While it may not be the most fun part of your J1 experience, it's really important that you pay tax and comply with US tax law when you're working on a J1 visa in the US.
Knowing just a little about US tax can help you gain big, which is why we've have created this simple, jargon-free guide to help you get it right!
The average US tax back we get for J1 students is $800
Working in the US on a J1 visa means you'll probably have a number of different taxes deducted from your US income when you're paid. As a J1 student in the US, you'll be considered a non-resident for tax purposes.
As a non-resident, you'll typically only pay tax on income from US sources. Exactly how much tax you pay in the US will depend on how much you earn and where you end up working, as taxes vary by state.
If you work in the US on a J1 visa, then you'll need to pay tax on income you earn there. The amount of tax you’ll pay will depend on how much you earn and will vary by each state. And if you go to the US on a J1 visa, you'll be considered a non-resident alien for tax purposes and taxed as such.
As a non-resident in the US, you'll be taxed on:
• Any income you earn from employment in the US
• Any stipend, fellowship, grant or award
• Any other income from US sources
Depending on where you choose to work in the US, you may pay up to 4 different types of tax on your earnings, including:
Federal Insurance Contributions Act (FICA) Tax
In 2018, There are 7 federal income tax brackets and depending on what your taxable income is, you'll pay a rate between 10% and 37%.
2018 Tax Brackets
|10%||$0 - $9,525|
|12%||$9,526 to $38,700|
|24%||$82,501 to $157,500|
|32%||$157,501 to $200,000|
|35%||$200,001 to $500,000|
2017 Tax Brackets
|10%||$0 to $9,325|
|15%||$9,325 to $37,950|
|25%||$37,950 to $91,900|
|28%||$91,900 to $191,650|
|33%||$191,650 to $416,700|
|35%||$416,700 to $418,400|
However, being in the 25% tax bracket for example doesn’t mean you’ll pay 25% on everything you make.
The progressive tax system means that if you have a higher taxable income, you're subject to higher tax rates. People with lower taxable incomes are subject to lower tax rates. No matter which bracket you’re in, you won’t pay that rate on your entire income.
*The above example applies for federal tax rates in 2017.
State tax is different and depending on the state it could be a flat income tax or no income tax at all.
45 states and the District of Columbia collect some sort of state income tax as well as federal tax. State income tax is imposed at a fixed or graduated rate on taxable income of individuals, corporations, and certain estates and trusts.
The rate you pay varies depending on the state so you should check this before you decide where you want to go for your J1!
Many states allow a standard deduction, however typically if you’re a non-resident you cannot avail of this deduction.
The 5 states with the highest average combined state and local sales tax rates are:
Louisiana 10.02%, Tennessee 9.46%, Arkansas 9.41%, Washington 9.18%, and Alabama 9.10%.
The following states have a flat rate individual income tax as of 2016:
Colorado – 4.63% (2016)
Illinois – 4.95% (July 2017)
Indiana – 3.23% (2017) (note also that counties may impose an additional income tax)
Massachusetts – 5.1% (2016) (most types of income)
Michigan – 4.25% (2016) (22 cities in Michigan may levy an income tax, with non-residents paying half the rate of residents)
North Carolina – 5.75% (2016); 5.499% (2017)
Pennsylvania – 3.07% (many municipalities in Pennsylvania assess a tax on wages: most are 1%, but can be as high as 3.9004% in Philadelphia).
Utah – 5.0% (2016)
As a non-resident J1 student, you should not be charged FICA tax, however it may happen and if so you should apply for a refund, unless you qualify as a resident alien due to previous presence in the US.
Federal Insurance Contributions Act (FICA) Tax is a US federal payroll (or employment) tax imposed on both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, disabled people, and children of deceased workers.
The average US tax back we get for J1 students is $800
14 states and Washington DC allow counties and cities to impose their own local income taxes in addition to federal and state income tax. Local tax is typically non-refundable except for New York.
- New Jersey
- New York
- West Virginia
Sales tax isn’t a tax on your income but rather on goods and services you buy, like dinner in a restaurant. You may look at a menu and see a price but the sales tax is only added onto the bill when you have to pay, so it's worth keeping an eye out for it!
- Sales tax rates differ by state and since January 2017, 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) don’t levy a state-wide sales tax, while California has the highest state sales tax with a base rate of 7.25%.
- New Jersey reduced its statewide rate from 6.875 to 6.625% as of January 2018
State Sales Tax Rates 2018
|State||State tax rate|
3. Starting A Job In The US And Tax
If you want to work in the US, you'll need a Social Security Number (SSN) or Individual Tax Identification Number (ITIN) to identify you for tax purposes. You must put your taxpayer identification number on your tax returns, statements, and any other tax-related documents.
If you don't have a Social Security Number or Individual Tax Identification Number and you want to file a tax return or get a refund, you can apply for an ITIN with Taxback.com here.
ITINs are issued regardless of immigration status because both resident and non-resident aliens may have a US filing or reporting requirement under the Internal Revenue Code.
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS). If you expect to receive taxable Scholarship, Fellowship or Grant income then you will not qualify for a Social Security Number (SSN) and must apply for an ITIN.
You'll need an ITIN if you're a
● Non-resident alien receiving taxable Scholarship, Fellowship or Grant income and not eligible for an SSN
● Non-resident alien required to obtain an ITIN to claim a tax treaty benefit
● Non-resident alien filing a US tax return and aren't eligible for an SSN
● Non-resident alien filing a US tax return to claim a refund
● US resident alien (based on days present in the United States
You'll need a tax number to file your US tax return and if you receive income from your US employer then you are legally required to file a tax return. You don’t need one if you are just filing a Form 8843, but if you have been supplied with one, you must include it on the form.
It can take 6 to 8 weeks and sometimes longer to obtain an ITIN. And it’s important to be aware that it can often take more than one application before you successfully receive an ITIN. You will need I.D. such as a passport to apply for your ITIN.
4. Filing Your US Tax Return
Non-resident aliens file Form 1040NR-EZ or 1040-NR “US Non-Resident Alien Income Tax Return” to assess and file federal income and taxes. Even if you don’t earn money during your time in the US, you will still need to file Form 8843 with the IRS by the April 17 deadline. It’s the law and there is no way around it!
Sample non-resident tax return Form 1040-NR EZ
If your gross earned income from sources within the US doesn't exceed the personal exemption allowance ($4,050 in 2017), then a federal income tax return isn't due and any federal tax withheld will be refunded in full.
Under US law, a personal exemption is the amount a resident taxpayer can claim as a tax deduction against personal income in calculating taxable income and consequently federal income tax. It has the effect of reducing income tax payable, even to tax-free level, but not so as to result in a tax refund.
The Tax Cuts and Jobs Act of 2017 eliminates personal exemptions for tax years 2018 through 2025, so you won't be able to claim this for your 2018 refund. However, this will not affect your 2017 US tax refund.
Even if you earn under this amount though, you'll still need to file a Form 8843.
However, if you earned less than the personal allowance and you had taxes withheld, you should still file a tax return and claim your refund with the IRS or with Taxback.com. This is the only way to reclaim any overpaid tax.
If you’re resident of a country that has a tax treaty with the US, you may be taxed at a reduced rate or exempt from US tax on income from specific sources earned within the US.
The US has a number of tax treaties with foreign countries. Under these treaties, certain residents of foreign countries are:
● Taxed at a reduced rate
● Exempt from US tax on income derived from specific sources earned within the US
If you’re a non-resident alien, a tax treaty will eliminate or reduce taxes on certain income and services, including: Pensions, interest, dividends, royalties, and capital gains.
Under a treaty, if you're a resident (not necessarily a citizen) of a certain foreign country, you may be taxed at a reduced rate or exempt from US taxes on certain items of income you receive from sources within the US.
The reduced rates and exemptions vary depending on the country and types of income.
These countries have tax treaties with the US:
United States Model
When you apply for your US tax refund with Taxback.com, we'll check if you can use a tax treaty to reduce your income tax liability.
Most tax treaties have a clause that preserves the right of each country to tax its own residents, so once you become a resident of the US, you will lose most of the tax treaty benefits. However, many treaties still allow you to claim certain benefits even if you become a US citizen or resident. Basically it prevents a citizen or resident of the US from using the provisions of a tax treaty in order to avoid taxation of US source income.
If the treaty doesn't cover a particular kind of income or if there is no treaty between your country and the US, then you must pay tax on the income in the same way and at the same rates shown in the instructions for the applicable US tax return.
Many individual states tax income which is sourced in their states and some states don't honor the provisions of tax treaties.
Non-resident aliens typically cannot claim the standard deduction. However, certain non-resident aliens can deduct specific itemised deductions if they receive income effectively connected with their US trade or business.
