Taxes

1
Taxes Treaties for International Student
Employees

• Amanda Maines
• Foreign National Tax Unit
• University at Buffalo

2
AGENDA

• Tax Vocabulary
• UBs Foreign National Information System (FNIS)
• Income Tax Treaties
• How To Claim a Tax Treaty Benefit
• U.S. Income Tax Withholding
• New York State Income Taxes

3
TAX VOCABULARY

• IRS Internal Revenue Service
• Income Tax Return form which all employees send
  to the IRS each year
• To file an income tax return to send it to the
  IRS
• Income money earned from a job, bank interest
  or investments
• Wages or compensation money earned only from a
  job

4
BACKGROUND ON U.S. TAXATION

• There are two types of income tax that employees
  in the U.S. pay
• Federal (U.S.) tax
• State (New York) tax

5
TAX VOCABULARY

• To withhold income taxes (tax withholding)
• to subtract income taxes directly from the
  employees paycheck
• Exempt from paying income tax (tax exemption)
• excused from paying income tax due to an income
  tax treaty

6
What Is FNIS?
7
UBs FNIS (Foreign National Information System)

• Foreign employees at UB will receive an e-mail
  with a website link, username and password.
• Each individual will be expected to log on to the
  website and complete their foreign national
  information.
• This will give us the information that we need to
  determine how to withhold income taxes and if you
  are eligible for an income tax treaty exemption.

8
1st FNIS E-MAIL
9
What are the Steps to Using FNIS?
10
FNIS WEBSITE
When you receive the 1st e-mail, login to the
FNIS system and go to Data Entry. You will be
prompted to change your password for security
purposes.
11
FNIS WEBSITE
There is easy navigation through the pages
12
FNIS WEBSITE
If your information is missing or incorrect, the
page number will be shown in red.
13
FNIS WEBSITE
Fields that must be completed are shown in red.
There is a help button for every question.
14
FNIS WEBSITE
When you confirm that your information is
correct, notification will be sent directly to
the FNIS administrator for review.
15
FNIS WEBSITE
The FNIS administrator will review your
information and approve or reject it. When your
information is approved, the administrator will
contact you.
16
REMEMBER

• Logon to FNIS and complete your foreign national
  information.
• Print a copy of your data form and send it to
• Amanda Maines
• Foreign National Tax Unit
• 120 Crofts Hall
• North Campus

17
What about Income Tax Treaties?
18
INCOME TAX TREATIES

• Exist between the United States and 47 foreign
  countries
• 31 apply to students
• Either reduce or exempt income tax on a portion
  of earnings
• Apply only to federal and state tax
• Based on country of foreign residence not
  citizenship

19
DIFFERENCES IN TAX TREATIES

• Most income tax treaties exempt earnings from
  income taxes while others reduce income taxes.
• There is a dollar limit on the amount of earnings
  that can be exempt from income tax.
• Wages earned over the exempt dollar limit will
  have income tax withheld.
• There is a time limit on the number of years that
  a foreign employee can benefit from the income
  tax treaty
• Begins from date of arrival in the United States

20
DIFFERENCES IN TAX TREATIES

• Retroactive clauses
• If the exempt dollar or time limit is exceeded,
  the wages may be taxed back to the first dollar
  earned.
• To find out more about a specific income tax
  treaty, see the Student Income Tax Treaties
  handout.

21
How Do I Know if I am Eligible to Claim a Tax
Treaty Benefit?
22
STUDENT INCOME TAX TREATIES
23
U.S. TAXATIONPUBLICATION 901
24
What Do I Need to Do to Claim a Tax Treaty
Benefit?
25
FORMS USED TO CLAIM A TAX TREATY BENEFIT

• FORM 8233 Exemption from Withholding on
  Compensation based on a Tax Treaty
• Use this form to claim a tax treaty exemption.
• REVENUE PROCEDURE Required statement that is
  attached to Form 8233 verifying your exempt status

26
FNIS PRE-FILLED FORM 8233
27
FNIS PRE-FILLED FORM 8233
28
FNIS PRE-FILLED FORM 8233
29
FNIS FORM 8233 PRINT AND SIGN PART III
Youra Name
1/10/07
30
REVENUE PROCEDURES

• The Revenue Procedures require Students,
  Teachers and Researchers to attach a statement to
  Form 8233.

31
Sample FNIS RevenueProcedure Statement
Youra Name
1/10/07
32
FNIS WEBSITE FORM 8233

• After your information is reviewed and accepted,
  and if you are eligible for a tax treaty
  exemption, the pre-filled Form 8233 and attached
  statement will be mailed to you. At that time,
  you must sign and date the forms in the specified
  sections.
• Return the pre-filled Form 8233 and attached
  statement to
• Amanda Maines
• Foreign National Tax Unit
• 120 Crofts Hall
• North Campus

33
FORM 8233 OR FORM W-4?

• Form 8233 is used to claim exemption from income
  taxes because of a tax treaty.
• If there is no tax treaty between your country
  and the U.S. OR you are not eligible to exempt
  your earnings from income tax, then you will
  complete Form W-4 instead.

34
How Do I Pay U.S. Taxes?
35
U.S. TAXATIONTAX WITHHOLDING

• Salaries, wages, or any other compensation for
  work paid to a nonresident alien employee are
  subject to tax.
• Withholding automatic deduction of income taxes
  from an individuals paycheck
• W-4 U.S. Income Tax Withholding form

36
W-4 Form
37
What About New York State Taxes?
38
NEW YORK STATE TAXES

• New York State complies with ALL Federal (United
  States) Tax treaties in accordance with the
  Internal Revenue Codes.

39
NEW YORK STATE TAXESWhich form to use?

• For New York State Taxes, you will give to your
  new employer either
• IT2104 Employees Withholding Allowance
  Certificate ORIT2104E Certificate of
  Exemption from Withholding

40
NEW YORK STATE TAXESWhich form to use?

• IT2104 Employees Withholding Allowance
  Certificate Use this form if1) You intend to
  earn MORE than 7500 in gross income in New York
  State OR2) You can be claimed on another
  individuals federal income tax return and you
  intend to earn MORE than 3000 in gross income in
  New York State.

41
NEW YORK STATE TAXES - Form IT-2104
1/13/2006
Youra Name
DO NOT FILL THIS IN or ANY BOXES BELOW YOUR
SIGNATURE date
42
NEW YORK STATE TAXESWhich form to use?

• IT2104E Certificate of Exemption from
  Withholding
• Use this form if all three of these exist
• 1) You are a full-time student under the age of
  25 AND
• 2) You had no New York State tax liability in
  2005 AND
• 3) You DO NOT expect a tax liability for 2006
• NOTE If you are unsure complete IT-2104

43
New York State Taxes Form IT-2104-E
X
x
x
x
x
Youra Name
DO NOT FILL in this BOX or any boxes BELOW
SIGNATURE and DATE
44
CONTACT INFORMATION

• Internal Revenue Service
• 1-800-829-1040
• http//www.irs.gov
• New York State
• 1-800-225-5829
• http//www.tax.state.ny.us/pit
• Foreign National Tax Unit (UB)
• Amanda Maines [phone] ext. 1286
• http//ubbusiness.buffalo.edu
• Click on Employee. Scroll down to Tax
  Facts. Either choose RF or State. Click on
  Foreign National Tax Unit.