Fulbright Foreign Student
Important U.S. Tax Informationby Kate Sullivan, Director, Student Services
As a Fulbright grantee, you are required to pay income taxes to U.S. tax authorities on the income you receive from U.S. sources unless you are exempt (excused) under a tax treaty, or special rulings of the U.S. taxing authority, the Internal Revenue Service (IRS). U.S. source income includes but is not limited to:
Scholarship grants are taxable in the U.S. similar to how wages are subject to taxes. Your sponsor, the United States Department of State, pays a tax estimate that is over and above the required tax on your Fulbright Scholarship to the IRS on your behalf instead of taking it out of your grant or asking you to pay the tax. Therefore, the Institute of International Education (IIE), one of the administrative agencies for the Fulbright Program, has a contractual obligation to your sponsor to report annually to the IRS. You should never owe U.S taxes on funds you received for your Fulbright grant.
GRANTAX is the tax management service used by IIE in New York. GRANTAX expert tax preparers will submit your annual United States tax report (commonly referred to as an income tax return) to the IRS at no cost to you. All Fulbright grantees are eligible to use GRANTAX services; however, if you receive your funding directly from IIE, you are required to use the GRANTAX service.
1. Each year in late January, you will receive various tax-related documents summarizing your U.S. source wage income from the previous year. Universities, banks and employers (if applicable) will send these documents to you. You will most likely receive form 1042-S; in some instances, you may receive form 1099. For those who receive funding directly from IIE, your form 1042-S summarizing your Fulbright scholarship income will be kept at GRANTAX. Tax forms and tax terms you may encounter are explained below.
2. Each year in late February, you will be sent an electronic questionnaire to complete and return electronically to GRANTAX by the end of March. At that time, you will also be asked to mail any other tax documents you may have received (mentioned above) summarizing your U.S. source income in addition to your Fulbright grant, a copy of your social security card, and a completed Power of Attorney form to GRANTAX.
3. GRANTAX will then prepare and submit your tax report to the IRS. If a tax refund is a result of this report, the IRS will send the refund check to IIE. If your U.S. source income is solely from your Fulbright grant, then the entire refund amount will be kept by IIE and returned to your sponsor. In the event that you have earned wages during your stay in the U.S. in addition to your Fulbright grant, and you are eligible to receive a portion of the refund, GRANTAX will send you a refund check. If your employer fails to withhold enough tax from your wages, you may be faced with making a payment to the IRS.
4. For those Fulbright grantees who are required use GRANTAX services, please note that you will not be eligible to submit a “joint tax return” (tax terminology) with J-2 or dependent wage earners who may have accompanied you to the U.S.
Tax Terms and Tax Forms You May Encounter
1042-S (Foreign Person’s U.S. Source Income Subject to Withholding) This form is used to report U.S. source income paid to a non-resident alien.
Income on this Form Includes:
W-2 (Wage and Tax Statement)
This form is used to report your U.S. income from employment regardless of your U.S. residency status. Your employer reports gross income you earned during the year, as well as income taxes they withheld from your wages and submitted to tax authorities.
FICA Tax (Social Security Tax)
This tax is imposed on all earned wages in the U.S. This tax is to finance the old age/survivors/disability insurance and the medical insurance for such eligible individuals provided under the Social Security Act. Even though you are currently in possession of or have applied for a Social Security Number, you are most likely exempt from paying this tax, which represents 7.65% of your gross wage. Unfortunately, many U.S. employers are not aware of this fact and, consequently, they withhold this tax from your wages. Please see your employers if you notice the error on your statement of earnings.
1099 (Miscellaneous Income)
This form is used to report income that is not reported in the previously mentioned forms (1042-S or W-2): compensation as an independent contractor, bank interest, dividends, etc. If you receive this form as a result of your employment, please ask your employer to issue the form W-2 instead, withhold appropriate income taxes and submit to the applicable tax authorities. Otherwise, you may find yourself having to pay a large tax bill.
8843 (Statement for Exempt Individuals and Individuals with a Medical Condition)
This form must be filed in order to ensure your exempt status for U.S. tax purposes as a J-1 visa holder. It’s usually attached to your income tax return (annual income and tax report). In the event that you are not subject to U.S. taxes because you did not receive U.S. source income, and are not required to file a tax return, you must still complete this form and submit it to the IRS.
W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding)
If you receive a scholarship/fellowship grant, and you are from a tax treaty country and want to claim a tax treaty exemption, please complete this form and submit to your withholding agent (IIE). You can determine the availability of tax treaty benefits for your country in the IRS Publication 901.
8233 (Exemption from Withholding on Compensation for Independent (Certain Dependent) Personal Services of A Nonresident Alien Individual)
If you engage in U.S. employment while on your grant and are from an active tax treaty country, you will be eligible to claim a tax treaty exemption on your compensation provided you complete the 8233 form and submit it to your employer. An employer will file this form with the IRS on your behalf. You must compete this form for each tax year that you are employed in the U.S.
W-4 (Employee’s Withholding Allowance Certificate)
If you work while in the U.S., your employer will ask you to complete a W-4 form prior to the commencement of your employment. This form will determine the withholding tax amount from your wage. A more detailed explanation of this form follows.
Paying Tax On Your U.S. Source Wage Income
If your U.S. source income will include earned wages in addition to scholarship income, please read the following section carefully to protect yourself from owing a large amount of money to the IRS.
In general, U.S. employers are unfamiliar with the way in which U.S. tax law applies to Fulbright grantees or non-resident aliens (U.S. tax terminology). As a result, many employers will withhold income tax from your wages at the same rate as a U.S. citizen. This means that when your annual U.S. tax report is submitted to the IRS, you will owe a significant amount of money. However, your annual U.S. tax report will not be the same as a U.S. citizen’s tax report. U.S. citizens are entitled to various tax benefits that unfortunately are not available to non-resident alien taxpayers. Finally, at the end of the year, when you are required to report all of your U.S. source income to the IRS, you may be surprised to find yourself with a higher tax responsibility than anticipated. Remember, your sponsor pays an estimate of the required tax on your Fulbright grant to the IRS on your behalf, but not on any other U.S. source scholarship or wage income.
Since it may be difficult for you to pay off a significant debt all at once, you can request that your employer withhold the maximum amount from your wages. If at the end of the year, when all of your income and all of your tax responsibility has been calculated, it is determined that too much of your income has been held for tax purposes, the annual U.S. tax report submitted on your behalf will result in a tax refund paid to you.
Again, if you undertake employment, one of the forms you will be asked to complete is a W-4 form. Your employer will use the information on this form to calculate the percentage of your wages that should be held back for tax purposes. Please click here for a copy of form W-4 in PDF format.
In section #3, you should check “single.” This means that for U.S. tax purposes, you are requesting to be considered single. In section #5, you should indicate “0,” which means you would not be claiming any dependents on your annual U.S. tax report.
If you think you will earn more than $10,000, ask your employer about an additional withholding (about 5% of your gross income), or be prepared to pay additional taxes at the time your U.S. annual tax report is prepared.
A Reminder about Submitting Transcripts
This is just a friendly reminder that it is time for you to submit your academic reports from Fall 2006.
IF YOU ARE A DEGREE-SEEKING STUDENT: please submit an OFFICIAL transcript to your IIE Student Services representative. Internet print-outs will not be accepted. To order a transcript, please stop by your college or university's Registrar's or Bursar's Office to request that a copy be sent to your IIE Student Services representative directly.
IF YOU ARE A NON-DEGREE STUDENT OR VISITING RESEARCHER: please submit EITHER a letter of progress from your supervising academic advisor, OR, a Visiting Researcher Report Form. Click here to access a copy of the form.
Your transcript or progress report should have been submitted by January 31, 2007. Thank you.
My Experience on the Greatest Student Exchange Program in the World: The Fulbright Programby Wilfrid Ndzaba, 2006-2007, Republic of Congo
I have to make it clear at the outset that without this program, I would not be able to afford my education (tuition, fees, maintenance, and living expenses in the United States). The reasons why, I believe, that this program (initiated by Senator William J. Fulbright) has to be extolled throughout the world is that it brings thousands of students from around the world regardless of their status, color, ethnicity, and origins to study in an amazing place where there are literate people who are culturally kind, compassionate, and supportive. For instance, in Athens where I arrived first, I came across nice American people who made my life there easier; no worry for a ride at anytime and wherever I wanted to go in this country. Also, at school, we were energized by outstanding instructors who taught us in a very democratic way that I have never experienced in my own country or city, Brazzaville in the Republic of Congo; teachers often rewarded high-performing students with praise. For example, I have been awarded a book after receiving a perfect score in study skills.
In similar way, American students at Ohio University appear open, friendly, and smiling to the international students. It is an educational setting that I will recommend for future Fulbright students and scholars to attend. As far as the accommodations are concerned, I was living in one luxurious place called Courtyard Apartments where I was sharing an apartment of four bedrooms, fully-furnished, with two American students and one British student, a wellness and sports center, and swimming-pool -- all included. It was an apartment of delight, fun, and learning. We were learning from each other in terms of cultural backgrounds, differences and similarities, and food. I loved Ohio University, where I made friends for life who have helped me improve my English speaking and listening skills.
However, at the completion of my certificate at Ohio University, this wonderful program gave me an opportunity to discover another university called The College of Saint Rose in Albany, New York. My stay in Albany is full of amazing opportunities. First, I am involved in one of the clubs at The College of Saint Rose which led me to discover Saratoga where I visited the house in which the General Schuyler hosted one guest, President Jefferson. Also, my positive experience extends to one of the greatest presentations I have been proffered to give by The Office of Multicultural Affairs where my flyer was put everywhere on the walls, online, and throughout the college. I was made a star! And this experience allowed me to meet a large number of professors, faculty, administrators, and students that I have never met before.
To wrap it up, the Fulbright Program stands for a metaphor of “father who cares not only his own children but also those of his neighbors.” Can you realize, in addition to friendships, relationships, and future opportunities for his own offspring, how his neighbors’ children will be greatly indebted to him?
Photo of the Month
My Fulbright Program -- A Macedonian Perspectiveby Mira Bekar, 2006-2007, Macedonia
I am writing this article, which is more like a memoir to describe my experiences, as a non-U.S. Fulbrighter from the Republic of Macedonia. My name is Mira Bekar, and my adventures began on August 11, 2006 when I arrived in Fort Wayne, Indiana. I have been awarded a Fulbright grant for the academic year 2006/07 and got an affiliation at Indiana University-Purdue University at Fort Wayne (IPFW). The purpose of my stay is to do research for my Master's thesis in the field of Discourse Analysis and Second Language Writing. Although some may argue that IPFW is not at the top on the list of the prestigious universities, I would like to point out the positive features of having my Fulbright experience at IPFW, which I find extremely valuable.
It is worth mentioning that IPFW enjoys the status of being a combined campus of Indiana University and Purdue University. Every year it welcomes around 1,200 freshmen students and meets the educational needs of 12,000 students both native and international.
Furthermore, I have found out that IPFW pays a great deal of attention to developing students’ communication and multimedia skills, which are very important for writing and the critical thinking needed for effective professional achievements in diverse and multicultural settings. Since I am interested in Linguistics, Discourse Analysis and Second Language Writing, I was pleased to participate in the Inaugural Conference of the Appleseed Writing Project where issues of race and diversity in classrooms were discussed.
When I arrived at IPFW, I was disappointed by the fact that a degree program in Linguistics is not offered. The good news is that the Department of English and Linguistics is seriously considering offering a B.A. in Linguistics. The lack of such a program is compensated by the presence of several experts in linguistics such as Dr. Thompson, Dr. Sun, Dr. Crismore and Dr. Simons, who are eager to fulfill students’ individual professional needs and take responsibility for independent studies.
Although my Fulbright grant is a non-degree one, I feel that auditing courses and workshops, along with the personal conversations with the professors, experts in their fields, have contributed significantly to my professional and personal enrichment.
When it comes to cultural interaction, I would like to mention the Department of Music at IPFW, which presents a variety of concert activities in which faculty artists, student soloists and guest artists are included. I also had the chance to visit one of the public schools in Allen County to see a play by the 5th graders and realized that public schools here provide a great variety of both curricular and extracurricular choices, including programs for students who want additional challenges in areas such as arts, foreign languages and communications. At IPFW, the Office for International Programs, the Office for International Student Services and the Office of Diversity and Multicultural Affairs are in charge of organizing cultural events where international students present their national heritage and rich cultural values. These offices also maintain the working connection between the university and diverse groups. I am looking forward to giving a presentation on my country, the Republic of Macedonia during spring semester 2007.
As for the city of Fort Wayne, although I prefer bigger cities, I am pleased by the so called 'All-American city,' which is a truly modest community that enjoys a low cost of living but is the embodiment of hospitality. An excellent way for one to experience the true American culture of the midwest region is by attending festivals. Johnny Appleseed and the Three Rivers Festivals feature national music acts, ethnic foods and crafts. Moreover, I am excited that I have experienced my first real Halloween, Thanksgiving and will experience the Christmas holidays in a native environment.
What is also worth mentioning is that a contact list of all Fulbrighters at IU, IPFW, and IUPU has been created so now we can exchange our experiences and, I hope, build long lasting connections.
All in all, I am glad and honored to be the first Fulbrighter at IPFW contributing to the purpose of the Fulbright Program to promote mutual understanding among people of the United States and the rest of the world.
In the end, I would like to thank my student advisor Dr. Richard Ramsey and his family who made all the above mentioned possible.
My First Thanksgivingby Dilini Walisundara, 2006-2007, Sri Lanka
Before I arrived, my opinions of American culture were modeled around many television programs that were telecast back home. Today, I have come to realize that the reality is different. This was best reflected at Thanksgiving; a cultural celebration, I believe that is celebrated mostly in the U.S.
My roommate is also a Fulbright Fellow, and our daily experiences, be it taking the bus, or just walking down a sidewalk (I am gradually getting myself accustomed to the local idiom), have been learning experiences.
Annegret, Sundus and I, three Fulbrighters, did not know what to expect as we set out on Thanksgiving Day. First, we had lunch at Cynthia Kelly’s house. We were welcome by Cynthia’s family and her parents. We all had a wonderful time with plenty of turkey, sweet potatoes, squash, mashed potatoes and of course, apple pie. It was wonderful gathering of the Kelly family. The rest of the afternoon was spent on exchanging each others' experiences that ranged from stories about Thanksgiving to sharing our own cultural traditions. This was indeed very entertaining. By the time we had desert, it was almost time for us to go my friend’s house for dinner.
At my friend Josephine Mayo’s house, we were welcomed by her family and her brother’s family. After a few minutes it was time to eat! As we walked down to the dining table we were all touched by what was on the table. "Dau," as we all called her, had all our flags placed on the table! It was a very emotional moment for all of us. We each took turns at explaining our flags and what they represented. After dinner, we all sat around singing songs until late at night.
On my first Thanksgiving in the U.S., I had the opportunity to witness the very essence of American life. I felt that at Thanksgiving, many Americans do celebrate an important aspect in their culture; the importance of family. When I return to Sri Lanka, my account of the American experience will be very different what many perceive it to be back home. I will have so much to say about the warm hospitality, the care and concern and most of all the wonderful spirit of friendship. This, I believe, is the best that any program could offer. A first-hand experience of culture cannot be substituted by any book or television program.
A Call for Articles -- with Photos
We welcome articles with accompanying photos for future issues of the Foreign Fulbright Student Grantee Newsletter. Articles should ideally be about your experience of being a Fulbright ambassador in the U.S., and any relevant and/or unique musings you might want to share with your fellow Fulbright grantees and others interested in the Fulbright Program. The length of the article should be no longer than 500 words and not require much editing in order to be published, although we reserve the right to edit articles where appropriate. Please note, however, some articles may not be published. The accompanying photos should show you engaged in program activities, and be illustrative of your article's content. Please submit your articles with photos within two weeks of the release of this newsletter. If you have any questions, please do not hesitate to contact us. We look forward to receiving your articles and photos!