These deductions include:
● State and local income taxes
● Charitable contributions to US non-profit organizations
● Casualty and theft losses
● Miscellaneous itemised deductions
● The ordinary and necessary expenses related to a US trade or business
If anyone has told you that you can get this credit as a ‘ta bonus’, this is false.
As a non-resident J1 student, it is ILLEGAL for you to claim this.
Many students don’t understand the risks involved and try to claim more money than they are legally entitled to.
The tax credits commonly being used to do this are only for US residents who are studying in the US. If you file your tax return illegally and are audited by the IRS, you will not only owe this money back to the IRS but you will be fined and it may affect future US visa applications.
At Taxback.com, 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. So, to find out how much you're owed, apply with Taxback.com here today!
And remember, even if your friends tell you that you can claim that extra $1000, be aware that as a non-resident J1 student, it is illegal to do so.
The deadline for filing your US tax return in 2018 is Tuesday 17 April.
Whenever a tax deadline falls on a Saturday, a Sunday or a legal holiday, it's typically moved to the next business day.
That's why the filing deadline was April 18 in 2017-April 15 was a Saturday, the 16th was a Sunday, and April 17 was Emancipation Day!
If you earn income in the US, you must file a tax return and you'll need certain documents to file. It’s very important that you have the correct documents required to prepare and file your tax return.
- US entry and exit dates for current and all previous visits
- All tax forms you’ve received (including Forms W-2, 1042-S and/or 1099, etc.)
- Visa/immigration status information-Form DS-2019
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
Once you have your W2 Form from your employer (typically in January), you can use it to file your US tax return!
Make sure you check your state residency status as it may be different than your residency for federal tax due to some states having different rules and not following the federal ones and select the non-resident form. You must file your US tax return before the deadline of the following year.
The 1040NR-EZ is easy to fill out, just take your time and follow the instructions. Many boxes won’t apply to you and the majority of the information required is your personal information, earnings, amount of tax you paid, and amount you are to be refunded.
State and local tax return forms can often be trickier than filing the 1040NR-EZ form. To file your state and local tax forms, you can go onto that particular state’s government website or search for them in Google. If you worked in New York for example you will find your tax return forms here.
Make sure you select the non-resident form.
State and local tax return forms can often be trickier than filing the 1040NR-EZ form, often requiring multiple forms to accompany your return.
For example, if you worked in New York and are filing your tax return, you need to first fill out the IT-203 non-resident tax return form, the IT-203-B form section B, which details where you lived in New York, and the IT-2 form which is basically a copy of your W2 form.
If this all sounds a bit scary however, you can use an agency like Taxback.com to file your tax return for you! This means that we’ll do all the paperwork for you so you won’t have to worry about compliance.
The average US tax back we get for J1 students is $800
If you’re due a refund, Taxback.com can send your money straight to your bank account, anywhere in the world. Taxback.com has been processing refunds for students and people all over the world since 1996! That adds up to over 1 million tax returns filed to date!
All our specialists are fully certified with the IRS, and at Taxback.com, we only employ the most experienced people to look after your taxes. Our team of tax experts can answer any tax questions you might have 24/7, file your tax return for you and get you the highest tax refund you’re legally entitled to. The average US tax refund is $800.
Taxback.com can also file amendments on your behalf, correct poor tax returns made by dishonest companies, and help you to settle any liability or outstanding issues you may have with the IRS.
The average US tax back we get for J1 students is $800
The general IRS rule states that a non-resident alien, whether single or married, may claim only one personal exemption as long as they are not claimed as a dependent on any other US tax return (in which case their personal exemption was already used).
The general rule is that you can’t deduct personal or living expenses, unless specifically allowed by the US tax code. Some foreign students are eligible for a direct write-off of that part of the scholarship or grant that was used to cover qualified educational expenses. The deduction applies to all non-resident aliens who are candidates for a degree or at least part-time students.
The qualified educational expenses also include all out-of-pocket expenses paid for tuition, academic fees, books, supplies and equipment required by a college or university.
However, unless you're going to study in the US, you can't claim this.
5. Important Documents Explained
This is your US tax return and you can file it along with a copy of your Form W2 at the end of the tax year.
This for is specifically for J1 students with no dependents and who can’t be claimed as a dependent on another person’s tax return, and if your only income is from salaries, wages, tips, tax refunds, scholarship grants etc., and your only deductions were state and local taxes.
Sample non-resident state income tax form for New York
These forms differ from each of the 50 states in the US, and you will need it to complete the form for the state(s) in which you worked.
