Headed to a J-1 visa program abroad in 2022? After applying for your visa, getting airfare sorted, and then packing, tax returns are probably the last thing on your mind. Nevertheless, understanding how the IRS works will help you, because J-1 visa internships are paid opportunities. Here, we’ll walk you through the basics of working and getting paid in the U.S. and answer the question: what are J-1 visa tax returns?
We’ll also touch on:
- Whether you need a J-1 visa tax return calculator
- What tax treaties are and how to benefit from them
- What the J-1 visa tax exemption is
- What the basic J-1 visa tax rules are
- Whether it’s possible to get a tax refund for J-1 visa holders
- How to know if you’re a J-1 visa tax resident alien or a J-1 resident for tax purposes
- What types of J-1 tax forms you may need to file
Get ready, you’re about to learn a ton of info about all things tax for J-1 visa holders.
What’s the J-1 Visa?
First things first: what is a J-1 visa program? How do you know if you’re participating in one?
J-1 visa programs are opportunities for international Exchange Visitors to live and work in the U.S. for up to 18 months. Programs allow participants to travel as:
- Au pairs
- Camp Counselors
- Government Visitors
- International Visitors (for the Department of State)
- Professors and Research Scholars
- Short-term Scholars
- College and university students
- Secondary students
- Summer Work Travelers
The above programs span a wide range of roles and paid J-1 visa jobs. However, they are united in providing space for enriching cultural exchange.
Getting Paid in the US: How Does it All Work?
J-1 visa holders performing work in the U.S. receive compensation for their work. Their pay is in line with counterparts who hold citizenship in the country. J-1 visas allow individuals to legally complete their J-1 programs in the United States, meaning that work permits are not required.
However, J-1 visas do not permit exchange visitors to seek employment outside their designated program during their 12 to 18 month stay. This means there will be no job search necessary. Once you arrive in the U.S., you should already have your position ironed out and receive income that way.
Wondering how much you’ll get paid? Let’s look at a few examples:
- For Au Pairs, The U.S. Department of State calculation of the minimum weekly stipend is based on the federal minimum wage with a 40% deduction for room and board in exchange for childcare services. Host families and au pairs are free to agree to compensation higher than the legally applicable minimum.
- Camp counselors should receive pay on par with their U.S. counterparts.
- Summer work travelers can complete a wide range of positions. The compensation they will receive in return varies by their role and local wage standards.
Worker permits for J-2 visa holders
Many J-1 exchange visitors travel to the U.S. alone to complete their programs. However, some individuals may choose to bring their spouses and/or children along for the duration of their stay. These guests hold J-2 visas during their time in the country.
While J-2 visas are similar to J-1 visas, there are a few key differences, like:
- J-2 visa holders need to obtain a work permit in order to seek employment.
- J-2 visa holders may not use their earnings to support the J-1 visa holder.
- The stays of J-2 visa holders in the U.S. are contingent upon the legal standing of the primary J-1 visa holder.
In other words, depending on what J-2 visa holders plan to do while in the U.S., they may need to complete a bit more documentation. This often entails an Employment Authorization Document (Form I-765). This form asks for your basic information, as well as the reason you are applying for work authorization in the country, plus the date of your last visit to the U.S.
Some good news is that this documentation is not required for J-2 visa holders attending school in the U.S. School-aged dependents may go to their local U.S. school for the duration of the J-1 visa holder’s program. They do not need to apply for an F visa.
All in all, bringing J-2 holders to the U.S. should be an easy process. Hopefully, after reading this piece, filing taxes will be too!
J-1 Visa Federal Tax Basics
So, how does taxation work for visitors in the U.S.?
Depending on your knowledge base, it could seem quite confusing. But fear not, many Americans don’t understand the ins and outs of the system and still manage (with help) to file taxes each year.
While reading, please keep in mind that we are visa experts, not tax experts at Intrax Global Internships. We will provide you with the basics you’ll need to get started. However, we always recommend that you speak with a tax professional or accountant. You may also contact our partners at Sprintax.
