Do U.S. students need to file tax returns for remittances received?

What is the tax system in the United States? The U.S. tax system is a tax system with income tax as the main body. The federal, state, and local governments in the United States implement a thorough tax sharing system for taxation based on the division of powers and responsibilities. Federal and state legislation are enacted separately, and local taxes are determined by the state. Among them, federal taxes are mainly personal income tax, social security tax, and corporate income tax. In addition, there are inheritance tax, gift tax, consumption tax, etc.

Let’s first clarify a concept. Filing taxes in the United States does not mean paying taxes. Since the United States uses advance tax deduction, the taxpayer’s income (whether it is salary income or investment income) will be turned over at a certain tax rate. To the U.S. federal government, this part of the tax is called "Withholding Tax." In most cases, the result of tax filing is that the U.S. government will refund the overpaid tax to the taxpayer. If you underpay taxes and are required to pay back, it can be said that the result of filing a tax return may be a backpayment of taxes, but it is more likely to be a tax refund. All taxpayers who meet U.S. tax obligations must file "federal taxes" and "state taxes." Federal taxes are the responsibility of the IRS, the Internal Revenue Service. State taxes are the responsibility of each state of residence. Before the filing deadline, two different tax forms need to be completed and submitted to the IRS and state tax authorities along with the tax due. *Note: Some states do not impose state tax on income, including Texas, Florida, Nevada, South Dakota, Alaska, Washington, and Wyoming. The annual tax filing deadline in the United States is around April 15th (both have been postponed in the past two years due to the impact of the epidemic). If it falls on a weekend or holiday, it will be postponed later. The 2022 tax filing season has begun on January 24. April 18 is the deadline to submit the 2021 tax return, apply for an extension, or pay the tax owed. October 17 is the tax filing deadline after submitting an extension application. .

Who needs to pay taxes in the United States?

In short, as long as you have income in the United States or have stayed in the United States for a certain period of time, you need to file and pay taxes, regardless of your nationality and Your place of residence. If you are a U.S. citizen or green card holder (you obtained a green card at any time from January 1 to December 31, 2021), you must file taxes as a tax resident regardless of whether you actually live in the United States. If a foreigner has income in the United States, he will also need to file an income tax return in the United States. If you meet the residence time test, you file as a tax resident; if you do not meet the residence time test, you file as a non-U.S. tax resident. Under this provision, students who temporarily reside in the United States and hold F, J, M or Q visas are exceptions. They are still non-U.S. tax residents within the first five years of holding a valid visa and are not judged according to the residence time test.

Do international students need to file a tax return? - For students under 5 years old, first clarify their tax filing status: international students for the first 5 years and visiting scholars for the first 2 years were non-tax residents (Non Resident Alien, NRA). File your taxes. Secondly, you need to file a tax return regardless of whether you have a job or income, as long as you are a foreign student with an F (student), J (public), M (tourist) visa, or a J (visit), Q Foreign scholar (exchange) visa holders entering the United States must submit a personal data statement (Form 8843) to the Internal Revenue Service and fill out a tax form based on whether they have income. For example, if you go to the United States to study at your own expense in August 2021, and you have no income from U.S. sources in 2021, you will still need to file a tax return in 2022. However, since you do not have any income, you do not need to fill in any tax return forms. You need to mail Form 8843. The main purpose of this form is to indicate that you qualify as Exempt individuals.

We have encountered situations where students were charged withholding tax on the interest in their bank accounts because they did not mail the 8843 form. Although the amount is not large, it is an obligation under the law to file a tax return, so don’t be afraid of trouble!

If you have income, you need to file a tax return! According to the provisions of IRS Publication 501 and Publication 970, non-US tax residents such as international students/scholars in the United States need to declare when they have US source income in the United States. U.S. personal income tax. As a foreign student or scholar, the result of low income is that you do not have to pay tax when filing a tax return, and you may even get a tax refund with a high probability, so filing/Filing tax is still necessary. For example, if you went to the United States to study at your own expense in August 2020, and earned income as a teaching assistant/internship during the 21 years, you will need to file a tax return in 2021 because you have U.S. source income, and you will need to fill out forms 1040-NR, 8843, and 8833 Form (according to the Sino-U.S. Tax Relief Treaty, see details below) and mail it to the IRS

Income from U.S. sources includes non-taxable scholarships and grants generated in the U.S., income beyond the Tax Treaty, and other income in the U.S. Income, etc., no threshold. If there is no above-mentioned income in the United States, income is generated in the home country or other countries, or only personal deposit interest income, tax-free scholarships, etc. are generated in the United States, then there is no need to file a personal income tax return in the United States.

