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International Taxpayers

The Tax Clinic provides a number of services to nonresident aliens in the community and throughout the state of Michigan.  Whether you are an international student, a seasonal farmworker or a temporary worker in the United States, we can assist you with understanding and complying with U.S. tax laws.  This includes interpreting and claiming tax benefits under U.S. international tax treaties.   If you are a resident alien or U.S. citizen, please contact the Volunteer Income Tax Assistance (VITA) program for a VITA site near you.  There is also a VITA site at MSU

2020 Tax Return Tutorials - For International Students & Scholars

Due to COVID pandemic we will not be holding tax return workshops again this year.  However, below are informational materials to assist international students and scholars who are nonresident aliens for the 2020 tax year.  

If you have a question about residency, check our Tax Residency Worksheet.  

WHERE TO FILE YOUR TAX RETURNS (Last updated: 4/2/2021)

 

Federal Form (1040NR) & Glacier

If you are affiliated with Michigan State University, you may be eligible to receive a free code to use the Glacier tax return preparation software.  Contact the Office of International Students and Scholars for more information.

State of Michigan (Form MI-1040)

City of East Lansing (Form EL-1040) 

WHERE TO FILE YOUR TAX RETURNS (Last updated: 4/2/2021)

Emergency aid granted to students due to COVID are not taxable

Posted: 3/31/2021

IRS explains student and higher education institution reporting requirements, credits and deductions

The Internal Revenue Service issued frequently asked questions today on how students and higher education institutions should report pandemic-related emergency financial aid grants.

Students
Emergency financial aid grants made by a federal agency, state, Indian tribe, higher education institution or scholarship-granting organization (including a tribal organization) to a student because of an event related to the COVID-19 pandemic are not included in the student’s gross income. 

Also, students should not reduce an amount of qualified tuition and related expenses by the amount of an emergency financial aid grant. If students used any portion of the grants to pay for qualified tuition and related expenses on or before December 31, 2020, they may be eligible to claim a tuition and fees deduction or the American Opportunity Credit or Lifetime Learning Credit on their 2020 tax return. See Education FAQs.

The tuition and fees deduction is not available for tax years beginning after December 31, 2020. For additional information on these credits and the tuition and fees deduction, see Publication 970, Tax Benefits for Education.

Higher Education Institutions
Because students don’t include emergency financial aid grants in their gross income, higher education institutions are not required to file or furnish Forms 1099-MISC reporting the grants made available by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) or the COVID-related Tax Relief Act (COVID Relief Act) and do not need to report the grants in Box 5 of Form 1098-T. 

But any amounts that qualify for the tuition and fees deduction or the American Opportunity Credit or Lifetime Learning Credit are considered “qualified tuition and related expenses” and trigger the reporting requirements of Internal Revenue Code section 6050S.  Higher education institutions must include qualified tuition and related expenses paid by emergency financial aid grants awarded to students in Box 1 of Form 1098-T. 

Types of Income Reporting Documents & Statements

By Mostafa Shanta
Posted: 3/24/2021

When preparing your tax returns for filing, taxpayers need to first collect all of the tax statements they received in the spring for that tax year. Because income encompasses many kinds of payments and comes from many different sources, various forms are used to record a taxpayer’s income. These tax statements also include instructions on the back and describe any letter or number codes that may be used in the tax statement. The following is a list of the most common income statements a taxpayer may receive.

Form W-2 
A W-2 is an income statement that the taxpayer receives from their employer. It shows how much the taxpayer earned in 2020 and how much federal, state, and local income tax has been withheld from those wages by the employer. While all W-2s may not look alike, there is uniformity in the information found in the boxes. For instance, Box 1 will always contain the total wages earned that year.

Form 1042-S
A Form 1042-S is an income statement showing income (including scholarships) paid to a foreign person in the relevant tax year. The taxpayer should receive this form from the party who is the source of the wages or scholarships. Usually, an educational institution (like a university) or a financial institutional (like a bank) will send the foreign taxpayer this form.

Form 1099-B
A Form 1099-B is reported by brokerages and barter exchanges to record the taxpayer’s gains and losses from selling stocks and other securities during the tax year. Each transaction is recorded on a separate 1099-B. The taxpayer should receive these forms from his broker, though some brokers do have an online site from which the 1099-Bs may be retrieved. If the financial institution is required to report more than one 1099 to a taxpayer (i.e., 1099-B, 1099-INT, and a 1099-DIV), they may send you a “Consolidated 1099” that includes information for multiple 1099’s on one document.

