Taxes

 All international students and scholars (and their dependents) must complete at least one tax form for each calendar year in which they are present in the U.S., even if they have no income from a U.S. source. It is your responsibility to meet your tax obligation, the government will not do it for you, but they will penalize you if you do not fulfill this obligation.

When you are hired, you are responsible for helping your employer estimate how much of your income should be withheld from your wages for tax purposes by filling out a Form W-4 Tax Withholding Worksheet. Your employer will pay your withholding directly to the U.S. Treasury Dept. on your behalf. When you file your tax return you are reconciling your account with the government to verify you paid the right amount into taxes over the year. If you paid too much, you will get a refund, if you didn’t pay enough, you will owe money to the U.S. government.

If you earned wages that are less than the amount of one personal exemption ($3,650 for 2009) you are not required to file a tax return but you must file Form 8843 for yourself and any dependents you have.

If you earned U.S. based income in excess of $3,650 ( 2009), had wages or scholarship income exempt by tax treaty, had taxable scholarship income, or are due a refund of taxes, you must file Form 1040NR-EZ or Form 1040NR in addition to Form 8843.

Income is not limited to wages paid to you in cash, but also includes any portion of your scholarship that is applied to your housing and meal expenses. The amount applied to your tuition fees, books, and supplies is not counted as income. If you use a tax professional to complete your tax returns, ask about the applicability of any tax treaty that might exist between your country and the United States.

A Form W-2 will be sent to you at the end of the calendar year in which you were employed. You should receive one from all employers. This form is necessary for the completion of your tax return and provides information on your wages, and amount of taxes withheld. If you do not receive a Form W-2 from an employer by the end of January, contact that employer immediately.

Other Levels of Taxation

There are several types of taxes in the United States (Income tax, Social Security Tax, Sales Tax, etc). These taxes may be assessed at three layers of government; local, state and federal.

State taxes are used to pay for buildings, public education, highways, road signs, and the salaries of government employees like police, fire and other emergency personnel. State governments don’t produce many goods or services that can be sold. It is necessary to pass on the costs of government and its services to the citizens who benefit from them.

Sales tax is similar to VAT taxes collected in many countries except the amount of tax is not included in the advertised price of goods. Sales taxes vary from state to state and even city to city. North Dakota has a 6% sales tax on all consumer goods and services except food (prepared food you buy will be taxed, such as in the grocery store deli or a fast food restaurant).

U.S. tax laws are difficult to understand. Do not be tempted to ignore your obligation! Each year the USCIS and the IRS increase the amount of information shared between them. If you owe taxes and don't file, the IRS can assess penalties and interest. Fines and penalties can often amount to more than the original tax debt. There can also be immigration consequences for failing to file taxes. Applicants for permanent residency "green cards" are frequently asked to show proof of tax filing for previous years in the U.S.