Yes, you have to pay the taxes...
But there is good news as well: many countries have special tax treaties with the USA which may allow you to have extra tax deduction from the money earned here.
GENERAL TAX INFORMATION
As with other countries there are various taxes in the US. Here are the major taxes that you will encounter in the US, relating specifically to compensation you receive:
Federal Income Tax - A nationally applied tax
State Income Tax - most states have an income tax, a few have no income tax ( ex. FL )
City or Local Income Tax - varies from area to area
Social Security Taxes - otherwise known as FICA & FUTA
See below for more information on these taxes. In most cases you are exempt from these taxes while on J-1 Trainee visa.
WHY SHOULD I BOTHER TO FILE MY U.S. INCOME TAX FORMS?
It's the law!
The United States Internal Revenue Service (IRS) conducts audits every year. If you do not file they WILL track you down, even if you have returned to your home country (they have done it before). None fillers have to pay a fine and interest if you owe any tax. The US government has reciprocal agreements with most countries and your home country tax service may contact you as well.
The average tax range for J-1 trainees is 10%. This tax percentage is usually much less than in your own country. Usually the tax is taken by host employer from each pay check.
Most trainees are eligible for a tax refund and often get money back
Not paying taxes may jeopardize any future travel or visa to the U.S.
INCOME TAX TIMELINE
January 1st to December 31st Tax is deducted (withheld from your paycheck and sent to US government)
January 1st to April 15th Time period of the following year in which you have to submit your tax forms for the previous tax year.
If you arrive in the middle of, or even in the last week of that year, you still have to pay taxes for that period. You will have to file tax forms in the next year, even if ultimately you do not end up owing any tax (you still have to prove to the government that you that you either paid all the tax you owed, or that you didn't owe any).
Some states (such as FL) do not have State Income Tax. Most others do. You will be responsible to submit your tax return form to each state you received income.
You can download State tax forms here or pick them up from your nearest public library or post office.
City or Local Income Tax
Generally available from local library or post office. May also be available online from the website of your local or city income tax office.
HOW TO COMPLETE MY TAX FORMS?
Unfortunately, our program is not allowed to offer any tax advice and we cannot help you with your taxes. Instead, we offer free tax software for our participants. TOP has signed a contract with the Sprintax tax preparation software provider. This software is specially crafted for foreign people with income in the USA. It is extremely easy to use and very quick. To access Sprintax for free simply request access code from TOP. You can request it by going to:
TOP paid Sprintax for the access code that will allow you to complete Federal tax return the and required 8843 forms free of charge to you. Most interns will have to complete State Tax return as well. Sprintax will do this for you for $26 for each state. You can save the money and complete your State Return form for free but BEWARE: this is not a very easy process and you can make mistakes. You can find basic information on state returns above.
You can also hire a local tax preparer to complete your forms for you, but be aware that many of these preparers are not fully knowledgeable of how your J-1 visa status affects your tax situation. You may wish to consult publication 519. Our experience shows that tax preparers very often complete incorrect forms for J1 participants.
WHERE DO I SEND MY COMPLETED STATE FORMS?
Refer to your tax forms for the correct address.
SOCIAL SECURITY TAXES
Social Security Taxes (FICA and FUTA) are used to support US citizens or permanent residents in case of disability or unemployment and in retirement. As a J-1 trainee you are permitted to apply for and to receive a Social Security Number (SSN). However, as non-immigrant visa holders, neither you nor your host employer need to contribute towards a system from which you cannot benefit. Therefore you DO NOT have to pay Social Security Taxes.
If you notice that Social Security Taxes are being deducted from your paycheck then usually it is because you employer is not familiar with the exception made for J-1 visa holders (by law employers MUST ordinarily deduct these taxes from employees AND also contribute themselves towards each employee?s Social Security benefits). Many new host employers on our program are also nervous about not withholding Social Security Taxes from your pay. In this case, have your host contact our office. We can supply with official documentation to prove exemption. When your employer fully realizes this, they should be almost as happy as you!
If you have had money deducted for SS taxes, you and your host employer may receive a refund. Your employer must file a Form 941C with the government to reclaim these payments.
See our video!:
7/23/2015 - We produced this video with participation of hosts and interns. We hope it will provide some additional information to our applicants Read more