BANKING
It is neither necessary nor practical to carry large amounts of cash with you. If you have not done so already, you should open
a checking account. Personal checks are acceptable almost everywhere in the area with appropriate identification (driver's
license, passport, faculty/staff ID). Checks should always be used to pay bills; never send cash through the mail. Canceled
checks are returned to you from the bank either automatically or upon request and provide a record of your payments. Keep
them in a safe place in case you have to prove you have paid a bill.
If you have a substantial sum of money which will sit in an account for any length of time, you may also wish to open an
interest-bearing account or purchase a short-term certificate of deposit.
Different banks have their own policies on service charges and minimum balance requirements for checking accounts and
interest yields on savings. Be sure to ask for complete information about the various plans at each bank you call or visit.
The Campus Centers have automatic teller machines (ATMs) which allow you to withdraw money from your account 24
hours a day if your bank participates in the network. ATMs are located in shopping centers and a number of places in
downtown New Brunswick. Some banks may charge a fee for using the ATMs of other banks. You may wish to ask about
such a service and its specific conditions when you inquire about opening an account.
When opening an account you must present identification (passport, driver's license) and proof of affiliation with the university.
Check the Yellow Pages for names and addresses of banks in the area.
TAXES
If you have income during your stay at Rutgers, there are three different types of tax with which you must be concerned: U.S.
federal income tax, Social Security ("FICA") tax, and New Jersey state income tax. If you have no income but are in
F-1, F-2, J-1 or J-2 status, you must still file a tax return (see "Filing Tax Returns" later in this chapter for more information).
Federal Income Tax
Collection of Federal Income Tax in the United States is the responsibility of the U.S. Internal Revenue Service (IRS).
Nonimmigrants employed in the United States are subject to federal income taxation on any wages earned in the United States
unless they are exempt based on a tax treaty. The following is a summary of U.S. government requirements; for more detailed
information regarding your tax obligations, obtain the following publications: 519 (U.S. Tax Guide for Aliens), 520
(Scholarships and Fellowships), and 901 (Tax Treaties). These publications, information, and personal assistance are available
from the local IRS office, 100 Dey Place, Wick Plaza, Edison. As supplies last, they are also available at the Center for
International Faculty and Student Services between February 1 and April 15. These and other forms and publications can also
be obtained by calling 1-800-424-FORM.
The federal tax obligations of foreign nationals are determined by several factors: visa type, length of residence in the U.S.,
purpose for being in the country, intent to return to the home country or to remain for an extended period in the United States,
country of citizenship, and type of income. Different combinations of these factors result in different tax obligations.
The first consideration is one's status as a resident or nonresident for tax purposes. In general, the following guidelines apply:
F-1 students and J-1s in the student category are considered nonresidents for tax purposes in their first five years of study.
After five years, F-1 and J-1 students are presumed to be residents for tax purposes by the IRS. If you choose to file as a
nonresident after your fifth year, you will have to be prepared to defend your choice to the Internal Revenue Service.
J-1 exchange visitors other than students in degree-granting programs are considered nonresidents for tax purposes during
their first two years in the United States. After two years, J-1 faculty, researchers, and international visitors are presumed to
be residents for tax purposes.
J-2 dependents have the same tax status as the J-1 principle.
Individuals holding H-1 status are subject to the "substantial presence test" as defined in IRS publication 519 to determine
residence status for tax purposes. Generally speaking, individuals who have been in the United States for more than 183 days
are likely to be classified as residents for tax purposes.
Generally, treaty benefits take precedence over other criteria in determining resident/nonresident tax status. Individuals who
claim exemption from taxation based on a tax treaty are considered nonresidents for tax purposes.
Taxation of Residents: If you are a resident for tax purposes, you
pay tax on your entire worldwide income
pay social security tax (FICA) unless you are in J-1 or F-1 status
may claim all of your dependents
may take the standard deduction or itemize deductions
file form 1040 or one of its derivatives
may not claim tax treaty benefits
Taxation of Nonresidents: If you are a nonresident, you
pay tax only on income earned in the United States
do not pay social security tax (FICA) if you are in F-1 or J-1 status
may claim only yourself as a personal exemption regardless of the
number of accompanying dependents (citizens of Canada, Mexico, Japan,
and Korea excepted)
may not take a standard deduction; must itemize deductions
file form 1040NR
may claim tax treaty benefits if eligible
Taxable Income
All income is taxable unless specifically exempt from federal taxes because of a tax treaty benefit for academic employees
from certain countries. Employees in administrative or "casual" (hourly) positions are subject to all federal income taxes as tax
treaties do not apply to such positions.
W-4 Form
Because the United States requires employers to withhold tax on wages earned by employees, all employees must fill out a
W-4 form before going on a payroll. Based on projected earnings and the numbers of allowable exemptions, this form
determines the amount of money withheld from one's pay for the Internal Revenue Service and the New Jersey State Division
of Taxation. Except for citizens of Canada, Mexico, Japan and Korea, nonresidents for tax purposes may claim only one
personal allowance (item 5) and all nonresidents are required to leave item 7 blank: nonresidents may NOT claim exemption
from withholding on the W-4. Unless your entire income is specifically exempt from taxation by virtue of a tax treaty (see
following section on tax treaties), you must have tax withheld. You then claim a refund from the IRS for the portion of your
income you believe is exempt based on your treaty.
If you are 100% tax exempt based on a tax treaty benefit, you must complete and attach to your W-4 two copies of a treaty
exemption claim form (available in the center and in the Payroll office).
There is a flat $500 fine for incorrectly claiming exemption from withholding of federal taxes. It is better to have the money
withheld and get it back in the next year when you file your tax return than to risk having to pay the tax, plus interest, plus the
penalty if you make a mistake.
