International students - questions about paying taxes in the US

[crater21]

Hi everyone,

 

I'm a Canadian grad student in New York. My program gives me a stipend (not an assistantship or a job, just a living stipend). I just received my funds for the new semester and noticed that the university has taken off 14% "Withholding tax". Anyone know what this is about? 

 

Also, more generally, does anyone know what the tax liabilities are for international students? Do we have to file federal taxes in the US?

 

For the Canadians here - do we file income tax returns here or in Canada?

 

Thanks, and happy new year all!

[anthropologygeek]

Any money made in the US is taxed by US and any money made in New York is also taxed in New York. Be happy, I don't think your make enough so you should get money back from both and not have to pay.

[TakeruK]

Hi, also a Canadian in school in the US here (California). Like anthropologygeek says, we will have to file income taxes in both Canada and the US.

 

Income from Canada (e.g. for the 2012 tax year, if you made any money in Canada before moving to grad school, if this is your first year) will be taxed in Canada at Canadian rates. We still qualify for all of the basic exemptions so unless you were making a ton of money, you probably will get whatever tax you paid back. If you have no Canadian income, you might not have to file taxes (since you won't owe anything) but it's still a good idea to file these blank returns, in my opinion. It will help you keep track of any tax credits you want to carry forward (you might have a lot of educational credit leftover, for example). 

 

Income from the US is taxed at US rates. This gives good summary of US federal tax rates: http://en.wikipedia.org/wiki/Income_tax_in_the_United_States See the examples below. Take your total income expected for the tax year, and subtract out the $3800 personal exemption (if you are single). Then the table tells you how much tax you pay for each part of your income. Note that although the example on Wikipedia also shows a $5950 standard deduction, we are NOT eligible for this benefit as we are not residents for tax purposes (all F-1 and J-1 students are non-residents for tax purposes for the first 5 years). 

 

We would also have to pay income tax for our state (and in Canada, for our province).

 

This spring will be the first time I file taxes in the US. My friends in the US say, on average, they pay about 10% taxes, after considering all the deductions. So far, my school has also taken about 14% off my stipend payments too. A Canadian friend of mine also says there is some kind of tax treaty between Canada and the US so he thinks he got all his money back when he filed taxes (although he admits he doesn't track it very well). 

[crater21]

Great, thank you so much for the replies. This helps to clear it up. Cheers.

[LaraClarc]

Hey, I am a second year F-1 student from Canada here in the states. I have also heard about treaties, deductions and so many other things. I also know that my stipend is being taxed at a 14% rate. I knew that last year too, however last year's tax filing was very bad for me. I didn't understand a thing and I had to fill out my forms because I was getting close to the deadline. I read some things, however it still was not clear to me.I didn't know what to do so I decided to go to an accountant. I made an appointment, however a friend of my roommate said he had used some web site to fill out his forms for him. It sounded easier (while in my room, you know) and so I found this web site, it was called Sprintax. Everything was OK with it. It calculates and fills the forms. I just sent it to the IRS. Nothing seemed wrong, no message from the IRS of any kind, or anything at all. I just received my refund a few weeks after that. This year I made more research and I hope I will manage to fill my form by my self. I tried to keep track of my taxes. I will try, if I don't manage I think I will use this website again. At least I will not waste time calculating. So what do you think about these websites and softwares anyway?

[TakeruK]

In Canada, I always used software to file my taxes. It's way too time consuming to do it by hand. I use UFile for Canadian taxes, which is free for students, so that is pretty nice. They also have reduced rates if you are filing a simple return.

 

My US school provides us with software to file our US taxes. It is called Glacier, or something like that. It sounds like similar to Sprintax. I plan to use it again this year

 

My last post on this thread was about a year ago, before I filed my taxes for the first time! But for the 2012 tax year, I made so little US income (first 3 months of grad program) that I ended up getting all of my taxes back. I don't think that will be the case this year though. I learned a few things from last year though:

 

1. As a non-American, we cannot electronically file our IRS tax forms, we have to mail them in. As a Canadian living outside of Canada, we cannot NETFILE our CRA forms, we have to mail them in. This made it more difficult!

 

2. You can claim tuition money paid at a US school towards Canadian Education tax credits. Every dollar paid, even if you got a tuition waiver (to the CRA, this is income paid to you that you must pay back to the school). You also get the $400/month living expenses and $80/month book credit just like when you were an undergrad student in Canada. Fill out form TL11-A (and maybe TL11-D too?). I forgot about this until later in the year and filed a correction and waiting to see what the CRA will say. 

 

3. For California, there is an exception to what I said above. You have to pay state tax on income from foreign sources (i.e. if you are funded by a Canadian fellowship) as well as American sources. This probably varies from state to state though.

[LaraClarc]

TakeruK, were you happy with this Glacier website. Pls advice, I am open to new ideas. I was thinking of using this Sprintax again. You can check out the website and compare them. And one quick question - Does your school provide you with this software for free? I have heard that there are these kind of options I guess if my school had these, I should have been informed by now? Thanks

[TakeruK]

Yes, I was happy with Glacier but I didn't try anything different. Glacier was provided by my school for free, which was my main reason for using that one!

 

My school issues the tax forms around the end of Jan and that was when they told us about the software.

Edited January 14, 2014 by TakeruK

[Carthage32]

Just to chime in on this question...

 

My school also provided Glacier for free, and I found it a breeze to use (really user-friendly and easy to navigate). Will definitely use it again.

[LaraClarc]

Will I be able to claim my State TR and my FICA ( yes, I have withheld...) ? Last year it was possible with Sprintax I remember, I got them back. It was easy too... Just step by step, clicking here and there and I was done. I was planing on using Sprintax again this year... I'm familiar with it, it was easy and quite cheap btw. I think it was USD35 or 36. I can in fact recommend it. When I think about it now I was very happy when everything was finished and I was holding the filed return in my hands (so relieved..... )) ) and after that the refund of course. It was great help for me... So this was my plan, however if you guys have any advises or suggestions?