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The employer must verify the exemption exists before adjusting any withholding amounts. Tax treaties constantly change. IRS Publication 901: US Tax Treaties can be used to verify a claim.
All IRS forms and publications can be ordered by calling: 1-800- TAX FORM (1-800-829-3676)
IRS forms and publications are also available from the IRS World Wide Web site:
http://www.irs.ustreas.gov/prod /cover.html /cover.html
Federal Income Tax will be deducted from the trainee's salary. However, at the end of the calendar year the trainee will be entitled to receive a refund of most of the tax deducted.
To claim a refund, the trainee must give a stamped self-addressed envelope to the employer before leaving the United States. At the end of the year, the employer should send the trainee a W2 form; which shows the total wages and the amount of tax withheld.
As taxes are paid based on the wages earned during a calendar year, W-2 forms are only available during or after the January following the trainee stay in the United States. After the candidate receives the W-2 form, the trainee should obtain a non-resident tax form and information packet from the U.S. embassy or consulate.
Once the trainee has completed the form, the candidate has to attach the appropriate copy of the W-2 and mail to the address indicated on the form. The tax return must be postmarked by April 15. If the trainee does not receive the W-2 form by February 1, the candidate should contact the employer.
To claim a refund of state and local taxes the trainee must write directly to the Department of Taxation and Finance in the state where the candidate worked to request the tax forms. State and local tax returns are filed on the same form. The candidate will not be able to obtain these forms at a U.S. embassy or consulate abroad. As with the federal forms, the trainee has to complete the state and local tax return form, attach the appropriate copy of the W-2 form, and mail to the address indicated on the form by April 15.
The same research shows that overpayment of taxes in a surprisingly common result of the failure to file. Federal law requires [employers] withholding tax on wages paid to students. "Had the non-filing students in Antenucci's and La Berge's study filed and claimed all allowable deductions and treaty benefits, most would have been entitled to refunds". (NAFSA. news, December 1996)
The employer uses this form to determine how much tax to withhold from the paycheck.
The social security number and card of the trainee are required to fill out this form, even though the trainee is exempt from Social Security tax.
If the W4 is not filled out properly, the trainee may be taxed too much, or too little. If the trainee is taxed too little, the candidate will owe money to the U.S. government, and if the trainee does not pay it, the future VISA of the participant could be jeopardy.
Even though the trainee has returned home, the trainee is legally required to file a U.S. tax return. Tax returns have to be filled by April 15th for the previous tax year. The trainee will need two items to complete the tax return if the candidate is a non-resident alien:
- W2 form
- 1040NR- EZ form (can be download from the IRS website at http://www.irs.gov )
IRS Publication 519, "U.S. Tax Guide for Aliens", contains additional information, which may assist you in understanding the process of filing taxes in the United States. You may also visit the IRS web site, which contains a great deal of helpful information and forms at http://www.irs.ustreas.gov