Officially known as a "Wage and Tax Statement", this is an Internal Revenue Service (IRS) tax form used to report wages paid to employees and the taxes withheld. You’ll need your W2 to file your tax return and your employer should give it to you at the end of January. It will state the previous year's earnings and tax withheld.
This form is divided into state and federal sections and there are fields with employer information and details of income. Your employer must complete a Form W2 and they will send it you typically by 31 January.
If you earn any tip income you must report it to your employer each month (usually using Form 4070). Tips are subject to income withholding.
If you go to the states and earn income under the personal exemption ($4050 in 2017) then you still need to file a Form 8843 ’Statement for Exempt Individuals with a Medical Condition’. It's not an income tax return, it's a statement you file for the US Government if you’re a certain non-resident alien (including spouses/dependents of certain non-resident aliens).
6. Getting A Tax Refund
To get a tax refund from the US, you'll need to file a US tax return. The average J1 refund is $800 so it’s definitely worth applying to get your tax back! Taxback.com can help you get your tax back without the hassle and we’ll do all the paperwork. You can start by getting a free estimate of your refund using our online tax calculator.
● Fill out a W-4 withholding form once you get a job
● Keep track of expenses as you may be able to claim tax deductions
● Keep your US bank account open so you can get your refund straight to your account
● You MUST file a tax return in 2018 for 2017 if you earn more than the personal exemption amount
● You should file your US tax return by April 17 2018 for your 2017 tax refund
● To claim your refund, we’ll need your W2 Form or final cumulative payslip and social security number/ITIN number
● If you lose your forms, Taxback.com can help track them down!
● Make sure you get an address and other contact info from your employee
● Get your free tax refund estimate at www.taxback.com/us
● No upfront fees so you can apply now and pay later!
The quickest way to find out exactly what you're owed is to apply with Taxback.com here. We'll send you a free, no-obligation estimate of any refunds due.
January 1 2018
Start of the 2018 tax year. The fiscal year in the US is the same as the calendar year.
January 10 2018
For employees who work for tips. If you received $20 or more in tips in December, you must report it to your employer using Form 4070.
You should report your tips on the 10th of every month throughout the year, excluding months where the 10th falls on a weekend or bank holiday.
January 17 2018
If tax is automatically deducted by your employer, you probably don’t need to worry about this deadline.
However, if you didn't pay your income tax for the year 2017 through withholding (or didn't pay in enough tax that way), you must use Form 1040 ES. For example, if you’re self-employed or a landlord, you need to pay your final instalment for the year 2017. You don't have to make this payment if you file your 2017 return (Form 1040).
February 10 2018
If you worked for tips. If you received $20 or more in tips during the month of January you should report them to your employer on IRS Form 4070 (Employee’s Report of Tips to Employer).
February 15 2018
If you claimed an exemption from income tax withholding last year on Form W4, Employee's Withholding Allowance Certificate, you must file a new Form W4 by this date to continue your exemption for another year.
February 28 2018
Deadline for businesses to submit forms 1099 and 1096, if filing on paper. These documents relate to business transactions that aren’t covered by W2 (anything that falls outside of tips and wages – hiring an independent contractor, etc.). If filing electronically, the deadline is March 31.
Deadline for farmers and fishermen to file 2017 income tax return (Form 1040) and pay any tax due. However, you have until April 17 to file if you paid your 2017 estimated tax by January 15, 2018.
March 10 2018
Employees Who Work for Tips. If you received $20 or more in tips during the month of February, you should report them to your employer. Use IRS Form 4070 (Employee’s Report of Tips to Employer).
March 31 2018
Deadline for electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, and W-2GS. This date applies only if you file these forms electronically.
April 10 2018
Employees Who Work for Tips: If you got $20 or more in tips during the month of March, you should report them to your employer using IRS Form 4070.
April 17 2018
File a 2017 income tax return (Form 1040, 1040A, or 1040EZ) and pay any tax due. Last day to contribute to an Individual Retirement or Health Savings Account (IRA/HSA) and have it considered retroactive to 2017. Finally, it’s the deadline for the first quarterly estimated tax payment of 2017.
May 10 2018
Employees Who Work for Tips. If you received $20 or more in tips during the month of April, you should report them to your employer using IRS Form 4070.
June 10 2018
Employees Who Work for Tips. If you received $20 or more in tips during May, you should report them to your employer using IRS Form 4070.
July 10 2018
Employees Who Work for Tips. If you received $20 or more in tips during June, you should report them to your employer using IRS Form 4070.