This organization can help you with your personal taxes while you’re abroad–more on that later!
What Is Substantial Presence?
First things first: how do you even know if you need to pay taxes in the U.S. during your J-1 program? How do you know if you are J-1 visa tax exempt? How do you know what your J-1 visa tax status is?
The answer typically hinges on your “substantial presence” in the country, otherwise known as “how long have you been in the United States?”
There is some math involved in calculating this, so bear with us for a minute.
First, you'll need to gather the dates of when you were in the U.S. during the past few years. Note that not all of these dates will count toward establishing “substantial presence.” Days that do not count include ones spent:
- Traveling through the U.S. for under 24 hours to and from another destination
- Commuting to work from your home in either Canada or Mexico
- As a crew member of a foreign company
- Stuck in the country because of a health condition that began during your stay
- As an exempt individual
J-1 Visa Tax Exemptions
So who are exempt individuals? Generally, these folks are:
- Foreign government visitors under specific visas (not including “A-3” or “G-5”)
- Teachers or trainees visiting under “J” or “Q” visas
- International students studying in the U.S.
- Professional athletes temporarily in the U.S. to compete in a charity event
Once you’ve collected your calendars and figured out what days matter, it’s time to count! Substantial presence starts at 183 days. When tallying time you spent in the U.S. this year, include all non-exempt days.
However, you only need to include ⅓ of non-exempt days of the preceding year, and ⅙ of non-exempt days in the year before that. Your situation will depend on the frequency and length of your stays in the U.S.
Establishing whether you have substantial presence determines whether you will file taxes as a resident or non-resident. If you do have substantial presence, you will likely file as a resident (for tax purposes). This means you will be taxed similarly to a U.S. citizen. However, tax treaties and other benefits from your country of residence will still take effect.
J-1 Tax Exemption Through “Closer Connection”
One other form of tax exemption is exemption via establishing a “closer connection” to a country besides the United States. Essentially, this provision allows individuals to skip paying U.S. taxes even when they have “substantial presence” and are not an exempt individual.
To qualify for this, you will need to demonstrate that although you’ve spent significant time in the U.S., another country is still your primary residence. If this is the case, the U.S. is not your country of tax residence even while you are a J-1 program participant. You can prove this through the location of your:
- Home (or apartment or room–wherever you permanently live)
- Valuable belongings (example: car)
- Social, political, religious, and cultural ties
- Voting registration
The above examples are a few ways to demonstrate your closer tie to another country. It’s also important to note that you will not be eligible to claim a “closer connection” exemption if you took any steps to become a lawful permanent resident of the United States this year.
What Are J-1 Visa Tax Treaties?
Tax treaties are agreements between two countries that allow visitors to be exempt from taxes or eligible for reduced taxation rates when visiting the other nation. For example, one J-1 tax treaty protects visitors from India to the U.S. from being taxed on income earned from teaching or researching. The only stipulation is that these visitors must remain in the U.S. for less than two years.
Depending on the country you were a resident of before arriving in the U.S., the treaty benefits you are eligible to claim will change.
If you’d like more information about what J-1 visa tax treaty may extend to you, check out this A-Z of U.S. income tax treaties.
J-1 Visa Tax Refunds
Before we dive into getting a J-1 visa tax refund, let’s get clear on the U.S. tax vocab (because it’s confusing for everyone, even people who’ve been in the country for a while).
J-1 tax refunds and J-1 visa tax returns are two different things. They are not interchangeable words.
A tax return is what an individual files to the IRS when tax season rolls around. This includes the proper documentation of what taxes you owe, plus payment. Visitors filing taxes in the U.S. will generally fill out documents like 1040-C or 1040-NR. These constitute your tax return.
Essentially, you are returning part of your earned income to the government.
