How to Get Your Money Back!
All About U.S. Taxes
How do U.S taxes work?
- In the United States, taxes are levied at the federal, state, and sometimes local levels to fund various public services and government operations.
- Individuals and businesses are required to report their income.
- The amount of tax owed is determined based on a progressive tax system; where higher incomes are subject to higher tax rates.
- Taxpayers file annual tax returns, reporting their income, deductions, and credits to calculate their tax liability.
- If they have overpaid during the tax year, they will receive that money back from the IRS as a tax refund!
- Tax evasion and non-compliance are subject to penalties, so it is VERY important to meet your tax obligations accurately and on time!
Tax Filing is Required for J-1s
IMPORTANT!!
- ALL J-1 participants are LEGALLY REQUIRED to file their tax return. Failing to due so or filing an inaccurate or false return may lead to legal penalties and being denied entrance to the United States in the future!
- As a J-1 SWT Visa holder, you had at least one source of income in the U.S., maybe more.
- Some or all of this income may be subject to U.S. taxation.
- Your employer should withhold taxes from your paychecks, which will go towards your federal and state income tax liabilities.
- Beginning in February, the year after you return home, you are able to file a tax return and may receive a portion of that tax money back!
- NOTE: If your employer withheld less than 10% of your total wages, you will probably owe on your Federal return. This is why filling out your form W-4 correctly is so important!!
How does it work for ME?
- As a J-1 visa holder, you are considered a non-resident for tax purposes.
- This means you will file a different tax form than U.S. citizens or residents and have a different tax rate than they do.
- Unlike American Citizens, you do not get to take what is called the ‘Standard Deduction’ which would allow you to receive most or all of your prepaid taxes back because of the income level of most typical J-1 students.
- Like an American citizen, you should receive a form W-2 from each of your employers no later than February 15 of the following year.*
- Once you have this form, you can file a tax return using a form 1040-NR (not form 1040).
- You may receive at least a portion of your taxes paid back as a refund, however this is not always the case!
Note: One of the most common questions asked is, “Why does the amount of my return not equal the amount of tax I paid?”
The answer is simple – you are only entitled to receive back the amount that you overpaid based on the United States IRS tax schedule for the calendar year you were here.
*This is an enforceable legal obligation held by all of your employers. If you HAVE NOT received this form by February 15, please reach out to us here for help!
WARNING!
- If any service tells you that you will receive ALL of your tax money back, you should make sure that they are filing the correct forms.
- If you plan to come back to the U.S., filing the wrong tax form (form 1040 for US Citizens) can cause you to be denied a future Visa and may lead to fines or other legal penalties!!
- We take pride in ONLY filing accurate, legal, returns for all J-1 SWT participants and we will NEVER tell you something that is ‘too good to be true’ just to get your business!
Tax filing process from A to Z
During your Exchange
1. Filing a form W-4 with your employer:
(Click here) to get a filled and ready W-4 for you !
When you arrive in the U.S., your host employer will give you a W-4 Form. Based on the information you provide on the W-4, your taxes will be calculated and deducted from your paycheck. You must fill this form out and give it back to your employer to get paid.
What Is Form W-4 Used for?
Form W-4 is used by your employer to calculate the amount of money that will be withheld from each of your paychecks and paid directly to the tax authorities as an estimated tax payment. This will ensure that the IRS collects federal income tax from you in a timely manner. Not paying enough during the year can result in a tax bill and perhaps a penalty, while withholding too much can create a refund when you file your tax return.
What is the difference between a W-4 and a W-2?
There are several key differences between a W-4 and a W-2, specifically, who completes it and what it’s used for.
A W-4 form is completed by you and provided to your employer at the start of employment, so they know how much to withhold from your paychecks.
On the other hand, a W-2 is given to you by your employer when it’s time to do your taxes. A W-2 form will show your wages and the taxes withheld for the year.
Who Has to Fill Out a W-4 Form?
Every employee is asked to fill out a W-4, usually on the first day of the job. Failure to do so could result in you paying too much or too little taxes.
W-4 Forms are designed for U.S. residents, not for visitors. So, there are a few special instructions you need to follow.
- Home address: Indicate your permanent U.S. mailing address.
- Box 2: Enter your Social Security number if you already have it. If you do not have your number yet, inform human resources at your host company that you applied for a number, and provide a copy of your receipt.
- Box 3: Mark or check “Single,” even if you are married.
- Box 4: Leave blank.
- Box 5: Write “1” to claim only yourself as a dependent.
*If you want to ensure that you will not owe any tax at the end of the year, write “0”. You will have more taxes taken out of your check however you will have no surprise bills when you file!!*
(If you are a resident of Canada, Mexico, Japan, or South Korea, or India, please visit the IRS website for further instructions.)
- Box 6: Write NRA for “Non-Resident Alien”
- Box 7: Leave blank.
- Sign and date your form.
- Box 8-10: Leave blank.
- Do not complete the Personal Allowances Worksheet; this does not apply to exchange visitors.
2. Reviewing your FIRST pay stub:
Once you give your employer your W-4 and you start your program, you’ll receive your first paycheck. The taxes will already be taken out of your pay. It’s important to review your paycheck to make sure you are paying the right taxes.
You Do Pay
Federal Income Tax
Local or City Income
State Income Tax
You Do Not Pay
Medicare Tax (FICA)
Social Security Tax (S.S.)
Federal Unemployment Tax (FUTA)
Gross Pay: Total amount earned in the pay period before any tax deductions.
- Deductions or Withholdings: Amount of money the federal, state, and local governments take out of your paycheck
- Net Pay: Total amount of earnings you will receive after taxes have been taken out.
