J-1 Taxes

There are so many Tax laws and regulations that can change each year, that most Americans rely on specialists who are specifically trained and certified to help them complete their taxes. J-1 Taxes add another layer of complexity to this topic.
 
To help us answer some common questions, we brought in the experts at Taxback.com (sponsored linkTheir team of qualified and experienced tax professionals have been processing refunds for students and people all over the world since 1996! That adds up to over 1 million taxes filed to date!
 
(Note from Internship Saver: using the Tax Calculator or links to Taxback.com on this page helps support us at no cost to you via a small commission)
 
Don’t want to read all of that? Click to skip to the bottom to see how you can get a free, no obligation estimate on your J-1 Taxes refund, and more help on filing your return.
  • For questions on if you should be paid, look at this page.
  • When you start your internship you will need to apply for a Social Security Number (SSN) if you do not already have one. (See how to apply here)
  • Your company will either need your SSN, or confirmation that you have applied, in order to put you on payroll.
  • The money is usually reported via a W-2 form, as trainees and interns typically do not meet the qualifications of an independent contractor.

Before we get started, please keep the following in mind:

  • The following information is a general guide and is not intended to be comprehensive. It may not include all of the information you need for your taxes.
  • Individual tax requirements vary from person to person, so you may have to do something different from you friends and colleagues even if your situations appear similar.
  • If you have specific questions on your taxes and want additional help, we recommend you contact professionals like Taxback.com.

Tax Talk

Internship Saver: I’m an intern in the US on a J1 visa. Do I have to pay tax?

Taxback:

An internship really is a fantastic opportunity for students to sample what it’s like to live in the US.
Of course, part of becoming accustomed to a new country is learning to adapt to local laws.  And, if you are earning income in the US, it is important to comply with US tax law.
Yes, tax may be the last thing that you want to think about when you are planning an exciting stint in the US. But it is vital to comply with these laws or you may end up having to pay some unwanted fines or penalties. And what’s worse, you may even be denied entry to America in the future.

Internship Saver: Ok, fine. But do I really have to pay tax on the money I make from my internship?

Taxback: 

Yes. Generally in the U.S., you are taxed on:

  • Any earned income
  • Stipend, fellowship, grant, award
  • Any other income from US sources

So, even if you earn a stipend through your internship, rather than a salary, you must still report this income to the IRS.

The good news is that, if you were a resident in a country which has a tax treaty with the US prior to coming to the US, you may be taxed at a reduced rate or exempt from US tax on income derived from specific sources earned within the US.

Generally every visitor to the US on F-1, F-2, J-1, or J-2 (and other non-immigrant exchange programs) visas are considered non-resident aliens for tax purposes.

Internship Saver: Great, so how much tax do I have to pay?

Taxback:

There are two types of income tax in the US – Federal and State. The amount of Federal tax that you pay depends on how much income you earn. Tax rates are tiered with 10% being the lowest rate and 39.6% being the highest.

The amount of State tax that you pay depends largely on where you earn the income, as tax rates differ from state-to-state.

Internship Saver: Do I have to file a tax return?

Taxback:

If your income from US sources is above certain thresholds, you are legally obliged to file a federal and state tax return for each year you are present in the US. You will have to file a federal tax return if your income is over $4,050. However, the thresholds for state tax returns vary from state-to-state – for instance it’s $16,597 for California and $33 for Pennsylvania.

Even if your internship does not pay a salary and you have no other US income you will still need to file a form 8433.

Income is taxed on an annual basis. In other words, when you are filing your tax return in April 2018, you will be paying tax on income received from January 1st – December 31st 2017.

Internship Saver: How much will filing cost me?

Taxback:

Taxback.com customers are charged $60 for Federal return and $30 for State return + handling fee, but you will get $10 discount on your fee by following any of the links on this page.

Internship Saver: That sounds like a lot of work. What happens if I don’t file a return?

Taxback:

As mentioned above, you are legally obliged to file a US tax return if your income exceeds certain thresholds. Failure to file a tax return can result in fees or penalties from the IRS and you may even be refused future entry into the US.

Internship Saver: Can I  at least get a tax refund when I file my return?

