1. Financial Services - Payroll University of Chicago February 28, 2013 2013 Tax Session Post Doctoral Scholars and Fellows

2. 1.What type of income did I have? 2.What is my tax residency status? 3.Do I have a filing requirement for 2013? 4.What tax forms might I receive? 5.What tax forms do I file? 6.How do I complete the tax forms? 7.How do I get assistance? Steps to Tax Filing

3. Taxes: How they work Salary/Wages Compensation Scholarship Stipend Fellowship Independent Wages Income Withheld from payments Estimated tax payments Tax Payments File a yearend tax return to reconcile the total (annual) income earned and the taxes already paid Tax Return

4. Types of Income

5. What type of income did I have? Post-Doc SCHOLAR Provide services to the University for payment – paid wages/ compensation monthly Federal – taxes are assessed by the Income Tax Withholding Table IL State – 5% FICA/OASDI – 6.20% (J1 nonresidents for tax are exempt) Medicare – 1.45% (J1 nonresidents for tax are exempt)

6. What type of income did I have? Post-Doc FELLOW Funds given to support education/academic advancement or achievement Federal – taxes are withheld at 14% for nonresidents and 0% for residents. Residents may be required to pay quarterly estimated payments Illinois State – taxes are not withheld at source, but individuals may be required to pay quarterly estimated payments and/or pay taxes when filing a tax return FICA/OASDI – Not applicable Medicare – Not applicable

7. Tax Residency Resident versus Nonresident

8. Tax Residency Resident for Tax U.S. Citizens Permanent Residents Residents for Tax as determined by the Substantial Presence Test (SPT) Nonresident for Tax Nonresidents for Tax as determined by the Substantial Presence Test (SPT)

9. Substantial Presence Test Count days of physical presence in the U.S. Current Year x 1 ________ 1 st Previous Yearx 1/3________ 2 nd Previous Yearx 1/6________ If total equals 183 days or more = Resident for Tax If total equals 182 days or less = Nonresident for Tax EXCEPTIONS F or J students receive 5 “exempt” years. Not exempt from tax, but of counting physical days of presence in the U.S. towards SPT. (So, for the first 5 years, the SPT total will be “0”) J non-students receive 2 “exempt” years (of the past 6 years). (So, typically for the first 2 years, the SPT will be “0” – unless individual has had previous entries to the U.S. as an F, J, M or Q) “Exempt” years are CALENDAR years, not years from date of arrival

10. Filing Requirements

11. Residents for Tax For most people under 65:

12. Nonresidents for Tax If you were physically present in the U.S. (any status but tourist) in 2013 (for any length of time), you do have a filing requirement. YES If you were NOT physically present in the U.S. in 2013, you have NO filing requirement. NO

13. Bottom Line Only you can determine if you have a filing requirement If you received funding through fellowship from UChicago or an external source, all or part may be taxable, even if you did not receive a tax form (Possible exclusions: required fees, books, supplies, and equipment) Do I have to file? http://www.irs.gov/instructions/i1040/ar01.html#d0e38 5 http://www.irs.gov/instructions/i1040/ar01.html#d0e38 5

14. Federal and State Requirements Per requirements from the IRS and State of Illinois: If you will owe more than $1,000 in federal taxes and $500 for Illinois state taxes you should make estimated quarterly payments Not doing so may result in federal and/or state tax penalties

15. Tax Forms

16. What Tax Forms Should I Receive? Post-Doc SCHOLARS without tax treaty benefits Post-Doc SCHOLARS with partial tax treaty benefits W2 Post-Doc SCHOLARS with full tax treaty benefits Post-Doc SCHOLARS with partial tax treaty benefits Post-Doc FELLOWS with full tax treaty benefits Post-Doc FELLOWS without tax treaty benefits 1042-S Post-Doc FELLOWS that are Residents for Tax University Memo

17. 2013 Deadline: April 15, 2014 Forms must be post-marked by this date, not received by the IRS Federal Tax Filing

18. Residents for Tax File using 1040; 1040-A; 1040-EZ Can file jointly with a spouse and claim dependents (children) Post-Doc FELLOWS only: Form 1040EZ. Include fellowship amount in the total on line 1, also enter “SCH” and the taxable amount in the space to the left of line 1 Form 1040A. Include fellowship amount in the total on line 7, also enter “SCH” and the taxable amount in the space to the left of line 7 Form 1040. Include fellowship amount in the total on line 7, also enter “SCH” and the taxable amount on the dotted line next to line 7