- Year To Date (YTD): The total amount of earnings and withholdings since January 1st of the current calendar year.
*If you see deductions that say FICA, FUTA, S.S., or Social Security, please notify your employer and ask for a refund. If your employer is unable to issue a refund, contact the IRS and request Form 843. ( We provide this service in our TAX app )
3. Update your contact details with your employer:
If you have the option, it is good to request an electronic copy of your W-2 be delivered to a monitored email address. This will be the fastest way to receive your W-2.
If an electronic copy is not available, make sure you employer has a good address to send your W-2 to! It can be in your home country or in the care of a trusted friend in the U.S.
After Your Exchange
4. Receiving your form (s) W-2:
- Your W-2 Form summarizes your earnings and taxes withheld from you the previous year. Your employer will mail your W-2 Form to you by January 31, 2024. If you do not receive it by February 15, 2024, contact your employer to find out where it was sent or to request a copy.
- If you had more than one employer, you will have more than one form W-2.
- You will need to WAIT to file until you have ALL of your W-2 forms from ALL employers that withheld taxes. If you do not wait, you may miss out on part of your refund and will need to file an amended return later which can be time consuming and costly!
* Note: We take pride in offering a service within our tax app that assists users in locating missing W-2 forms for both prior and current tax years. This feature underscores our commitment to providing a comprehensive solution for accurate and efficient tax filings
(click here) for more.
5. Filing your Federal Tax Return
After you receive your W-2, you will file a 1040-NR (Non-Resident Alien) tax form along with the supporting forms (Schedule A, Schedule OI, and any other form that may apply to your tax situation).
click (here) to File your tax with us
The deadline to file your taxes is (April 15, 2024). The sooner you complete your taxes, the sooner you receive your tax refund, if eligible!
6. Filing your state tax return:
- Filing a federal Tax Return should automatically trigger your state filing with the State (or States) on your form W-2(s).
- A good Tax prep service will also be able to file your state return at little to no extra cost to you!
*NOTE – Not every state requires that you pay income tax! These states will not require a tax return and you will receive no state tax refund because you didn’t have to pay it in the first place!
click (here) to File your tax return with us
7. Filing extensions:
- If you are unable to complete your 2023 tax return by the deadline or do not receive your W-2 before April 15, it’s important to file an extension with the IRS.
- This step is crucial to avoid potential late-filing penalties and ensures that you retain the ability to receive your return. Filing an extension grants you additional time, moving your deadline to October 15, 2024.
Requesting an Extension of Time to File:
If you are unable to submit your tax form(s) by the tax deadline, use Form 4868 to apply for an extension of time to file Form 1040 or 1040NR. If you use this form, your deadline to file your tax return will be October 15, 2024.
To get the extra time you must:
- Estimate the amount you owe.
- Enter that amount on Line 4 of Form 4868, and include your payment with the form. ( $0 for the J-1)
- Mail Form 4868 in time no later than April 15, 2024.
Depending on the state(s) where you worked or lived, you may also need to file state tax extension forms. Each state has different requirements. Be sure to search the state tax agency in both states, if you lived in one and worked in another.
Or
E-file your form 4868 with us .
8. Receiving your refund(s):
- Depending on your tax return, you may be due a refund from the Federal Government and/or the State(s) you paid income taxes in.
- Refunds may be collected several ways; via a paper check mailed to you at your address in your home country OR via direct deposit if you have a U.S. bank account and routing number. (This applies to WISE accounts and prepaid US debit cards!)
- A paper check may take several months to arrive however Direct Deposit can arrive in as little as 2 weeks after your return is accepted by the IRS!
Tax Filing Assistance: receive your funds using Wise
1- Create an account on Wise
- Visit the Wise Website:
Go to the Wise website by typing “wise.com” into your web browser’s address bar.
- Sign Up:
Look for the “Sign up” or “Register” button on the homepage and click on it.
- Choose Your Account Type:
Wise offers personal and business accounts. Select the account type that suits your needs.
- Provide Your Details:
Fill in the required information, including your full name, email address, and password. Make sure to use a secure password.
- Verify Your Email:
After submitting your details, Wise will send a verification email to the email address you provided. Go to your email inbox, find the email from Wise, and click on the verification link to confirm your email address.
- Complete Additional Verification (if necessary):
Depending on your location and the services you intend to use, Wise may require additional verification steps. This could include providing identification documents such as a passport or driver’s license.
- Set Up Your Account:
Once your email is verified and any additional verification steps are completed, you can log in to your Wise account using the email address and password you provided during registration.
Start Using Your Account:
You can now start using your Wise account to send and receive money internationally, hold multiple currencies, and more.
9. Paying a tax liability:
Sometimes, your employer has not withheld enough taxes during the course of your employment and you OWE taxes. In this case, you have the following options:
- Pay right away when you file with the money being directly debited from an account with a U.S. account and routing number.
- File without paying and set up a payment plan with the IRS to settle your account later. This can be paid with a debit or credit card and often you may be able to pay in lower installment amounts until the entire debt is paid.
*Note – If you opt to pay later, you will probably still need to pay your tax filing service and you may be subject to interest and penalties from the IRS.
10. Keep all your paperwork.
- It is important to keep as much of your paperwork as possible in order to ensure you are filing correctly.
- You should download and save all of your electronic pay check records if possible before your employment contract ends because some employers immediately shut off your access to these records once your contract is complete.
*NOTE – If you have not received your W-2 in a timely manner and you can not get ahold of your employer, you can use the information from your last paycheck stub to file your taxes!