If you are offering a paid training program to an InterExchange Career Training USA participant, he or she will be required to pay income taxes. Below is some helpful information to ensure a smooth process for both you and your trainee.
When the participant arrives at your company, he or she must complete an I-9 Employment Eligibility Verification Form, which notifies the federal government that he or she is allowed to work in the United States. The participant will show you his or her passport, I-94 Arrival/Departure Record, J-1 Visa and DS-2019 Form when completing this form. The participant will complete Section 1, and you will complete Section 2. The participant should fill out Section 1 using your company address.
The participant is also required to fill out a W-4 Employee Withholding Allowance Certificate as soon as he or she starts a paid training program. Based on the information provided on the W-4 Form, you will need to calculate the amount of federal, state and local taxes to be withheld from the paycheck. InterExchange Career Training USA participants are exchange visitors in the “non-resident alien” tax category. Please consult a tax professional for the most recent tax regulations.
How J-1 Trainees Should Complete the W-4 Form
The participant should NOT follow the instructions printed on the form, as the instructions on the W-4 Form are for U.S. residents—not exchange visitors. Please follow these instructions:
- The Personal Allowances Worksheet does not need to be completed—this does not apply to exchange visitors
- Home address: Indicate the participant’s permanent U.S. mailing address
- Box 2: Enter the Social Security number if known
- Box 3: Mark or check “Single”, even if the participant is married
- Box 4: Leave blank
- Box 5: Write “1”
- Box 6: Write “NRA” for “Non-Resident Alien”
- Box 7: Leave blank
FICA and FUTA Withholdings
Under IRS Code Section 31.21. (B)(19), all non-resident aliens on J-1 visas are exempt from paying FICA (Social Security) and FUTA (federal unemployment taxes) taxes during their first two calendar years in the U.S. Since all of our participants are only able to train for 18 months or fewer, all are exempt from these withholdings. Please consult a tax professional to see if the participant is also exempt from state unemployment taxes in your state.
As an exchange visitor on a J-1 Visa, the participant is considered a “non-resident alien” for tax purposes and is required to pay some taxes. Filling out the W-4 Form properly will ensure that he or she does not owe the U.S. government any money. Depending on how long the participant trains with you and how much money is earned, he or she may be eligible for a refund of some of the taxes paid.
All program participants who are paid must file a U.S. tax return for the calendar year during which they worked with your company and follow the tax-filing deadline for that year. Even if the participant is no longer in the U.S., he or she still must file a U.S. tax return for the time during which they worked. It’s important to remind your trainee of this tax filing requirement, particularly if the participant’s program spans over more than a single year’s tax period.
If the participant is still in the U.S. at tax time, please provide him or her with a W-2. If he or she will have already returned home by the time W-2s are issued, we recommend that you have the participant leave a self-addressed envelope prior to departing the U.S. so that you will be able to mail the W-2 at the appropriate time. Note: Do not send W-2 forms to InterExchange’s office. As a host employer, you are responsible for getting this information to the participant and confirming that he or she has received it.
Filing Form 1040NR-EZ
If the participant will still be in the U.S. at tax time, you may wish to offer him or her assistance with filing a tax return. Upon receiving a W-2 Form, the participant will fill out a 1040NR-EZ (Non-Resident Aliens with No Dependents) Tax Form. This can be obtained online at www.irs.gov.
Once the form is completed, it should be mailed to the address listed in the “Where to File” section of the 1040NR-EZ. Please note that InterExchange staff are not tax professionals. You and your trainee must contact the IRS if you have any specific questions regarding tax returns.
Please encourage your trainee to visit our Tax Resources and Information page or to contact the IRS or a tax provider with specific questions.