USA Taxes (1040NR) for International Students on F1, J1 and H1B

Akhil Bansal, a CPA, welcomes attendees to a webinar focused on taxes, specifically addressing 1040 and 1040 NR forms. He emphasizes the importance of understanding tax obligations for residents and non-residents, including international students and those on visas like F1 and J1. The deadline for filing taxes is highlighted as April 18th. Participants are encouraged to submit questions through the chat box for the Q&A session at the end of the presentation.

Akhil shares his educational background from Northeastern University and his experience with PwC in Boston and Los Angeles, leading to his establishment of USA Tax Gurus LLC. He clarifies the tax filing differences between 1040 for tax residents and 1040 NR for non-residents, with special notes on the substantial presence test and its exceptions for F1 and J1 visa holders. The discussion also touches on the tax implications of changing visa status, such as from F1 to H1B.

The script explains the U.S. tax year as a calendar year, contrasting it with other countries like India. It details how the first five years in the U.S. are calculated for tax purposes, especially relevant for F1 visa holders and those transitioning from student status to OPT and potentially H1B visas. The importance of tax filing for individuals who have changed visa status or are working under CPT or OPT is emphasized.

Akhil outlines special tax rules for non-resident aliens, particularly F1 visa holders and their tax filing status. He discusses the tax implications for non-resident aliens who are married, the rules for those pursuing additional degrees, and the importance of filing tax returns even if the income is below the standard deduction threshold to potentially receive a refund. The requirement to file a tax return for U.S. sourced income exceeding $12,550 is also highlighted.

The presentation covers common tax forms like W-2, 1099-NEC, 1099-B, 1099-DIV, 1098-T, and 1099-HC, explaining their relevance to different types of income and tax situations. It also touches on the standard deduction, the importance of updating addresses with employers and institutions, and the process for obtaining missing forms. The summary advises contacting relevant parties if forms like W-2 or 1099 are not received by mid-February.

Akhil explains the standard deduction available to students from India due to a tax treaty between the U.S. and India. He mentions the benefits of the standard deduction for students with income below $12,550 and the reduced tax liability for those earning more. The script also addresses other deductions like the rent credit in Massachusetts and the limitations of non-residents in claiming certain tax benefits. It advises against inflating expenses on tax returns to avoid future audit issues.

The script clarifies that non-resident aliens, including F1 and J1 visa holders within their first five years in the U.S., are exempt from Social Security and Medicare taxes, commonly known as FICA taxes. It provides guidance on checking W-2 forms for withheld FICA taxes and what to do if these taxes have been withheld in error. The process for requesting a refund or correction involves contacting employers and, if necessary, submitting a Form 843 to the IRS.

Akhil advises that non-residents are not eligible for stimulus checks and should not have received them. He recommends filing an amendment with the IRS (using Form 1040X) if a non-resident mistakenly filed as a resident in previous years and received stimulus money. The summary also addresses the complexities of working in multiple states and the importance of state income apportionment to avoid double taxation.

The script discusses common issues faced when filing taxes using software like TurboTax and Sprintax, including incorrect data entry, lack of personalized advice, and the potential for lost refunds. It outlines the advantages of hiring a tax expert, such as accurate return preparation, e-filing benefits, quicker refunds, and personalized service. The importance of consulting an expert for complex tax situations, especially as one's income and tax obligations grow, is emphasized.

Akhil highlights the increased tax planning opportunities for individuals with higher incomes, such as those with multiple W-2s, investment options, and stock investments. He mentions the responsibilities that come with being a resident alien, including foreign bank account reporting for accounts exceeding $10,000. The summary provides a brief overview of the services offered by USA Tax Gurus and the benefits of using their portal for tax filing.

The script provides guidance on handling tax documents, including W-2s and 1098 forms, and the importance of reporting health insurance information with the 1099-HC form in Massachusetts. It also addresses the requirement to file Form 8843 for non-residents without income, emphasizing the form's role in maintaining immigration status and avoiding penalties for not filing.

Akhil discusses the eligibility for rent deduction even for those not on a lease, provided there is proof of rent payment. He also explains that while the IRS does not require bank documents to be submitted with the tax return for student loan interest, they may request to see them in the event of an audit. The summary reassures that as long as the documents can be provided if needed, the interest deduction should not pose a problem.

The session concludes with a final Q&A, addressing topics like state tax refunds, filing jointly when one spouse is a resident and the other is a non-resident, and the necessity of health insurance in Massachusetts. Akhil provides his contact information for further questions and reiterates the importance of tax compliance, offering assistance through his website for those ready to file their taxes.