Do exchange visitors who were in the U.S. during the previous year, but are now outside the U.S. required to file tax forms from abroad?
Which forms must I file?
What information do I need to prepare my tax forms?
What references may help with complicated situations?
What is UH’s legal responsibility with respect to advising on federal and state taxes for exchange visitors?
Can I get an extension if I am unable to file my tax returns on time?
What happens if I do not file a tax return?
J-1 exchange visitors who teach or conduct research and are paid by a foreign source are exempt from counting days of presence for up to three years. Can these J-1 exchange visitors file as nonresident aliens?
J-1 exchange visitors paid by a U.S. source are exempt from counting days of presence for two calendar years. After two calendar years of residence in the U.S. they may file as resident aliens using the Substantial Presence Test. Can they still file as nonresident aliens if they want to?
An H-1B worker who does not pass the Substantial Presence Test (SPT) must file as a nonresident alien. If they pass the SPT, then are they required to file as a resident alien? Do they still have the option to file as a nonresident alien?
Do exchange visitors who were in the U.S. during the previous year, but are now outside the U.S. required to file federal and state tax returns from abroad?
All nonresident alien J-1 exchange visitors and their J-2 dependents who were in the U.S. in a given year must file federal tax returns by April 20th of the following year. Individuals who are now abroad may obtain tax forms, instructions and information from the IRS website. Some U.S. embassies or consulates may also be able to assist with tax forms.
A person must also file a State of Hawaiʻi tax return if Hawaiʻi source income was received while they were in the U.S. State of Hawaiʻi tax forms, instructions, and information are available on the Hawaiʻi Department of Taxation website.
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Which forms must I file?
For federal tax forms, see “How to determine which forms to file” on the Federal Tax Information page for more details. All federal tax forms can be obtained on the IRS‘s website.
For State of Hawaiʻi tax forms, see “How to determine which form to file” on the State Tax Information page. All State of Hawaiʻi tax forms can be obtained on the Hawaiʻi Department of Taxation’s website.
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What information do I need to prepare my tax forms?
Anyone paid a salary or wages for UH employment should receive a Form W-2 from UH after January 31st. A copy of the W-2 must be attached to the tax return. If someone received a fellowship or stipend payment, UH will issue a Form 1042-S, which should be attached to the tax return. If taxable dividends on investments were earned, the financial institution will send a Form 1099, which also must be attached to the tax return. Receipts for any charitable donations or certain medical expenses during the tax year will also be needed. Each person’s tax situation is unique, so additional documents may be required.
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What references may help with complicated situations?
IRS Publication 519, “UH Tax Guide for Aliens” and Publication 901, “UH Tax Treaties” are both helpful. A person who cannot figure out their tax situation independently should contact the IRS, Hawaiʻi Department of Taxation, or a certified public accountant for assistance. Since tax obligations are a personal responsibility, UH cannot assist with tax return preparation or advising.
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What is UH‘s legal responsibility with respect to advising on federal and state taxes for exchange visitors?
UH must inform exchange visitors of their obligation under the tax laws. However, UH staff must specifically avoid personal and individual consultation with respect to an individual’s tax situation. UH officials cannot be responsible for helping with tax forms or providing tax advice. If more assistance is needed, the individual should contact the IRS, Hawaiʻi Department of Taxation, or a certified public accountant.
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Can I get an extension if I am unable to file my tax returns on time?
Yes. Both the IRS and Hawaiʻi Department of Taxation have forms to request an extension. The IRS application for extension is Form 4868.
The State of Hawaiʻi has two extension periods. The first extension is granted for four months automatically – no form needs to be filed unless a payment is owed. If the person is making a payment and asking for an extension, then they must file Form N-101A and payment must be sent by due date of April 20th. To obtain an additional two-month extension period, file Form N-101B. The applicant must give a valid reason, pay at least 90% of ultimate tax liability, sign, and submit the payment and form before the end of the first extension period.
Federal and state applications for extension must be filed by the respective regular due dates of the returns. It is important to note that extension applications do not extend the time allowed to pay any taxes owed. Taxes are still due by the regular due dates of the returns.
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What happens if I don’t file a tax return?
Tax return submission is required by tax law, but compliance is voluntary. Someone who does not file a return may or may not get caught. If caught, a fine will be imposed. Individuals who comply with filing requirements are generally eligible for refunds. Anyone who does not file a return will not receive a refund. Foreign nationals who later decide to apply for U.S. permanent residence may have difficulty with their application if they have not complied with tax law.
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J-1 exchange visitors who teach or conduct research and are paid by a foreign source are exempt from counting days of presence up to three years. Can these J-1 exchange visitors file as nonresident aliens?
Yes, filing as a nonresident protects the foreign-source income from U.S. tax. However, if they choose to follow the same rules as a J-1 with U.S. source income and file as residents, they can do so, but must pay U.S. tax on their total worldwide income.
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J-1 exchange visitors paid by a U.S. source are exempt from counting days of presence for two calendar years. After two calendar years of residence in the U.S. they may file as resident aliens using the Substantial Presence Test. Can they still file as nonresident aliens if they want to?
Ordinarily, J-1 exchange visitors present in the U.S. for 183 days or more in their third year qualify to file as residents under the Substantial Presence Test (SPT). In order to file as a nonresident, a scholar must prove a closer connection to a foreign country than to the U.S. If they are able to prove such a connection, they should complete Form 1040NR and Form 8843.
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An H-1B worker who does not pass the Substantial Presence Test (SPT) must file as a nonresident alien. If they pass the SPT, then are they required to file as a resident alien? Do they still have the option to file as a nonresident alien?
Anyone who passes the SPT must file as a resident alien. It would be very difficult for an H-1B who passes the SPT to prove a closer connection to another country than to the U.S. If there is a treaty involved, the individual would file as a dual resident, not as a nonresident alien.
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Sources:
Adviser’s Manual of Federal Regulations Affecting Foreign Students and Scholars, NAFSA: Association of International Educators
Information provided by Deborah Vance, author of the U.S. Federal Income Tax Guide for International Students & Scholars
Form N-15 Instructions for Preparing State of Hawaiʻi Department of Taxation Nonresident Income Tax Return
IRS Publication 519, “U.S. Tax Guide for Aliens”