19. Residents for Tax Claiming a Tax Treaty as a Resident for Tax Resident tax forms do not specifically address claiming tax treaties as residents for tax. However, the IRS recommends the following: A residents for tax must complete form 1040 Enter ALL wage income on line 7 On line 21 indicate the amount of tax treaty benefit in parenthesis (which indicates subtraction) On the dotted line 21 indicate the treaty article (e.g. US- China article 19) On line 22 you will subtract the amount from line 21 from the rest of your income to claim the treaty benefits It is also recommended to either submit a memo stating your visa status, date of entry, expiration date and that you are eligible to claim the treaty benefit; or submit a copy of the treaty

20. Nonresidents for Tax File using 1040NR or 1040NR-EZ and 8843 (if in J status) Can use Glacier Tax Prep – software provided by OIA Generally cannot claim spouses and dependents (children) OIA Website: http://internationalaffairs.uchicago.edu/page/tax- responsibilities-international-students-and-scholarshttp://internationalaffairs.uchicago.edu/page/tax- responsibilities-international-students-and-scholars

21. 2013 Deadline: April 15, 2014 Forms must be post-marked by this date, not received by the IRS Illinois State Tax Filing

22. Residents of Illinois *Lived and worked only in Illinois* Can use any avenue for filing such as Tax Filing Software; Certified Public Accountant (CPA); Tax Preparation Firm; Illinois State Web File or Yourself Start with IL-1040 – Begin the IL-1040 with the adjusted gross income created on the federal tax return Do you need to File? See Illinois State Website for filing requirements http://tax.illinois.gov/TaxForms/IncmCurrentYear/Individual/IL-1040- Instr.pdf http://tax.illinois.gov/TaxForms/IncmCurrentYear/Individual/IL-1040- Instr.pdf

23. Part-Year Residents *Lived and/or worked in Illinois AND another state* A part-year resident taxpayer Must file Form IL-1040 and Schedule NR if: - you earned income from any source while you were a resident, - you earned income from Illinois sources while you were not a resident, or you want a refund of any Illinois Income Tax withheld. There is a reciprocal agreement with the following states: Iowa, Kentucky, Michigan, or Wisconsin. If you are an Illinois resident you must file Form IL-1040 and include as Illinois income any compensation you received from an employer in these states. Compensation paid to Illinois residents working in these states is taxed by Illinois. You will not pay tax in the above states. (If you were a legitimate resident of IL and reciprocal state, you will need to file a Schedule NR). Use form IL-1040 AND Schedule NR. (Or Schedule CR)

24. Part-Year Residents *Lived and/or worked in Illinois AND another state* If you lived/worked in another state (other than Iowa, Kentucky, Michigan, or Wisconsin) – You need to investigate that state’s filing requirement States without State Tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming There is local tax in some cities/townships/villages

25. Nonresident of Illinois A nonresident taxpayer: You were not a resident of Illinois at any time, but received income from Illinois sources. You must file Form IL-1040 and Schedule NR, if you earned enough taxable income from Illinois sources to have a tax liability or you want a refund of any Illinois Income Tax withheld in error. You must attach a letter of explanation from your employer If you were in Illinois and did not have any income from Illinois sources, you may not have an Illinois filing requirement

26. Getting Assistance

27. IRS Free File/Tax Assistance Software IRS Local Office Illinois State Revenue Office VITA Volunteers Tax Preparers  Certified public accountants  Enrolled agents  National tax-prep chains If you choose to use a professional tax preparer, make sure they: Have filed student tax returns in the past Have passed state or federal certifying exams Give you an estimated price for services up front, including all fees Will stand by their work and provide audit assistance or advice if necessary Avoid preparers who base their fee on a percentage of your refund

28. Final Notes Record-keeping Keep a file with all payments Make note of “types” of payments (e.g. stipends, fellowships, wages) so you know what forms to expect at year end Keep receipts with possible deductions Make estimated tax payments (using the 1040ES and IL-1040ES) if required MAKE COPIES OF TAX FORMS W2 Tax forms are available on ESS!

29. University Contacts Lauren Bautista Foreign Tax Analyst lbautista1@uchicago.edu (773) 795-0591 6054 S. Drexel Ave, Suite 300 Chicago IL 60637 Angie Gleghorn Payroll Manager gleghorn@uchicago.edu 773.702.5989 6054 S. Drexel Ave, Suite 300 Chicago IL 60637