued by the State of Missouri (or another state where you worked) to document a state tax refund from the previous tax year. This income may be taxable for this year.
This form is issued by your bank and shows the interest you received on deposits in your bank account or CD (certificate of deposit). Bank interest is not taxable for nonresident aliens, so you do not need to consider this form in preparing your tax return if you are a nonresident alien for tax purposes.
This form is used most commonly used to show “independent contractor” income. Sometimes, students who work off-campus jobs are given this form to document job income instead of the W-2. When companies report earnings on this form, it means that no U.S. or state taxes have been prepaid on your behalf. Therefore, if the income shown on the Form 1099-MISC is very large, you may owe taxes when you file the return, because these taxes were not prepaid on your behalf.
If you did work as an “independent contractor,” you will want to maintain a file throughout the year of expenses related to the work, because some of these expenses may decrease the taxable nature of this income.
This form is used to report distributions from annuities, retirement plans, IRAs or pensions. Recently, more U.S. institutions have been requiring employees to contribute to retirement plans. When the employee quits working for the institution, a refund of the retirement contribution may be received and is then reported on Form 1099-R. If you had an internship, it is possible the company for which you worked will send you a Form 1099-R if you were required, under the terms of your employment, to contribute to a retirement plan and then received a refund when you left the company.
If you are a nonresident alien and received a Form 1099-R, the tax return preparation software used in the nonresident alien VITA site will not adequately prepare your return. You will need to seek outside assistance in preparing your tax returns.
This form documents dividend income, which must be included when you calculate your taxable income for the tax return. This type of income is outside the scope of the nonresident tax clinic, so if you are a nonresident alien and received a Form 1099-DIV, you will need to seek outside assistance in preparing your tax returns.
This form is issued by educational institutions in the United States to facilitate U.S. tax residents in obtaining certain tax benefits. Nonresident aliens will not generally receive this form.
This may be in the style of a letter or actual receipts documenting contributions made to U.S. charities. Examples of U.S. charities include houses of worship, places that will take clothing and furniture donations and special funds set up to aid in disaster relief (like the 2011 tsunami in Japan, the 2010 earthquake in Haiti, and the Philippines typhoon of 2013).
Under current tax laws, charitable giving is subtracted from taxable income. Therefore, if you plan to make contributions and would like to receive a tax benefit, make the contributions in such a way that you have a receipt. Most charities will provide receipts. If your donation is monetary, you can make the contribution by check, which can also serve as your receipt.