Every J1 participant has a tax obligation.
If you earn income here in the United States, you must file a tax return.
While it may not be the most fun part of your J1 experience,
it is really important for you to pay taxes and comply with the U.S. tax law
when you are working with a J1 visa in the United States and who doesn't want to
file their tax return, if you will get some of your hard earned money.
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And without further ado, let's jump into the video. So before filing taxes,
especially if this is your first time, it's essential to know the basic terms,
concepts and also the best practices working in the United States with the J1
visa means that you have probably a number of taxes that are being deducted in
your salary.
As a J1 student in the United States you will be considered as a nonresident for
tax purposes.
So as a non-resident you are only required to pay the taxes for the income that
you have earned here in the United States.
So in this video we are going to talk about why is it important to file a tax
return, who is the IRS,
what are the taxes that you need to pay, what is the federal income tax bracket,
how do you calculate your tax return,
what will happen if you don't file your tax return and how to file a tax return.
But before we dive into the video, we have important shout out to do
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So now let's dive into the video.
First things first. Why is it important?
Because every J1 visa holder must file their tax return at the end of the tax
year and it is the law that is really required,
so if you don't follow that you might encounter problems.
And also not only J1 visa holders are required to do that.
Even American citizens, permanent resident or other, J1,
a no other visa holders are also required to do that.
So you really have to do that in order to avoid problems in the future.
And plus doesn't want to file their tax return if you will get some of your hard
earned money.
So who is IRS? IRS stands for internal revenue service.
The IRS is the government agency that enforces federal tax code here in the
United States.
So number three is what are the taxes that you need to pay as a J1 visa
holder? So J1 visa holders are usually taxed based on the following,
number one income earned from working in the United States.
Second is from your stipends, awards,
grants and fellowship and next is other income earned from working here in the
United States.
So depending on the location where you work here in the United States,
there may be up to four different types of taxed that you are required to pay.
Federal taxes, state taxes, local taxes and FICA taxes.
So what is a FICA tax?
As a nonresident J1 you should not be charged FICA tax,
however it may happen and if so you should apply for a refund unless you qualify
as a resident alien due to previous presence in the United States.
So some States here in America do not charge income state taxes like Florida,
Nevada, Texas and Washington.
So the amount of taxes that you have to pay depends on your income.
So I will show you the bracket so you will know a what percentage you are in and
how much you need to pay them.
There are seven federal tax bracket for the 2019 tax year.
Your bracket depends on your taxable income and filing status.
These are the rates for taxes due in April 2020.
The set of numbers below shows the brackets and rates that apply to the current
2019 tax year and relate to the tax return you file in 2020
So a lot of people wants to know how to calculate their tax return.
Your refund is calculated as the amount withheld for federal income tax minus
your total federal income tax for the year.
So after you've calculate your taxes, you might be wondering,
well my employer is withholding more than this.
Well you might be probably right because your employer is not only deducting
federal income taxes from your salary,
but also their deducting Social security tax, Medicare tax,
and also state income tax.
So just to reiterate that not all of your employers will deduct a state income
tax.
It just depends on what state you are in because every state has different laws
and different requirements.
So if you are having a hard time calculating your own tax return,
there's a bunch of websites that offer free a calculator or a tax return
calculator. All have to do is enter your information,
your W2 and how much you earn in that year so they can help you all throughout
your process.
So next is what will happen if you don't file your tax return. Well,
it can be a problem in the future.
So if you are planning to go back here in States,
or stay here in the United States or live here in the United States,
that can be one of the reason for your future visa denial.
So make sure that you always comply with their requirements.
So next is how to file a tax return. Well, first things first,
you have to identify how do you want to file your tax return?
So there are three steps to file your tax return.
Number one is know or choose how you want to file your tax return.
Is it with a tax preparer, a CPA accountant or an online software.
And by the way guys, not all online softwares are available for us,
J1 students because we are non residents,
there are only certain tax softwares that can be used by a J1 visa holders.
So make sure that when you choose an online software to prepare your tax return,
make sure that you put that you are a non resident and they accept non-resident
applicants because if you file your tax return as a resident there can be a lot
of complications. So there's a lot of laws,
rules and requirements that needed to be done correctly. So for me,
I know what I am only capable of and I am not an expert in filing a tax return
that's why I always use a tax preparer.
Now for the difference between the tax preparer and an online software,
a tax preparer of course you can talk to them,
you know like person to person or you can visit their offices.
Or for example like me,
I am here in Pennsylvania and my tax preparer is in California and we just
communicate through phone call while a tax online software,
you can use it wherever you are or anywhere you are in the world and most of the
time they are cheaper or for free.
Unlike for tax preparer I have to pay them $100 -
$120 I think.
And if you use a CPA that will be more expensive.
So I explained the difference of the tax preparer,
a CPA and also an online software from my last video.
I will link it them below and also just put it here in the card so you guys can
just click it. So if you will ask me for my recommendation,
well I recommend all of them. Personally,
I haven't experienced the online software,
I only experienced the tax preparer. But in my own opinion,
I think all of them are legit. You just have to find the right one.
And by the way, guys, if you're a non resident in the United States,
you cannot use TurboTax.
So that is something that you should check out or cross off on your list.
So if you have decided how you want to file your tax return,
let's now move onto the required documents.
If you earn income in the United States, you must file a tax return.
It is very important that you have the correct documents required to prepare and
file your tax return. This includes passport,
U S entry and exit dates for current and all previous visits,
all tax form you had received,
visa or immigration status information form DS - 2019,
social security number or individual taxpayer identification number.
And the third step is wait for your money to be deposited in your bank account.
So how long will it take?
Usually it takes 21 days for the IRS to direct deposit in your bank account.
If you are not using a direct deposit as your option,
it can be a little bit longer. Also,
I highly suggest just for you to file your tax return because you will get your
money back. A certain amount from the taxes that they withheld from your salary,
you will get it. So it's like a win win situation.
So either of them is safe, as long as, that tax preparer or that CPA accountant
has a legit business. You need to make sure of that.
And also the online software that you will be trusting with all of your
information.
You need to make sure that they have a good reputation and they are really
legit. But at the end of the day,
it still depends on you because we have all different kinds of needs.
I don't think so because before I tried filing it by myself so I don't have to
pay anyone but then I still ended up, you know, choosing a tax preparer,
because when I search it on Google, the IRS, uh,
recommended all of this online tax software that are free to use.
But then I realize I am not very knowledgeable enough to use this online tax
software even though it is for free. So I ended up hiring a tax preparer.
So the cost will depend on your income. If you're using an online tax preparer,
your income is below 66,000 then that is for free.
Or if you decided to use a tax preparer,
usually they cost from $100 - $150 and if you want to use a CPA accountant,
that will be double the amount of the tax preparer.
So usually it will be $200 to $300 and that's all for today guys.
I hope you enjoy this video. If you still have any questions,
just comment down below and I will be happy to assist you.
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