Form 1099-DIV
A Form 1099-DIV is sent out by banks or other financial institutions to taxpayers who received dividends and distributions from their investments during the tax year. Certain investment accounts are exempt from issuing a 1099-DIV (namely an individual retirement account, which have a separate form for their distributions). Banks and financial institutions are not required to send 1099-DIV if the total amount in dividends is not greater than $10.

Form 1099-G
A Form 1099-G is a form used by a government agency reporting income paid to the taxpayer for the tax year. It mainly reports state unemployment payments or state/local tax refunds. The state or local government should mail the form to the taxpayer. If it was not received, the taxpayer should contact the relevant government agency to get a copy.

Form 1099-INT
A Form 1099-INT shows how much bank or credit union interest you earned that tax year. Note that while credit unions refer to interest as dividends, the information is provided on a 1099-INT, not a form 1099-DIV. You may receive this by mail, but some banks and credit unions may require you to retrieve it from their website or request it. If it is less than $10, the bank or credit union is not required to report it.

Form 1099-MISC
A Form 1099-MISC shows any miscellaneous income that may have been receive from your employer or another party. Before 2020, the 1099-MISC was the form that businesses usually used to pay independent contractors and other non-employees.

Form 1099-NEC
A Form 1099-NEC is the form, beginning 2020, self-employed individuals will receive from businesses that has paid them more than $600 for their work. Self-employed individuals include independent contractors and gig workers. If you believe you should have received a 1099-NEC from a particular business, you should contact them.

Form 1099-R
A Form 1099-R is used to report a distribution of $10 or more form a retirement savings or investment account. You should receive the form from the party responsible for sending the distribution.

IRS warns university students and staff of impersonation email scam

Posted: 3/30/2021

WASHINGTON – The Internal Revenue Service today warned of an ongoing IRS-impersonation scam that appears to primarily target educational institutions, including students and staff who have “.edu” email addresses.

The IRS’ phishing@irs.gov has received complaints about the impersonation scam in recent weeks from people with email addresses ending in “.edu.” The phishing emails appear to target university and college students from both public and private, profit and non-profit institutions.

Taxpayers who believe they have a pending refund can easily check on its status at “Where’s My Refund?” on IRS.gov. 

The suspect emails display the IRS logo and use various subject lines such as “Tax Refund Payment” or “Recalculation of your tax refund payment.” It asks people to click a link and submit a form to claim their refund.

The phishing website requests taxpayers provide their:

  • Social Security Number
  • First Name
  • Last Name
  • Date of Birth
  • Prior Year Annual Gross Income (AGI)
  • Driver's License Number
  • Current Address
  • City
  • State/U.S. Territory
  • ZIP Code/Postal Code
  • Electronic Filing PIN

People who receive this scam email should not click on the link in the email, but they can report it to the IRS. For security reasons, save the email using “save as” and then send that attachment to phishing@irs.gov or forward the email as an attachment to phishing@irs.gov. The Treasury Inspector General for Tax Administration (TIGTA) and IRS Criminal Investigation have been notified.

Taxpayers who believe they may have provided identity thieves with this information should consider immediately obtaining an Identity Protection PIN. This is a voluntary opt-in program. An IP PIN is a six-digit number that helps prevent identity thieves from filing fraudulent tax returns in the victim’s name. 

Taxpayers who attempt to e-file their tax return and find it rejected because a return with their SSN already has been filed should file a Form 14039, Identity Theft Affidavit, to report themselves as a possible identity theft victim. See Identity Theft Central to learn about the signs of identity theft and actions to take. 

Individual Taxpayer Identification Number (ITIN)

An ITIN, or Individual Taxpayer Identification Number, is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN). It is a 9-digit number, beginning with the number "9", formatted like an SSN (NNN-NN-NNNN).

To obtain an ITIN, you must complete IRS Form W-7, IRS Application for Individual Taxpayer Identification Number (PDF) . The Form W-7 requires documentation substantiating foreign/alien status and true identity for each individual. You may either mail the documentation, along with the Form W-7, to the address shown in the Form W-7 Instructions, present it at IRS walk-in offices, or process your application through an Acceptance Agent authorized by the IRS. Form W-7(SP), Solicitud de Número de Identificación Personal del Contribuyente del Servicio de Impuestos Internos (PDF) is available for use by Spanish speakers.

Acceptance Agents are entities (colleges, financial institutions, accounting firms, etc.) who are authorized by the IRS to assist applicants in obtaining ITINs. They review the applicant's documentation and forward the completed Form W-7 to IRS for processing.    


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