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J-1 Tax Exemption

J-1 Tax Exemption

Old Aug 1st 2016, 5:47 pm
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Question J-1 Tax Exemption

I have recently been accepted to start as a post-doc over in the US. I was told I would enter the US on a J-1 visa. Now I have had a read online and as I am from the UK I can claim tax exempt status. Now a lot of the information I have read online is drenched in jargon and as someone with zero experience and knowledge of the US taxation system I can't make heads or tails of it! I used this website: <<<SNIP>>>. to estimate my take home pay each month, and on the website it mentions multiple taxes. (social security, medicare etc.) Now I have two main questions:

1. Which taxes would I be exempt from, as I understand it I would only have to pay local state taxes, is that correct?

2. The tax exemption is for 2 years - my contract with the university here is for 1 year with a renewable second, and assuming it all goes well I would like to stay the full two years. Now does the 2 year tax exemption go from when I start my position (i.e. November to November) meaning I can claim tax exempt status, or would it go on the US fiscal year (October to October I believe?), meaning I will have to pay the tax.

Sorry if this has been asked before, I did try a google search but I couldn't make heads or tails of what people were saying. I would really appreciate any help/advice that anyone can give!

Last edited by Jerseygirl; Aug 1st 2016 at 5:52 pm. Reason: Link removed
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Old Aug 1st 2016, 5:53 pm
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Default Re: J-1 Tax Exemption

Originally Posted by cr289 View Post
Now I have had a read online and as I am from the UK I can claim tax exempt status.
I know that you believe this to be immigration-related, but it's really not. It's a tax issue related to your status... not to your actual visa. The tax experts hang out in the general USA forum.

Hopefully a moderator will move this thread over there! Good luck to you!

Ian
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Old Aug 1st 2016, 5:57 pm
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Default Re: J-1 Tax Exemption

Originally Posted by ian-mstm View Post
I know that you believe this to be immigration-related, but it's really not. It's a tax issue related to your status... not to your actual visa. The tax experts hang out in the general USA forum.

Hopefully a moderator will move this thread over there! Good luck to you!

Ian
Ah okay, thanks for letting me know! I'll wait for a moderator to move the post rather than starting a new thread. Thanks for giving me the heads up!
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Old Aug 2nd 2016, 2:14 am
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Default Re: J-1 Tax Exemption

J-1s are exempt from social security and medicare taxes for as long as the status lasts. Beware, unless you inform HR, they may take these from your check anyway bucease they wouldn't know any better.

Federal and state taxes will be taken from your paycheck. If eligible for a tax treaty benefit, you would claim this with your tax return.
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Old Aug 2nd 2016, 3:38 am
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Default Re: J-1 Tax Exemption

Originally Posted by cr289 View Post
I have recently been accepted to start as a post-doc over in the US.
Congratulations!

Originally Posted by cr289 View Post
my contract with the university here is for 1 year with a renewable second, and assuming it all goes well I would like to stay the full two years.
From personal experience, academic careers have only a nodding relationship to best laid plans (my 9 month postdoc became 8 years and a green card!). I say forgo the tax treaty and avoid the potential headache of hitting 2 years, having a job to stay, but not wanting/being in a position to deal with the tax issues. Search for posts by caleyjag for an account of just such a sticky situation.

Think of it as the price of having the freedom to choose the best employment on offer in 2 years' time. Given it's an academic salary, it's not like there's that much tax they can take out anyway
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Old Aug 8th 2016, 4:16 am
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Default Re: J-1 Tax Exemption

Originally Posted by jxv73 View Post
J-1s are exempt from social security and medicare taxes for as long as the status lasts. Beware, unless you inform HR, they may take these from your check anyway bucease they wouldn't know any better.
This is not correct. J-1 scholars are only exempt from social security as long as they are non-resident aliens, which generally is true in the first two (calendar) years only. See https://www.irs.gov/individuals/inte...-professionals

Originally Posted by jxv73 View Post
Federal and state taxes will be taken from your paycheck. If eligible for a tax treaty benefit, you would claim this with your tax return.
You can also request for taxes not to be withheld in the first place which is probably preferable if you're sure you won't stay for more than 2 years.
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Old Aug 8th 2016, 4:22 am
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Default Re: J-1 Tax Exemption

Originally Posted by cr289 View Post
1. Which taxes would I be exempt from, as I understand it I would only have to pay local state taxes, is that correct?

2. The tax exemption is for 2 years
1. Whether you have to pay state tax depends on the state. NY, for example, takes the federal tax return as the basis and since you have only exempt income on a federal level you won't have to pay state tax. CA, on the other hand, doesn't acknowledge the federal exemption and you have to pay state tax.

2. For the US-UK treaty for scholars regarding income tax, it's 24 months from the date of entry to the US (not from the date you start working but from date of entry, which can be 30 days before).

For the exemption from social security, it's as long as you're classified as a non-resident alien (which generally speaking is going to be the first two calendar years). So if you enter in November 2016 and stay for two years, you'll be exempt from social security in 2016 and 2017 but you'll have to pay social security for the period from January to November 2018.
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