U.S. law requires that you pay federal, state, and local taxes. Generally, your employer will deduct money from your paycheck every pay period. As an income-earning individual, you will be taxed on income from salaries, wages, and tips. Your employer will submit the amount withheld directly to the federal government. Deductions for state and local taxes will vary. Some states do not have a personal income tax; others may tax income as much as 8%. Similarly, local taxes will vary but will be significantly less. If no taxes are withheld from your pay, please contact InterExchange.
You do pay:
- Federal income tax
- State income tax
- Local or city income tax
You do not pay:
- Social Security (S.S.)
- Medicare tax (FICA)
- Federal Unemployment Tax (FUTA)
If you see deductions that say FICA, FUTA, S.S. or Social Security, please notify your employer promptly. If your employer is unable to issue a refund, contact the Internal Revenue Service Center and request IRS Form 843 Claim for Refund and Request for Abatement. You will need to submit the completed IRS forms to the Internal Revenue Service Center. Please note: some states may deduct state unemployment taxes, which you are required to pay.
New Tax Information
Starting January 1, 2018 (until 2026) the personal exemption has been suspended. In the past, students may have received refunds from the federal government. Due to the change (IRS Publication 515) you will not receive any federal refunds if you have earned less than $9,525. State taxes are not affected by this act, and are dependent on the state you worked in. You may still be eligible for a State refund regardless of the amount you earned.
For tax purposes, you are required to fill out a W-4 Employee's Withholding Allowance Certificate as soon as you start working. Your employer will give you a W-4 Form. It is your responsibility to complete and submit the W-4 Form to your employer. Based on the information you provide on the W-4 Form, your employer will calculate the amount of federal, state, and local taxes to be withheld from your paycheck.
How to fill out your W-4 Form:
Your employer may tell you to follow the instructions printed on the form, but this is not correct. The instructions on the W-4 Form are for U.S. residents; they are not for you. Please follow the instructions below.
- Mark or check Single on line 3, even if you are married.
- Claim "1" on line 5. If you are a resident of Canada, Mexico, Japan, or South Korea, or a U.S. national, please visit the IRS website for instructions.
- Write Non-Resident Alien or "NRA" on the dotted line.
- Do not claim Exempt on line 7. Line 7 should be left blank.
- You are not exempt just because you are a student in your home country or because you make less than a certain amount of money. Please do not claim exempt.
As an Exchange Visitor on a J-1 Visa, you are considered a "non-resident alien" for tax purposes. Depending on how long you work and how much money you earn, you may be eligible for a refund. You should give your employer a self-addressed envelope with your home country address so that they can mail you your tax forms later. Be sure to file a tax return by April 15th to get your refund! Note that InterExchange staff are not tax professionals. If you have tax questions, please consult a tax professional.
In order to make sure that you are paying the correct taxes, check your first pay stub:
How to understand your Pay Stub
Gross Pay: Total amount earned in the pay period before any tax deductions.
Withholdings: Amount of money the Federal, State and local governments take out of your paycheck
Net Pay: Total amount of earnings you will receive after taxes have been taken out.
YTD or Year To Date: The total amount of earnings and withholdings since January 1st of the current calendar year.
Before you end your program please give your employer your home address or a self-addressed envelope so that they can mail your W-2 Form to you. If you don't do so, your employer will not be able to send you the necessary forms to file for your tax return.
Can I get back the taxes that were taken out of my paycheck?
You may be able to get a refund for some or even most of the money you paid. Your refund depends on how much money you made while you were in the U.S. It also depends on how you filled out your W-4 Form.
When can I file my taxes? / How can I get my refund?
You won't be able to file your taxes until you receive your W-2 Form. At the beginning of the year, your employer will send you a W-2 Form (your employer is required by law to mail your W-2 to you by February 15th of the year following the year wages were earned). Before leaving your job, give your employer a self-addressed envelope so that he or she can mail you your W-2. If you have received your W-2, please read our Filing Your Taxes page for more information.
If I am eligible for a refund later, why do I have to pay taxes at all?
The government calculates tax deductions in advance, but it is ultimately determined by how much money you actually end up making. If the government overestimated how much you would earn, you may be eligible for a refund. If the U.S. Government underestimated how much money you would earn, you will likely owe money.
If you don't pay taxes, you are breaking the law. If you owe the government money at the end of your stay, you may not be able to return to the U.S. in the future. Filling out your W-4 Form properly will ensure that you do not owe the U.S. Government any money. The taxes will be taken out of each paycheck. If you have paid too much in taxes, you can get it back by filing a tax return once you have returned home.