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13.5 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - Tax Withholding
I entered the U.S. in August and I have a J-2 visa with an Employment Authorization
(work permit). Can I be considered as a U.S. resident for tax purposes under the substantial
presence test? Since my visa does not allow me to stay in this country am I subjected
to social security tax and Medicare tax?
You will be considered a U.S. resident for tax purposes if you meet the substantial
presence test for the calendar year. As an exempt individual, a J-2 visa holder will
not initially meet this test.
For purposes of the substantial presence test, certain days of physical presence
do not count, such as the days during which you were an exempt individual . Please
refer to Publication 519, U.S. Tax Guide for Aliens , for a detailed
explanation of this issue.
In general, U.S. social security and Medicare taxes apply to payments of wages
for services performed as an employee in the United States, regardless of the citizenship
or residence of either the employee or the employer. In limited situations, these
taxes apply to wages for services performed outside the United States. This exception
does not apply to a derivative visa holder.
References:
Under my visa as a temporary nonresident alien, I'm not subject to social
security and Medicare withholding. My employer withheld the taxes from my pay. What
should I do to get a refund of my social security and Medicare?
If social security tax and Medicare were withheld in error from pay received which
was not subject to the taxes, you must first contact the employer who withheld the
taxes for reimbursement. If you are unable to get a refund from the employer, file
a claim for refund with the Internal Revenue Service on Form 843 (PDF), Claim for Refund and Request for Abatement.
You must attach the following to your claim:
a copy of your Form W-2 (PDF) , Wage and Tax Statement,
to prove the amount of tax withheld;
Form I-797, INS Approval Notice, is needed if you have changed your status
from F-1 or J-1 to another status prior to filing the claim;
if your visa status changed during the tax year you should attach copies of the
pay stubs that cover the period of exemption from social security taxes;
a copy of INS Form I-94, Arrival/Departure Record, if you are still in the United
States;
a copy of your valid entry visa;
Form 8316, Information Regarding Request for Refund of Social Security Tax ,
or a signed statement stating that you have requested a refund from the employer and
have not been able to obtain one; and
a copy of Form 1040NR (PDF) , US Nonresident Alien
Income Tax Return (or Form 1040NR-EZ (PDF)), for tax
the year in question. Processing of your claim may be delayed if you submit it less
than six weeks after you filed Form 1040NR or 1040NR-EZ.
In addition to the documentation listed above foreign student visa holders should
also attach the following:
a copy of Form I-20, Certificate of Eligibility, endorsed by your student advisor
and stamped by the Bureau of Citizenship and Immigration Services; and
a copy of the Employment Authorization Document of your Optional Practical Training
(e.g., Form I-766, I-538 or 688B).
if you are an exchange visitor, attach a copy of Form IAP-66 or DS-2019 to your
claim.
File the claim, with attachments, with the IRS where the employer's returns were
filed. If you do not know where the employer's returns were filed, send your claim
to the Internal Revenue Service Center, Philadelphia, PA 19255.
For more information, refer to Publication 519, U.S. Tax Guide for Aliens .
References:
I am a U.K. resident and I need to recover withholding tax on a U.S. capital
gain. Do I need an ITIN?
To claim a refund of U.S. tax withheld you need to file Form 1040NR (PDF) , U.S. Nonresident Alien Income Tax Return . Therefore, you
need to secure an Individual Taxpayer Identification Number, or ITIN. To secure an
ITIN, you must file Form W-7 (PDF), Application for
IRS Individual Taxpayer Identification Number . For detailed information on applying
for an ITIN, go to Tax Topic 857 , Individual Taxpayer Identification Number
- W-7
References:
- Publication 515, Withholding of Tax on Nonresident Aliens and
Foreign Corporations
- Publication 519, U.S. Tax Guide for Aliens
- Publication 1915 (PDF), Understanding Your IRS Individual
Taxpayer Identification Number
- Form W-7 (PDF), Application for IRS Individual
Taxpayer Identification Number
- Tax Topic 857, Individual Taxpayer Identification Number -
Form W-7
- Form 1040NR (PDF) , U.S, Nonresident
Alien Income Tax Return
- Tax Topic 857 , Individual Taxpayer Identification Number
- Form W-7
I am a foreign citizen and resident from the European Union. I plan to buy
U.S. stocks, but what tax will I have to pay if I have earnings on stocks?
U.S. source dividend income is subject to 30% tax rate when paid to nonresident
aliens. A lower rate may apply to residents of a member country with which the United
States has an income tax treaty. The U.S. does not currently recognize the E.U. as
a taxing authority.
References:
I am a nonresident alien. Our broker withholds 30% tax on dividends. Can
I get this tax back since I already owe tax in my residence country on overseas income?
Generally, this type of income paid to nonresident aliens is taxable at the 30%
or lower treaty rate. If your country has a tax treaty with the U.S., you may have
a reduced rate of tax. If that is the case, you should file Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return, to claim a refund
of federal income taxes withheld. To avoid future excess withholding, provide your
broker with a completed Form W-8BEN (PDF) , Certificate
of Foreign Status of Beneficial Owner for U.S. Tax Withholding. You may be entitled
to a credit against the tax you owe to your residence country for the U.S. tax that
is withhold from your dividends.
References:
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