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Tax InformationSocial Security Number vs. International Tax Identification NumberInternational fellows are required to apply for a Social Security Number (SSN). Information and directions to the closest Social Security Administration Office are found here. More information about how to apply and an application are also available. If you do not have an SSN and are not eligible to obtain one but you need to furnish a Federal tax identification number or file a Federal income tax return, you must apply for an Individual Taxpayer Identification Number (ITIN). [Note: By law, an Alien cannot have both an ITIN and an SSN.] Information about applying for an ITIN is available from the Internal Revenue Service. It is essential to inform your Division Administrator of the date of your application since the Smithsonian is required to record this information. If you do not apply for an SSN or ITIN, your stipend paycheck may be suspended. Tax Reporting and WithholdingThe following information has been prepared to explain the tax reporting and withholding obligations for visitors, scholars, researchers and fellows at SAO. Payment of U.S. Federal income tax is a personal obligation of each person who receives fellowship income from SAO, and all funds provided under the appointment (e.g., stipend, research, certain travel allowances, medical insurance premiums paid by SAO) are subject to taxes. It is the visitor's responsibility to maintain his/her own accurate records regarding these amounts, to be able to determine that portion of the award which is taxable, to report such amounts on the proper forms, and to pay all required taxes to Federal, state and local entities. Since tax liability varies on a case by case basis, SAO cannot give advice with respect to an individual's taxes. You should consult with the Internal Revenue Service (IRS) or a tax consultant to determine your particular tax liability. Please note that all fellowship recipients are expected to file tax returns. If you did not receive any income during the tax year, you must check with the IRS or the Massachusetts Department of Revenue about any reporting obligations.
A. United States Visitors or Resident Aliens Income tax is not withheld from awards to U.S. citizens or resident aliens. You may wish to refer the IRS Publication 520, "Scholarships and Fellowships," which may be obtained by calling 1-800-829-3676 or from the IRS website. Although income taxes are not withheld from stipends of U.S. citizens or resident aliens, you may be required to file quarterly estimated withholdings of Federal income tax. IT IS YOUR RESPONSIBILITY TO FIND OUT IF YOU ARE REQUIRED TO MAKE QUARTERLY ESTIMATED PAYMENTS USING FORM 1040ES. A PENALTY WILL BE ASSESSED BY THE IRS IF QUARTERLY PAYMENTS SHOULD BE MADE AND ARE OVERLOOKED. More information can be found on the IRS website. Additionally, you should check the Massachusetts state website to find out if you are required to make quarterly estimated payments of Massachusetts state income taxes. Stipend recipients who are U.S. citizens or residents for tax purposes (see Section C below for a discussion of who is a U.S. resident for tax purposes) will not receive an IRS tax form because they are not employees of the Smithsonian and no tax withholding is required. Please note that W-2 forms are not issued to recipients of stipends. But stipend awards are considered taxable income, and you are responsible for including your award in your income tax return for each full or partial tax year during which you are on a Smithsonian fellowship appointment. If you will receive your payments by direct deposit, your bank records may help you to document the payments made during each year. If you enroll in one of the health insurance plans through the Office of Fellowships and have the monthly premiums deducted from your award, we can assist with documenting how much was paid by SAO for medical coverage, which is still considered part of your taxable stipend award. SAO will issue you by mail an unofficial tax statement by March 31st for the previous year. It is important to retain copies of the award agreement and of checks or the electronic pay stubs from stipend payments for tax records. Stipend payment notifications can be obtained from the U.S. Treasury by Fellows who are entered as vendors in the SAO PeopleSoft payroll system. You can register here to receive email notifications whenever a stipend payment is transferred to your bank account. Residents of the United States and Massachusetts are required to file Federal and state income tax returns by April 15th. B. International Visitors (Fellows, Scholars, Researchers, Students) As a general rule, awards made to nonresident aliens are subject to withholding of Federal income tax. This required withholding can be as high as thirty percent unless a foreign visitor is in the United States on a J or F visa. For researchers or students on J or F visas, the rate of tax withholding is limited to a maximum of fourteen percent. However, when the visitor files an individual tax return, it is possible that higher tax rates may be applied. Elimination or reduction of tax withholding and tax liability may be available for those international visitors who are eligible to claim full exemption from U.S. taxation under the terms of tax treaties between their home countries and the U.S (see Publication 901 for more information on U.S. treaties). For each tax year that a nonresident alien visitor is present in the U.S. under an appointment at SAO, the individual will receive a Form 1042S from the Smithsonian (by March 31st). This form will show the amount paid to you and the amount withheld for taxes during the previous tax year. Before June 15th each year, nonresident alien visitors must file an income tax return form 1040NR or 1040NR-EZ (check to see if you meet the qualifications to file the EZ form) for the prior tax year. It is possible that you will have to pay additional tax, or you may be able to claim a refund if the amount withheld is more than the tax liability due to the IRS. It is important to point out, however, that the