alien – A term used by the IRS to denote an individual who is not a U.S. citizen.
exempt individual – A person not subject to the Substantial Presence Test (see below), which determines whether an individual files as a resident or nonresident. Many students misunderstand this to mean they are not required to file a tax return and or pay taxes.
Federal Insurance Contributions Act (FICA) – The federal law that requires employers to withhold a portion of employee wages and pay them to a government trust fund that provides Social Security retirement benefits and helps fund Medicare health insurance for the elderly and disabled. Also called Social Security.
“file a tax return” – A common expression referring to completing a tax form and sending it to the federal government and with the state of Indiana.
Form 1099 – A form that shows any interest earned on bank accounts, stocks, funds, etc., which students may need to claim. It also reflects any income earned through a temporary or staffing agency or if a student was hired as an independent consultant.
Form 8843 – The IRS form that must be filed for all students and scholars with F-1 or J-1 nonimmigrant status and their F-2 or J-2 dependents (physically present in the U.S. during the previous tax year) who are nonresidents for tax purposes. The 8843 is also known as the Statement for Exempt Individuals and Individuals With a Medical Condition. It is a very strange name for this form, but it is required regardless of whether or not students and scholars have earned income in the U.S. Dependents (including children, regardless of age) should have a completed Form 8843 independent of the F-1/J-1. If you received taxable income, we encourage you to use the FNTR software to prepare your federal tax return. The software will also prepare the IRS Form 8843 for you and your dependents.
Foreign National Tax Resource (FNTR) – A web-based tax preparation software designed to help nonresident aliens prepare a U.S. Nonresident Alien Income Tax Return (Form 1040NR or 1040NR-EZ) and Form 8843.
Individual taxpayer identification number (ITIN) – A nine-digit number that begins with the number 9 and was created for use as tax returns for those taxpayers who do not qualify for a Social Security number (SSN).
Internal Revenue Service (IRS) – The federal agency responsible for collecting federal income taxes and enforcing tax reporting and collection laws.
Nonimmigrant – An individual with a permanent residence abroad and in the U.S. temporarily, as in the case of an international student.
Nonresident – An individual who is not a U.S. citizen, U.S. permanent resident, or nonimmigrant who has been in the U.S. long enough to be considered a resident. Residency is determined by the Substantial Presence Test (see below).
Resident – For federal tax purposes, a resident is an individual who meets either the Green Card Test or the Substantial Presence Test (see below) for the calendar year (Jan. 1-Dec. 31).
Social Security – A term used to describe an agency, a card, and two types of tax. The Social Security Administration (SSA) is an agency of the U.S. Department of Health and Human Services. The card bears a unique nine-digit identification number and is issued to qualified individuals primarily to determine eligibility for Social Security benefits earned primarily through various forms of employment. The number on the card is also used by the IRS for data collection and record keeping. The taxes, known as Social Security and Medicare (collectively "FICA"), are withheld by employers from workers' wages and paid to the federal government for redistribution to workers after their retirement.
Substantial Presence Test – A formula devised by the IRS to determine whether an alien is a resident or nonresident for tax purposes. F visa and J visa students do not use the test during their first five calendar years in the U.S. After that time, individuals who spend 183 days a year or more in the U.S. become "residents for tax purposes" for that year (see IRS Publication 519).
tax treaty – An agreement between the United States and another country that allows residents of that country to be taxed at a reduced rate or to be exempt from U.S. income taxes on certain items of income they receive from sources within the United States. Tax treaties do not apply to state tax obligations. Tax treaties are very specific, and not all residents of a tax treaty country will qualify for tax benefits (see IRS Publication 901).
taxpayer identification number (TIN) – Individuals who are not eligible for a Social Security number receive from the IRS a unique nine-digit number for tax purposes.
U.S. source income – Any money or compensation received from a U.S. source (wages, scholarships, fellowships, money from stocks), or compensation from any source for activities in the US (see IRS Publication 519 for details).
Withholding – Deduction of a given amount of an individual’s salary for purposes of meeting that individual’s income tax obligation. Amounts are deducted directly by the employer and paid directly to the U.S. Treasury on the individual's behalf.
W-2 – Form from employer stating wages received and taxes paid in a given tax year.
W-7 – Form to apply for an ITIN (individual taxpayer identification number).
W-8BEN – Form for claiming scholarships and fellowships, used to determine substantial (physical) presence in U.S. (see Substantial Presence Test above).