Taxback:

Yes, you may be entitled to a tax refund. In fact, every year millions of dollars are left unclaimed by J1 students.

To retrieve your refund you will need:

W2 form: A form from your employer stating your total earnings and amount of tax deducted (usually issued in February).

1042-S form: Students, teachers or trainees on a J or F visa get this instead of a W2. It outlines the scholarships, fellowships or grants and tax treaties.

Taxback.com can help you to retrieve your refund. Our team of qualified tax experts can file your tax return for you and guarantee that you receive the maximum tax refund that you are due – straight into your bank account! Our average refund for J1 students is $800. So it is definitely worth claiming back what you are owed!

  1. Contact your employer: See if they mailed your form to you. They are usually sent out the January before taxes are due. If you are not in the US anymore, they may have sent it to your old residence.
  2. Contact the IRS: If you have not received your W-2 by March, reach out to the IRS for assistance.
  3. File Your Taxes: Even if you don’t receive your documents you still need to file your taxes on time.
  4. The IRS has a video that goes into detail on what to do.

Internship Saver: I’m going on a road trip. Filing a tax return is the last thing I want to do. Can someone else do it for me?

Taxback: 

Yes. US tax matters can be complicated and if you find the prospect of filing a tax return to be daunting, you’re not alone. Each year, thousands of people enlist the services of tax agents such as Taxback.com for help in filing their tax return.

Taxback.com employ experienced and qualified US tax professionals and ensure that your tax return is filed in compliance with the IRS.

Internship Saver: Finally some good news. I see that some tax companies say they can give me more money back than others. Why is this?

Taxback: 

There are some tax companies who boast about much they save their customers on their tax bill or claim they can retrieve inflated tax refunds.

One of the main reasons that these companies advertise inflated refund figures is because they are claiming expenses and reliefs for their clients that they are not entitled to. The American Opportunity Tax Credit (AOTC) is a good example of this. Some dishonest companies have been telling their J1 clients that they are entitled to receive this credit as a ‘$1000 bonus’. However, this is false as the majority of J1 students do not qualify for AOTC.

Like many things in life, if it seems too good to be true, it almost certainly is.

When you are choosing a company to handle your tax return, investigate if the company has a PTIN (paid tax preparer identification number). The PTIN is issued by the IRS and should be included on each tax return filed by the preparer. A PTIN means that the responsibility for the tax return preparations is with that person and is based on the information you provided.

Internship Saver: What happens if I use one of these companies and get caught?

Taxback:

Filing a fraudulent tax return is a crime. In other words, if you are get caught you will have to pay penalties and interest with the IRS. You may also be refused future entry to the US.

It’s also important to note that if a company files a fraudulent tax return on your behalf, it’s you who will be held responsible and not the dishonest company. ‘Not knowing’ will not be considered as a valid excuse by the IRS.

Internship Saver: I don’t want to get in trouble, but I already used one of these companies to help me. Is there anything I can do?

Taxback: 

 ​If you have already had a bad experience with a dubious tax company, Taxback.com can help you. We can file amendments on your behalf, correct poor tax returns made by dishonest companies and help you to settle any liability or outstanding issue that you may have with the IRS.

End.

 

Whew, that was a lot of information. What if you have more questions or want help filing your return?

Simple! Choose Taxback.com to handle your J-1 tax return. Members will receive $20 off when they join our community, and non-members will receive $10 off using the calculator on the right, or clicking through one of the links on this page.

Their team of qualified and experienced tax professionals have been processing refunds for students and people all over the world since 1996! That adds up to over 1 million taxes filed to date!

When you apply for your US tax back with Taxback.com, you’ll first get a free, no-obligation estimate and you can then decide if you want to apply.

Their team of tax experts can answer any tax questions you might have (they even have a 24/7 live chat service!), file your compliant tax return for you and retrieve the maximum tax refund you are legally entitled to. Their average US tax refund is $800.

Get started today!

*Disclosure: By clicking on the links to Taxback.com contained on this page, or using the Taxback.com USA J1 Tax Refund Calculator, Internship Saver may receive some compensation at no cost to you. You will also receive $10 off Taxback.com filing fees.