August 10 2018
Employees Who Work for Tips. If you received $20 or more in tips during July, you should report them to your employer using IRS Form 4070.
October 16 2018
Last day to efile a Federal Income Tax Return for tax extension filers.
December 31 2018
Last day to make any tax moves for the year 2017. Planning your income and expenses year by year is a really useful method of managing your income tax effectively. By incurring expenses a year early (‘accelerating’ expenses) or delaying them until the following year, you can make significant changes to your tax values!
The average US tax back we get for J1 students is $800
Q. Do I need to file a US Tax Return?
A. Yes. You’ll need to file a Form 1040 EZ if you earned over the personal exemption amount in 2017. If you earned under this amount, you’ll still need to file a Form 8843.
You will need to file a tax return if you want to apply for a refund.
Q. What happens if I don’t file a tax return?
A. It’s very important to comply with US tax laws as it may affect your future visa applications.
Q. How do I know if I’m owed a tax refund?
A. The quickest and easiest way to find out if you’re due a refund is by using our online tax calculator or applying for a refund. We’ll send you a free, no-obligation quote of what you’re owed, you won’t pay anything upfront.
Q. What forms do I need to file my tax return and apply for a tax refund?
A. You will need to provide either a:
1. Final Cumulative payslip OR W2 Form
2. Your social security number/ITIN number
Often we can use your final cumulative payslip to start applying for your refund but some states require you to submit a W2. You will receive this form at the end of the tax year.
Q. What is a final cumulative payslip?
A. This is a payslip which is given to you along with your final payslip and states all your earnings and taxes you were charged during the year.
Q. How do I know if I'm a resident or non-resident for US tax purposes?
A. You will probably be deemed a non-resident for tax purposes when you first start working in the US. As a non-resident for tax purposes, you must file a non-resident 1040NR Tax Return.
It’s only when you pass the Substantial Presence Test that you’ll be deemed a resident for tax purposes. Please, note certain J1 and F1 visa holders might be exempt from the Substantial Presence Test for 2 or 5 years depending on their occupation.
Q. What is the substantial presence test?
A. The Substantial Presence test is a test which will allow you status as a resident for tax purposes once you pass it. To pass it you must have been physically present in the US for:
● 31 days of the current year
● 183 days over the last three years
To calculate the 183 days, you can include all of the days you were present in the US over the current year, 1/3rd of the days you were present for the year before, and 1/6th of the days you were present in the US in the year before that.
Q. When can I apply for my US tax refund?
A. You can apply for your tax refund at the end of the US tax year which runs from January to December.
Q. How much money will I get back?
A. How much you get back will depend on your individual circumstances, but Taxback.com will endeavour to get you back the maximum legal tax refund possible. That amount depends on factors like:
● Your visa
● Your earnings
● What state you worked in
● How long you worked for
The average refunds we get for our clients on J, Q, F, M, and H visas is between $520 and $1118 so apply today!
Q. How long will it take to get my tax refund from the US?
A. Normally it takes around 10 - 12 weeks from the day your file is received by the tax office to the day you get your cheque.
Q. Could I owe money to the IRS?
A. It’s unlikely. We’ll check your situation and file a tax return that is 100% compliant with US tax laws on your behalf.
Q. How far back can I go to claim a refund from the US?
A. US law gives taxpayers who fail to file their income taxes 3 years to submit a return and claim a refund.
9. Need Help With Your US Taxes?
There are many dubious tax companies out there who boast about how much they save their customers on their tax bill or claim they can retrieve inflated tax refunds. However, it’s important to ask yourself - are they really the best people to handle your tax affairs? After all, if you choose the wrong tax company, and incorrect information is submitted on your tax return, you will be seen as fraudulent by the IRS and you may have to pay fines and penalties.
Students should proceed with caution and choose the correct and legal route! If you choose a legitimate tax agent like Taxback.com you can still receive a tax refund, while also remaining compliant with the IRS.
With over 1 million tax returns filed since 1996 and over half a billion euro in refunds processed already, you know your taxes are in safe hands!
Taxback.com is also the only tax agent to become a partner member of the Alliance for International Educational and Cultural Exchange. This Alliance is an association of 76 nongovernmental organisations comprising of the international educational and cultural exchange community in the United States. The Alliance serves as the only collective public policy voice of the exchange community.
To find out how much you're due, simply apply for your US tax refund here and we'll send you a no-obligation refund estimate!
The average US tax back we get for J1 students is $800