IRS will not allow you to claim income tax deductions if you do not file an income tax return by the deadline. The IRS Publication 519, U.S. Tax Guide for Aliens, may be obtained from the IRS by calling 1-800-829-3676, or from the IRS website. The form 1042S for the final year of an appointment will be sent to the forwarding address on file with your division administrator. Note that all nonresident aliens in the U.S. on F or J visas are also required to submit IRS Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition with their tax return, even if they received no U.S. source income. You may also be required to submit additional forms and/or schedules, which are identified in the IRS instructions. Individual Taxpayer Identification Numbers (ITINs) are required for any nonU.S. citizen filing a U.S. income tax return who does not have a U.S. Social Security Number. C. International Fellows Who Pass the Substantial Presence Test The substantial presence test is a mathematical calculation used to determine when a nonresident alien visitor has spent enough days in the U.S. to be considered a resident alien for tax purposes. This is a determination for tax purposes only, and does not affect a visitor’s immigration status. This strict mathematical formula counts the number of days of presence in the United States over a specific number of years depending on the type of visa which you hold. You will be asked to provide SAO with information about your days of presence in the U.S. to enable SAO to perform the calculation. If SAO determines that the test is satisfied, you will be treated as a U.S. citizen for tax purposes, which means that SAO does not withhold taxes from your stipend. However, it is your responsibility to determine if you are required to pay estimated Federal, state and or local taxes on a quarterly basis. A PENALTY WILL BE ASSESSED BY THE IRS IF QUARTERLY PAYMENTS SHOULD BE MADE AND ARE OVERLOOKED. Information and forms are available on websites produced by the Internal Revenue Service (IRS) and Massachusetts Department of Revenue (MDOR). Once you pass the substantial presence test, you are considered a U.S. resident for tax purposes. Federal Tax Forms State Tax Forms D. State Tax Information for all Fellows (U.S. Residents and Nonresident Aliens) All fellowship awardees may be subject to additional income taxes imposed by the state of Massachusetts and are required to file a state tax return by April 15th of each year. Please note the difference in due dates of Federal (June 15th) and state (April 15th) income tax returns for foreign visitors. Additional information can be requested from the Massachusetts Department of Revenue website or by calling 617-887-6367. State taxes are not as high as Federal taxes, and they often follow Federal exemption rules. However, awardees must acquaint themselves either with Massachusetts tax law or the law of the state in which they reside, if different from Massachusetts, to determine if they should file as a resident or nonresident since the regulations do not coincide with Federal regulations. More specifically, although you may be a nonresident of the U.S. for purposes of Federal taxes, you may qualify as a resident of Massachusetts for tax purposes. Stipend income of U.S. citizens and resident aliens is not considered to be income derived from a trade or business and is not, therefore, subject to social security or self-employment tax. SAO will not withhold social security taxes from the stipends of nonresident aliens present in the U.S. on F or J visas and from U.S. citizens and residents because their income is not deemed to be wages. F. Annual Tax Forms Issued from SAO International Visitors: Stipend recipients who are not U.S. citizens or residents for tax purposes will receive a copy of IRS form 1042S and unofficial statement of earnings from SAO, which reports the total amount paid to the recipient during a calendar year and any tax withheld. These forms are mailed by mid-March for the previous tax year. U.S. Citizens, Resident Aliens, Nonresident Alien Fellows Passing the Substantial Presence Test (U.S. residents for tax purposes): Stipend recipients who are U.S. citizens or residents will not receive an annual IRS tax form (like the W-2 or 1099) because the tax laws do not require withholding on or reporting their stipends. SAO will distribute an unofficial financial statement that outlines all earnings during the previous tax year by the end of March. Stipend awards are considered taxable income, and you are responsible for including your award in your income tax return for each full or partial tax year during which you are on an SAO appointment. If you will receive your payments by direct deposit, your bank records may help you to document the payments made during each year. Stipend payment notifications can be obtained from the U.S. Treasury by Fellows who are entered as vendors in the SAO PeopleSoft payroll system. Using the following link, you can register to receive email notifications whenever a stipend payment is transferred to your bank account: http://fms.treas.gov/paid/index.asp. For all Fellows: If you enroll in one of the health insurance plans through the Smithsonian Office of Fellowships and have the monthly premiums deducted from your award, Christine Crowley in the Fellowship Program Office can assist with documenting how much was paid by SAO for medical coverage, which is still considered part of your taxable award. In addition, payments made for travel expenses that are not documented adequately may be included in the amount of your taxable award. The Fellowship Program Office at CfA will assist you, if needed, to ensure the information you report on your income tax return is accurate. Please contact Christine Crowley, Fellowship Program Coordinator, if you need further assistance at 617-495-7103. G. Tax Deadlines and Web Resources International Fellows: Federal: IRS 1040 or 1040NR forms are due by June 15th. US Residents or US Residents for Tax Purposes or Resident Alien Fellows: Federal: IRS 1040 or 1040NR forms are due by April 15th. Helpful Web Resources:
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