File your US Tax Return

US tax has changed for J-1 students. Here’s what you need to know

How to understand your obligations, file your tax return and apply for your refund

In November 2017, the US government introduced a new tax bill, called the ‘Tax Cuts and Jobs Act’. Included in this bill were significant changes to tax for non-residents in the US. Many J-1 visa holders and international students in the US, were left feeling extremely confused.

‘How does this bill affect me?’ ‘Do I have to file a tax return?’ ‘Can I still get a tax refund?’

A lot of questions were left unanswered.

Today we are here to answer these questions! And by following this guide you can keep the IRS (the American tax authority) happy while receiving any US tax back you are due.

So let’s get started.

Short on time? Check out our video summary instead!

I’m in the US on a J-1 visa. What are my tax obligations?

First things first. Every J-1 visa holder in the US must file a tax return at the end of the tax year. It’s the law!

Prior to the new tax bill there were a limited number of circumstances in which a J-1 participant would not be required to file a tax return.

This is no longer the case however, and one of the conditions of the J-1 visa is that the visa holder files a tax return.

File your US tax return the easy way with Sprintax!

How can I file my tax return?

There are a number of ways to file a tax return.

For starters, you could file your return directly with the IRS.

But, for many J-1 students, filing a tax return is an extremely confusing, complicated and frankly boring task!

The fastest, easiest and best way to prepare your US tax return is to choose Sprintax.

What is Sprintax?

Sprintax is the only online self-prep tax software for those on J-1 programme and non-residents in the US. It will help you prepare your US tax return in minutes!

When you create a Sprintax account, our system will assist you in preparing fully compliant Federal and State tax returns.

Our software will also enable you to receive your maximum legal tax refund.

Sprintax is also the ‘go-to’ tax filing software for numerous major universities in the US including NYU, Columbia, Arizona State University, Illinois Institute of Technology and Cornell. We’re also the non-resident partner of choice for Turbo Tax.

What does self-prep mean?

Sprintax is a self-preparation tax software that allows J-1 visa holders to easily prepare a fully compliant tax return.

When you create your account you’ll be asked to enter some relevant information into the software. You can then download your fully completed and complaint 1040NR (non-resident tax return).

What is a tax residency status?

It’s vital to determine your residency status in order to file a compliant tax return.

The majority of J-1 visa holders are considered non-resident aliens for tax purposes by the IRS.

When you prepare your tax return with Sprintax, our software will determine your residency status based on the information that you provide.

What is the ‘Tax Cuts and Jobs Act’? And what does it mean for J-1 students?

The bill has wide ranging effects for all US taxpayers – but particularly for non-residents who are venturing to the States to study, for an internship or to work and travel.

As most of these changes were activated in January 2018, it’s vital that all non-residents understand their US tax obligations and entitlements.

The primary change for non-residents relates to what’s known as the ‘personal exemption’.

Prior to the bill’s introduction, every non-resident who was working in the US was entitled to a personal exemption of $4,050. In other words, if you were working in the US on a J-1 visa in 2017 you could earn up to $4,050 without paying tax. The personal exemption was also the main means that non-residents could use to get their Federal tax refund.

However, as of 1 January 2018 (and up to 2025) the personal exemption was reduced from $4,050 to $0. The removal of the personal exemption means that overall taxable income has increased for all non-residents.

It’s important to note that these amendments do not affect the 2017 (and previous) tax return filing season. So, if you were working in the US on a J-1 visa in 2017, you can still avail of the personal exemption.

Note – this does not impact your State refund. More below!

What are the Federal tax rates for non-residents?

From the 2018 tax year onwards, all non-residents must pay 10% in income tax up to $9,525. And if you earn more than this amount on your J-1 program, you must pay 12% in income tax on the amount between $9,525 and $38,700.

Case studies

1

Fred travels to Boston on a J-1 visa to work in a restaurant for the summer. During his time in the US he earns $4,000.

If Fred was working in Boston in 2017 he would not have to pay tax on his earnings as his income does not exceed the personal exception amount of $4,050.

However, if Fred works in Boston in 2018, he will not be able to avail of the personal exception and must pay $400 (10%) in income tax.

2

Fiona moves to Miami on a J-1 visa and secures work in an office for the summer. During her time in the US she earns $9,000 (the average income for around 50% of all Summer work and travel participants).

Had Fiona earned this income in 2017, her tax bill would have been $495 ($9,000 – $4,050 = $4,950. 10% of $4,950 = $495).

However, if she earns this income in 2018 her total tax bill will be $900.

The full tax rate and bracket list is as follows:

Bracket Tax rate
$0 – $9,525 10% of taxable income
$9,526 – $38,700 + 12% of the balance over $9,526
$38,701 – $82,501 + 22% of the balance over $38,701
$82,501 – $157,500 + 24% of the balance over $82,501
$157,501 – $200,000 + 32% of the balance over $157,501

The personal exemption is gone. Does this mean I can’t get a tax refund?

The removal of the personal exemption means that, for most non-residents, Federal tax refunds will be reduced. From the 2018 tax year onwards, the only reason a non-resident will be entitled to a Federal tax refund is if too much tax is deducted from their income.

Even if you’re not entitled to a Federal tax refund, it’s pretty likely you’ll be entitled to a State tax refund.

Our average State tax refund is $175

But remember; to receive your State tax refund you’ll have to file your State tax return. Before you can file your State tax return, you’ll first have to file your Federal tax return!

Bottom line? You’re legally required to file a tax return. There’s a great chance you’ll be due a State tax refund. So file your return and claim your cash!

Filing a tax return sounds boring! Can I just skip it?

Every non-resident in the US is obliged to file a tax return. It’s one of the conditions of your visa. And it’s also the law!

If you don’t file a tax return after your J-1 programme, you may be subject to penalties and interest.

Failure to comply with your tax obligations may also result in you being denied a US visa in the future.

What are the penalties?

The late filing penalty is 5% of the additional taxes owed amount for every month your return is late, (up to a maximum of 25%). If you file more than 60 days after the due date, the minimum penalty is $205 or 100% of your unpaid tax, whichever is less.

What is the advantage of filing my tax return with Sprintax?

When you file with Sprintax you file with confidence!

  • Compliant US tax return
  • Save time and stress!
  • Determine your residency status
  • Avail of relevant international tax treaties
  • Avail of personal allowances, credits & tax deductions
  • 24/7 Vita Qualified Live Chat facility
  • Maximize your State tax refund

Over 500k people have used Sprintax to prepare their tax return and get their tax refund.

How much will it cost?

The Sprintax tax prep fees are:

  • $35.95 – Federal
  • $25.95 – State

But don’t forget, most J-1 visa holders are entitled to a State tax refund!

How can I get started?

Easy! Set up a Sprintax account today!

Need to know:

  • The majority of all J-1 visa holders are considered non-residents for tax purposes in the US
  • Every non-resident in the US is legally obliged to file a tax return
  • Failure to do so may result in fines, penalties and future refusal of entry to the US
  • As of 1 January 2018, non-residents are no longer entitled to claim the personal exemption of $4,050
  • However, J-1 visa holders can still apply for their State tax refund by filing a tax return
  • Sprintax makes filing your US tax return easy!
  • When you prepare your tax return with Sprintax you’ll receive your maximum legal refund.