Tax refunds, on the other hand, are what the government gives you back if you overpay. This happens because the original sum you provide is only an estimate of what you owe.
A question many exchange visitors have is: is there a tax refund for J-1 visa holders?
The answer is yes, J-1 visa holders can receive tax refunds, just like their U.S. counterparts. Whether you will receive a USA J-1 tax refund depends on the status of your return.
It’s also important to note that, depending on the form you filed, receiving a tax refund could take up to six months.
Below, we’ll present more details on how to get started filing a tax return, J-1 visa and all.
How to File J-1 Tax Return
First, you'll need to figure out if you had substantial presence or are an exempt individual before you fill out any J-1 tax forms.
Depending on your information, you will file either a normal 1040 or a 1040-NR. It comes down to whether you are a J-1 visa resident or non-resident for tax purposes.
Most individuals who work with us file taxes as non-residents. They are required to pay federal, state, and city income tax, but are not required to pay:
- Social security tax
- Federal unemployment
This is because they are not eligible to receive these services.
Additional documents Exchange Visitors may need to file as part of a tax return include:
- Form 8833: Treaty-Based Return Position Disclosure
- Form 8840: Closer Connection Exception Statement for Aliens
- Form 8843: Statement for Exempt Individuals and Individuals with a Medical Condition
Some of the documents (like form 8843) are meant to be filed without a return. Rather than providing the U.S. government with taxes, they allow the IRS to keep track of who does and does not owe taxes in the country at any given time.
Skip the J-1 Tax Calculator
As you’ve likely gathered from all the information above, navigating taxes in a new country can be tricky. That’s why there’s help available!
We recommend that the J-1 visa holders we sponsor get professional help filing their J-1 tax returns online. These services are essentially J-1 tax return calculators. While it is not required to work with them, it is extremely beneficial because these professionals have:
- Decades of expertise with the U.S. tax system.
- Experience filing the taxes of individuals from many different countries of residence
If you’re sold on getting professional assistance to file your taxes, here are the next steps you should expect from them to get your taxes in working order.
- First, you’ll answer some quick questions so experts can determine what you are required to file.
- Second, the J-1 visa tax information you provided will be used to find benefits and tax treaties you can claim.
- Next, the service will calculate your taxes and fill out the proper form(s). This means that you won’t need a J-1 visa tax calculator–they’ll do the math for you!
- Finally, it’s time for you to print out your forms and send them to the right place. This address will depend on the state you’re staying in.
The price of a professional tax service will vary depending on what specific forms you need to file. Costs per form generally range from USD $16-$50.
If you are looking for a free resource to help sort out your taxes, consider connecting with the Taxpayer Advocate Service. This service is an organization within the IRS with the goal of ensuring that all taxpayers are treated fairly. If you qualify for help, an advocate can help you with whatever tax issue you are experiencing.
Tax Filing for J-1 Visa Holders
We understand that navigating J-1 tax returns as a non-resident can be stressful. There are lots of forms to keep track of, and new terminology to learn. This is a lot to deal with on top of completing your J-1 program and adjusting to life in the U.S.
However, with help, filing taxes should go smoothly. If you’d like a more hands-on approach to getting your questions answered, consider registering for one of the following webinars from Sprintax:
- An Introduction to Nonresident Tax in the USA Monday December 13th @ 12.30pm EST – Register here
- An Introduction to Nonresident Tax in the USA Tuesday February 1st @ 1pm EST – Register here
- An Introduction to Nonresident Tax in the USA Monday March 21st @ 12pm EST – Register here
We want to connect you with quality tax resources so that you can focus your energies on cultural exchange and professional growth during your exchange program.
At Intrax Global Internships, connecting driven individuals with welcoming host companies for amazing cross-cultural experiences is our passion.
Our objective is to make all the details and legalities easy to navigate. If you would like more information from us, we’re happy to help. You can contact us to ask any questions.
In the meantime, feel free to check out some of our other pieces on taxes and J-1 visa details: