GET TO KNOW WHAT TAXES YOU SHOULD PAY

Learn the types of taxes you should pay in the USA and pay only mandatory ones.

 

What are types of taxes in the USA?

According to the US laws and regulations, every employee legally working in the USA must pay taxes. There are several types of taxes. The type of taxes you should pay depends on your visa type.

Federal Income Tax: 10%-12% of the weekly wages is deducted as this type of tax.

State Income Tax: 3%-6% of the weekly wages is deducted as this type of tax. Only nine states do not have this type of tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.

Local Tax: most of the states do not apply any local taxes. Some of the states apply local tax. Local tax rates differ, but they are not high.

Social Security & Medicare Tax (Also known as FICA or OASDI):  7.65% of the weekly wages is deducted as this type of tax.

What taxes should I pay?

Everyone legally working in the USA is required to pay the following tax:

Federal Income Tax
State Income Tax
Local tax

If you work under F-1, J-1, M-1 or Q-1 visa, you do not have to pay Social Security & Medicare Tax. Your visa type is written on the right side of your visa stamp.

If your employer deducts Social Security & Medicare Tax, inform him/her that you are exempt from Social Security & Medicare Tax according to the Article 8 of IRS publication 519.



REGISTER FOR SSN AND FILL W-4 FORM

Register for Social Security Number (SSN) which will guarantee legal work. Also correctly fill W-4 form during the first week of your work in the USA.

 

How to register for Social Security Number?

To be legally employed in the USA you need a special number called Social Security Number (SSN). It is a nine-digit number issued by the Social Security Administration. It is written on a Social Security Card.

Your program provider or your employer will assist you in registering for SSN.

When you are in the USA, first thing you should do is to register for receiving a Social Security Number because you will need it at your work. Your employer will use this number for paying you wages, deducting taxes and sending information about your employment to the US Tax authorities.

You can find the nearest USA Social Security administration office here.

A couple of weeks after your registration, a Social Security card will be issued to you. It will be mailed to the address which you give when registering. You should write the address where you will be able to receive letters. If you do not know where you live in the USA, you may write your employer’s address.

Don’t lose your SSN because it is issued for all your life. Next time you come to work to the USA, you will use the same number.

Be careful telling your SSN to people whom you do not know. This is your personal information like a passport number or ID number which should be given only to reliable people/institutions to make sure this information will not be used for illegal actions.

NOTE! SSN is not required for calculating your refundable tax amount. It is required only for refunding taxes.

If you lost your SS Card or forgot SS Number while being in the USA, please visit the nearest Social Security Administration office. A letter verifying your SSN will be issued by this office. This letter can be used as a substitute for the lost Social Security Card.

How to fill in W-4 form?

Filling in W-4 form (Employee’s Withholding Allowance Certificate) determines what types of taxes will be deducted from your weekly wage.
Your employer will ask you to fill in this form during the first week at your work. You must fill in the W-4 form in all the jobs you have in the USA.
Most employers do not know that a J-1 visa student (like you) should fill in the W-4 form in a different way than a US citizen. Please note that your income is subject to taxation differently from the U.S. citizens, therefore, the instructions, given on the front page of the W-4 form, are not applicable to you.

View the sample how to fill in the W-4 Form

When you write the address in this form, you should give the address where you will be able to receive letters after you go back to your home country. W-2 form will be mailed to this address. You will need W-2 form for refunding your taxes.
After termination of your employment, please double check that your employer has your permanent residence address in your country.



COLLECT NECESSARY DOCUMENTS

Start collecting necessary documents and information on your Tax Refund Account. Please or register. You will need it for your future tax refund process.

 

What documents do I need?

A list of Tax Refund documents:

You can keep most of the documents and information in your Tax Refund Account before coming back from the USA. Only W-2 form is issued after you come back from the USA.

What is Form DS-2019?

This is a document, which was given to you by your sponsor organization after you applied to participate in the program. This color document is required when you apply for the Visa and at the US passport control when you enter the U.S. For the tax refund purposes we need a copy of DS-2019 form.

What is Pay slip?

Employees receive their wage by a check every week. The check is accompanied by pay slip. The pay slip contains information on your income and tax deductions for the last week (“CURRENT”) and the entire period of employment in the company (“YEAR TO DATE” or “YTD”). For tax refund purposes, information in the field “Year to date” from your last pay slip is needed. You should keep the pay slips from all your jobs even if you did not pay taxes there because ALL your income must be shown when refunding taxes.

What is W-2 form?

This form is issued by your employer at the end of the financial year (after December 31st). Information about your earnings and tax deductions for the entire period of employment in the company is written in this form.

During the first week of your work in the USA you will fill in the form W-4 (Employee’s Withholding Allowance Certificate). Make sure to write your home address in your country in this form. You should give the address where you will be able to receive letters after the New Year. W-2 form will be mailed to this address.

After termination of your employment, please double check that your employer has your permanent residence address in your country.

You will need W-2 form for refunding your taxes. According to the laws of the USA all the employers must send W-2 forms to their employees till the 15th of February. One copy of W-2 form is sent to the US Tax Authorities. To make sure your W-2 form does not get lost in the post, you can ask a copy of it to be sent to your e-mail.