20 Feb Challenges faced by International students to file a tax return
Apart from meeting the travel hassles resettlement struggles, every international student must deal with the tax issues as well which is not an easy task. Any international student is considered as a nonresident alien by the Internal Revenue Service (IRS). You must file tax return 2020 if you have earned any income in the calendar year 2019(January 1st – December 31st). To do this filing, you need to submit certain documents/forms to the IRS. Before we get into what is required, let’s look at the challenges every international student face to file a tax return.
Challenges in filing tax return 2020
While adapting to a new culture itself is a big deal, facing tax filing and fearing the IRS and other State Tax Authorities would add more pressure. Wonder why every student is buzzing about it? Here are the reasons to fuss about tax filing.
1. You must deal with loads and loads of documents and forms which would drive you crazy for sure. Understanding the technical terms mentioned in the forms itself would take much of your time.
2. The forms and documents differ from student to student based on the visa type, nationality, scholarship/grants, etc., and hence identifying the right forms to be submitted is a Herculean task.
3. A common mistake that most of the student commits is choosing an online app to file a tax return, but it adds more stress by providing incomplete benefits as the apps generally have the universal options rather than customized options.
4. Many students won’t be aware of the visa compliance issues which would be known only when an independent audit is conducted and once found, they won’t know about how to fix the issue.
5. Most of the students lose their peace of mind by not being aware of the deadlines to file a tax return and end up spending a huge amount on tax consultants or online applications in the last minute.
Requirements to file tax return 2020
It is highly important to file tax return 2020 in US as refraining from it will affect your chances of re-entering into US or changing the visa status. So, ensure that the following documents are submitted while tax filing.
1. Form 1040NR-EZ or Form 1040NR need to be filed, if you are a nonresident alien for tax purposes who has any source of taxable income above $3700 in the USA during the previous tax year.
2. Form 8843, an IRS supplemental form must be filed by all nonresident students to exclude their days of presence in the USA from the Substantial Presence Test, which would determine if you are eligible to become a resident alien. This form must be submitted to the IRS even if you don’t earn any income in the USA.
3. Individual Tax Identification Number, issued by IRS to students who are required to have a US taxpayer identification number for tax purposes, but are not eligible to obtain a Social Security Number.
4. If Social Security and Medicare taxes are withheld by mistake, refund can be asked from your employer. If you are unable to obtain a refund, you shall file Form 843 – Application for Refund and Abatement.
5. Form W-2 must be sent by the employer to the employee and the IRS at the end of the year to report an employee’s annual wages and the tax amount withheld from the paycheck.
6. In addition to the IRS, you must pay tax to the specific state where you live in the USA which is referred to as State Income Tax.
7. If you have nontaxable scholarship, then form 8843 must be submitted along with additional forms from your University.
Important terms related to filing tax return 2020
Though you submit the papers demanded by your tax consultant or online tax partner, you would still have numerous doubts regarding the process and certain terms. So, here are few of the common terms that might be difficult to understand.
1. Alien – It is one of the many common words that you can see in IRS.gov. It generally means a person who is not a US citizen for tax purpose.
2. Income for tax purpose – Wages, salaries, interest, tips, dividends and scholarship/fellowship grants from US source are considered as income for tax purpose.
3. Amendments – It is done to rectify the mistakes or errors committed in the previous year tax filing.
How to file tax return 2020?
As everybody knows, filing the right documents is of course a tedious task and it is not so easy to do by oneself. If you are aware of the forms to be filed, you can do it online on your own if not you can seek help of a tax consultant, but it is a bit pricy. So, the best way is to seek help from a tax preparer who can assist in paying the tax return 2020 on time and can deal with the IRS or any other State Tax Authorities. They can help you be stress free by saving your money, time and your bank account and properties.