Helpful hints for Canadian Students with J1 Visas in the United States
As a Canadian student studying at the University of Waterloo, an internship in the United States can be an amazing experience. However when it gets to tax season, things can get a little complicated.
Before I jump into the fun stuff, here's a mandatory disclaimer: I am not a lawyer or a tax specialist. The following is my interpretation of the rules set out on the IRS forms and is only applicable to a small subset of people. When in doubt, check with your accountant. This advice was not intended or written by the practitioner to be used, and that it cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.
These tips will only apply if you meet all of the following criteria:
This post will not walk you through filling out forms - for that I recommend just using tax software, as it's significantly easier and will save you a ton of time. Instead, this post is a compilation of resources that will help point you in the right direction and help navigate the multitude of forms used by the IRS.
These tips are currently geared towards Federal taxes, but I'll be updating it to add tips for state taxes. If you have any tips you want to contribute, leave a comment, or file an issue on GitHub.
The most helpful place to start is IRS Publication 519, U.S. Tax Guide for Aliens - this post will be linking you to specific points of interest in that document.
Your tax residency status determines which tax forms you have to fill out. This status is determined by the Substantial Presence Test. This test looks at the number of days an individual is present in the United States over the past three years.
According to IRS Publication 519, J1 trainees who have complied with their visa terms are considered exempt and can exclude those days of presence from the substantial presence test. If you claim an exemption, you will have to fill out Form 8843 proving that you were exempt.
If you're not an American Citizen and did not pass the substantial presence test - congrats! You're a Non-Resident Alien!
Should you use tax software? Absolutely - it will speed up the process and make things a lot less painful. There are many options geared towards non-resident aliens and I've personally had experience with the following:
| Federal | State | Federal & State |
|---|---|---|
| Glacier Tax | Sprintax | OLT |
Note that your tax software should explicitly support Non-Resident Aliens - some of the more popular options like TurboTax do not!
If your total income for the tax year is less than $64,000, you may qualify for access to free tax filing software. Check out the Free File Software Offers section of the IRS website for more details.
If you're like most Nonresident Aliens and have to file a 1040NR, you'll have to paper file taxes - the IRS does not currently support e-filing Form 1040NR. Fortunately, paper filing is reasonably straightforward.
The IRS accepts both single and double sided printouts (see Publication 1167, Section 3.3.8). I'd recommend double sided printing as it both saves paper and becomes quite a bit cheaper to mail, especially if you're mailing via international priority.
Note that printing should result in the same page arrangement as that of the official form or schedule. Therefore you should be careful to only double side pages of the same form - two separate forms should not share the same sheet of paper.
Assembling a federal return is pretty straightforward:
For some more information, check out this IRS publication or this post on the intuit forums.
Take a look at the Where to File section of IRS.gov. That webpage will give you the appropriate mailing address for the type of tax return you're filing. For a 1040NR/1040NR-EZ you will have two options, based on whether you are enclosing payment or not. Ensure you select the right one.
That's it for your US Federal Taxes! Don't forget though, you still have to file your state taxes as well as Canadian Taxes. If you've found this useful, let me know! If you have any tips you want to contribute, you can leave a comment, or file an issue on GitHub.