Taxes

Introduction
The U.S. tax system may seem confusing to international visitors. That is because it is confusing--many in the U.S. pay licensed tax preparers or attorneys to interpret the laws, forms and tax filing requirements. While Berkeley International Office is not legally allowed to give individual tax advice, we hope this general information will answer some of your basic questions.

Sales tax
Sales tax is a state tax added to any item sold, except for certain food items. In the Bay Area, the sales tax is approximately 8.75% (as of October 2005). Sales tax may vary by city and county. There is no way to get a refund of sales tax.

Income Tax
The Internal Revenue Service or "IRS" is the U.S. federal agency for collection of income tax. While not every state in the U.S. collects a tax on income, the State of California does through the Franchise Tax Board. All tax forms and information cited here can be found on the websites. Publication 519 is the "U.S. Tax Guide for Aliens" and contains most of the information you might need about payment of federal taxes. (see below for "Income Tax Filing"). If you have spent time in other states, you will need to obtain their state tax information.

Tax Withholding and the W-4 Form
When a person is working in the U.S., the employer is required to deduct a portion of the salary in each pay period for income taxes. At the start of your job, you will complete a half page W-4 form (Employees Withholding Allowance Certificate). The information on that form determines how much will be withheld from your paycheck for taxes. When completing the W-4 form, most international students and scholars are required to file as "single," regardless of their marital status.* It is usually correct to claim one "withholding allowance" as well. Your employer should be able to help you complete the W-4 form if you have any questions. UC campus departments can contact UC Payroll office if they have questions about the W-4. . *There may be some exceptions for people from Mexico, Japan, Korea, Canada and India.

Tax Treaties
Some countries have tax treaty agreements with the U.S. in which certain types of income may be exempted from federal tax. General information on tax treaty benefits can be found in IRS publication 901. The actual tax treaty text may also be found on the IRS website. Persons intending to take advantage of a tax treaty should provide IRS form 8233 and a tax treaty statement to their U.S. income provider in order to reduce or avoid tax withholding on income.

Social Security and Medicare Taxes
Anyone who works in the U.S. is required to have a Social Security number to be hired by an employer and for use in completing the tax return form. Social Security (FICA) and Medicare are U.S. government programs that provide benefits for U.S. citizens and U.S permanent residents, usually for retirement. It is financed by taxes withheld from the paychecks of working people. F-1 or J-1 students and scholars who are "non-residents for tax purposes" (see below) are not required to pay these taxes (see the chart in IRS publication 519). Those in J-2 status and those in F-1 and J-1 status who have become a "resident for tax purposes", do pay Social Security and Medicare taxes. If Social Security and Medicare taxes are withheld in error, you can obtain a refund by following the instructions in IRS Publication 519.

Income Tax Filing Requirement for International Students and Scholars
International students and scholars who have been in the U.S. for any portion of a calendar year must file some sort of U.S. annual tax report (also called a "tax return") by the following year's tax filing deadline (see below). Income that is taxed includes wages, scholarships and earnings on investments. (A complete list of taxed income may be found in IRS and state tax guides.) The most common type of income is wages; the money withheld from each paycheck is an estimated payment of the federal and state income tax obligation. This money is sent by the employer to the IRS and Franchise Tax Board in the employee's account (the account number is the Social Security number). Taxable scholarship payments may have some amount withheld just like wages. Investment income (not including bank interest) rarely has an amount withheld in advance, the applicable tax is paid when filing one's tax forms.

Income Tax Filing Assistance
In the Spring during "tax season," Berkeley International Office offers tax filing assistance through an online program called "CINTAX." We will also offer CINTAX introductory workshops. See our Programs and Workshops link for an updated schedule.


	Taxes in the U.S.
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Sales tax Sales tax is a state tax added to any item sold, except for certain food items. In the Bay Area, the sales tax is approximately 8.75% (as of October 2005). Sales tax may vary by city and county. There is no way to get a refund of sales tax. Income Tax The Internal Revenue Service or "IRS" is the U.S. federal agency for collection of income tax. While not every state in the U.S. collects a tax on income, the State of California does through the Franchise Tax Board. All tax forms and information cited here can be found on the websites. Publication 519 is the "U.S. Tax Guide for Aliens" and contains most of the information you might need about payment of federal taxes. (see below for "Income Tax Filing"). If you have spent time in other states, you will need to obtain their state tax information. Tax Withholding and the W-4 Form When a person is working in the U.S., the employer is required to deduct a portion of the salary in each pay period for income taxes. At the start of your job, you will complete a half page W-4 form (Employees Withholding Allowance Certificate). The information on that form determines how much will be withheld from your paycheck for taxes. When completing the W-4 form, most international students and scholars are required to file as "single," regardless of their marital status.* It is usually correct to claim one "withholding allowance" as well. Your employer should be able to help you complete the W-4 form if you have any questions. UC campus departments can contact UC Payroll office if they have questions about the W-4. . There may be some exceptions for people from Mexico, Japan, Korea, Canada and India. Tax Treaties* Some countries have tax treaty agreements with the U.S. in which certain types of income may be exempted from federal tax. General information on tax treaty benefits can be found in IRS publication 901. The actual tax treaty text may also be found on the IRS website. Persons intending to take advantage of a tax treaty should provide IRS form 8233 and a tax treaty statement to their U.S. income provider in order to reduce or avoid tax withholding on income. Social Security and Medicare Taxes Anyone who works in the U.S. is required to have a Social Security number to be hired by an employer and for use in completing the tax return form. Social Security (FICA) and Medicare are U.S. government programs that provide benefits for U.S. citizens and U.S permanent residents, usually for retirement. It is financed by taxes withheld from the paychecks of working people. F-1 or J-1 students and scholars who are "non-residents for tax purposes" (see below) are not required to pay these taxes (see the chart in IRS publication 519). Those in J-2 status and those in F-1 and J-1 status who have become a "resident for tax purposes", do pay Social Security and Medicare taxes. If Social Security and Medicare taxes are withheld in error, you can obtain a refund by following the instructions in IRS Publication 519. Income Tax Filing Requirement for International Students and Scholars International students and scholars who have been in the U.S. for any portion of a calendar year must file some sort of U.S. annual tax report (also called a "tax return") by the following year's tax filing deadline (see below). Income that is taxed includes wages, scholarships and earnings on investments. (A complete list of taxed income may be found in IRS and state tax guides.) The most common type of income is wages; the money withheld from each paycheck is an estimated payment of the federal and state income tax obligation. This money is sent by the employer to the IRS and Franchise Tax Board in the employee's account (the account number is the Social Security number). Taxable scholarship payments may have some amount withheld just like wages. Investment income (not including bank interest) rarely has an amount withheld in advance, the applicable tax is paid when filing one's tax forms. Income Tax Filing Assistance In the Spring during "tax season," Berkeley International Office offers tax filing assistance through an online program called "CINTAX." We will also offer CINTAX introductory workshops. See our Programs and Workshops link for an updated schedule.