There are numerous tax systems in the US and everyone has certain tax obligations. There is federal income tax, state income tax, state sales tax, vehicle tax, property tax, and other taxes assessed for different things. International students and scholars may be exempt from paying certain taxes (varies by country of citizenship, length of time in the US, visa type, amount of earnings, etc) or have reduced tax liability in some situations, but taxes are inescapable. International students and scholars are required to file an annual federal tax return each year and may be required to file state and other tax forms as well. It is important to fulfill tax filing obligations and pay all required taxes – it is a condition of one’s nonimmigrant status and failure to file tax returns could prevent future entry into the US, fines and penalties (including detention and deportation), garnishment of wages, and/or denial of a future visa applications.
Each year in March, OIS organizes for the international community at NC State a Nonresident Tax Workshop and invites an IRS customer service representative, the NC State University foreign national tax specialist, and sometimes another local expert to give an overview of nonresident tax issues (including the substantial presence test and tax treaties), important tax documents, how to complete a nonresident alien tax return, and a question and answer period. OIS advisors are not able to assist with tax questions or completing tax forms. Most international students are able to complete and file the appropriate tax forms after attending the workshop, reading the instructions, and obtaining help from the internet. Those with difficult tax issues or questions should consult a qualified tax expert or attorney.
When an international student or scholar first begins paid employment at NC State, it is critical that an appointment with the foreign national tax specialist in the Payroll Office (Admin II building on Sullivan Drive) be among the first items of business. New international employees should take their passport, visa documents, and offer letter to a scheduled appointment with the specialist. It is not necessary to have obtained a social security card at that time. After several forms are completed, the specialist will consider the applicability of any tax treaty benefits and enter a tax withholding rate in the HR system. Most international student and scholar employees are able to reduce their tax withholding rate from the standard 30% to 14% and some have lower withholdings than that.
Important University websites related to foreign national tax issues:
To read about taxes in more detail: http://www.ncsu.edu/ois/orientation/taxnonresident.php