Do international students need to file a tax return? - Those who have been studying abroad for 5 years or more must first file a tax return, whether they continue to file as a non-resident (Non Resident Alien, referred to as NRA), or as a tax resident (resident Alien, referred to as RA) )’s identity declaration.

Because you have held an F-1 visa in the United States for more than 5 years, you are considered a tax resident and need to declare your global income: International students holding F, J, or M visas have been in the United States for more than five years. Visiting or exchange scholars holding J and Q visas who have been in the United States for more than two years (Q visa holders can include the time they have held F, J or M visas into the calculation). The calculation here is in natural years. For example, if you entered the country in August 2016 with an F-1 visa, no matter how many days you stay each year, your tax reporting status will be NRA non-resident from 2016 to 2020. Starting from January 1, 2021, you need to calculate the actual date of residence. If substantial residence is met, it is an RA tax resident and uses Form 1040.

There will be a big difference between tax residents and non-tax residents in filing taxes. To put it simply: Tax residents can file taxes jointly as husband and wife and enjoy basic deductions, but all income (including foreign scholarships and income), Income from stock trading, bank interest, etc. are all included in tax return items. If you work or intern, your salary income will also be deducted from FICA tax (Federal Insurance Contributions Act), Social Security tax (Social Security tax), Medicare tax (Medicare tax), Unemployment Benefits tax (TUFA tax), etc. If you want to continue to file taxes as a non-resident, you need to provide the following certificates or relevant documents. After approval by the IRS district supervisor, you can maintain your non-resident tax filing status and continue to use the 1040NR tax form. Therefore, students who are eligible for resident tax filing should consider clearly which status is more beneficial to them when filing. You will definitely leave the United States before your visa expires. Have a record of tax filing obligations or continued residence in your home country or a country outside the United States. There is no intention to reside in the United States long-term.

Chinese students and visiting scholars can enjoy tax exemption (Tax Treaty): According to the 1987 tax agreement between China and the United States, teachers, professors and university researchers who visit China and the United States are exempt from tax for three years, and foreign students and training There is a tax exemption limit of $5,000 for personal income of a student. Whether it is NRA or RA, as long as you are still in F-1 status, you can apply for a tax exemption limit of $5,000 even during the OPT period! When applying for Tax Treaty, you can directly reduce the income column Deposit 5,000 US dollars, and attach Form 8833 (for RA use) or 8233 (for NRA use). Please refer to the instructions on the IRS for specific filling. The following are the terms of tax deductions and exemptions in China and the United States:

*For tax filing Benefits* The benefits of filing a U.S. personal income tax return for international students! If you generate salary, salary or scholarship income in the United States, you can reasonably apply for a U.S. Social Security Number (SSN). Social welfare and medical benefits in the United States are closely related to SSN. Applying for SSN as early as possible and filing taxes properly will be very helpful for individuals' future social security in the United States, and will be very beneficial to friends who plan to stay in the United States for development in the future. If international students and scholars who work legally in the United States or have scholarship income file taxes, they may receive a tax refund of varying amounts. Because the United States has a withholding system, it will generally charge more withholding tax than the actual amount! The United States and China have a bilateral tax preferential agreement, which is consistent with Qualified international students and scholars can enjoy a tax deduction of US$5,000, which means that US$5,000 of their income does not need to be taxed, and they will receive additional benefits during the tax filing process. U.S. source income generated in the United States is subject to tax reporting obligations, which is an obligation required by visas! If there is a bad record due to delay or failure to report, high fines and interest may be incurred, and in severe cases, it may affect your study abroad and your future. Immigrant visa. Tax bills are very important in daily life in the United States, such as renting a house, applying for a loan to buy a house, a car, and credit card loans. Personal income tax returns and credit records under SSN are the most important considerations in American society for understanding personal financial status. By filing and paying taxes on time, you can quickly build your personal credit.