W-2 and 1042S Forms
In January, everyone who was on a payroll in the previous year receives a W-2 form, a statement of the amount of money
withheld from total earnings for federal tax, social security taxes (FICA), and state taxes. The form is issued by every
employer for whom you worked. Each W-2 has four identical sections, one to be submitted to the IRS with the federal tax
return, one to be submitted to the state with the state tax return, one to be submitted for local taxes in those places where such
taxes exist, and one to be retained by the employee.
Nonresident recipients of fellowships receive a 1042S statement of income rather than a W-2. A portion of the income
reported on the 1042S is subject to federal and state taxes. The portion of the income which is taxed depends on your
education-related expenses and whether or not you are covered by a tax treaty. (See Publications 519, 520, and 901 for
interpretation.)
Tax Treaties
The United States has tax treaties with over 40 countries. Although there are certain basic similarities among them, the treaties
vary in significant ways in terms of the benefits they offer, in terms of the types of income covered, the total amount of the
exemption, and the number of years one can claim the benefit. The university withholds tax on your earnings unless you make
a claim for exemption by treaty.
The Center for International Faculty and Student Services has the partial text of the treaties for your reference (in IRS
Publication 901). The staff does not, however, interpret the treaties for you; for a full analysis you must consult a tax
accountant or your consulate. Countries with tax treaties with the United States are listed below. The existence of a tax
treaty with your country does not automatically mean you do not have to pay taxes.
Australia Austria Barbados Belgium
Canada China (PRC) C.I.S. Cyprus
Czech Republic Denmark Egypt Finland
France Germany Greece Hungary
Iceland India Indonesia Ireland
Israel Italy Jamaica Japan
Korea (South) Luxembourg Malta Mexico
Morocco Nth. Ant./Aruba Netherlands New Zealand
Norway Antilles/Aruba Pakistan Philippines
Poland Romania Russia Sweden
Switzerland Trinidad/Tobago Tunisia United Kingdom
Claiming Exemption from Taxes Based on a Tax Treaty
Everyone earning income in the U.S. is required to complete and file a Form
W-4; however, tax treaty benefits are not claimed on the W-4 form itself. Individuals who are sure they are eligible for treaty
benefits must complete in duplicate a claim form to be submitted to the Payroll office. Individuals are responsible for their own
tax decisions. They are also responsible for notifying Payroll when their tax treaty benefit ends (in some cases, the benefits end
after two years).
If you are unsure as to whether you are eligible for tax treaty benefits, you may consult with a tax attorney for advice, or you
may do the following: do not claim exemption from withholding; the Payroll office will withhold your tax, and when you file
your tax return, request a refund, based on the treaty, of all taxes withheld. If the IRS determines you are ineligible for treaty
benefits, your withheld taxes will not be returned, but you will not have to pay the penalty.
Filing Tax Returns and Obtaining Refunds
All nonresidents for tax purposes, including those who cannot or did not work in the U.S., e.g. F-2s, must file a federal tax
return and IRS Form 8843. Most residents for tax purposes who have income from a source in the United States must file the
tax return form 1040 or one of its derivatives between January 1 and April 15 for the preceding tax year. Non-residents for
tax purposes file the form 1040NR or 1040NREZ. Forms will be available during that period from the center. In addition, the
center sponsors a series of workshops with general information on how to file. We will not be able to give individual tax filing
advice, however. The 1040NR, 1040NREZ, 1040 or 1040EZ is filed with the Internal Revenue Service Center, Philadelphia,
PA 19255.
In many cases, taxpayers are due a refund because more money was withheld from their pay than they owe in taxes. If a
refund is due, a check is sent a few months after the tax return is filed. In some cases, more tax may be due; in this case the
taxpayer must send the IRS a check for the tax due with the return by the April 15 deadline.
It is not possible to receive a refund of money withheld without filing a return. Individuals who fail to file when tax is owed may
later be required to pay fines, penalties, and interest charges in addition to the taxes. Do not assume because people you
know did not pay tax in the past that you also do not have to pay taxes -- the tax laws have undergone substantial changes in
recent years, and the IRS computers are very sophisticated.
Sailing Permit
Individuals not in F-1, F-2, J-1 or J-2 status must "settle up" with the Internal Revenue Service prior to departing the United
States. These individuals must file a Certificate of Compliance, Form 1040C, with the Internal Revenue Service before being
permitted to leave the country. Approximately 15-30 days prior to your departure take your passport, airline ticket, copy of
your federal income tax returns for the last three years, W-2, 1099, or statement of earnings from the Payroll office to the
IRS. The IRS office closest to New Brunswick is located at 100 Dey Place in Wick Plaza, Route 1, Edison.
You will normally be required to pay all taxes due up to the date of departure. Payment need not be made, however, if you
can show that the departure will not endanger the revenue. If you are going home for a short visit, for example, you may not
be required to make payment.
New Jersey State Taxes
State tax laws are considerably simpler than federal laws, but it is usually the case that if you must pay federal taxes you must
also pay state taxes. In some cases you may have to pay state tax even when you do not pay federal tax. Information on New
Jersey State tax regulations is available from the New Jersey State Division of Taxation, 1011 Route 22, Second Floor,
Bridgewater, New Jersey 08807. Forms are available at the County Courthouse on Patterson Street in downtown New
Brunswick. There is only one version of the state tax form, so all taxpayers file on the same form. State income tax returns are
filed at the same time as your federal return.
Social Security Tax
The United States' national retirement and disability insurance plan is known as Social Security. With very few exceptions all
people who work in this country are required to pay into the system: those in H-1B, J-2 and L-1 status must pay social
security tax; J-1s and F-1s who are nonresidents for tax purposes are not required to have social security payments withheld
from their pay. When social security tax is withheld, it appears on the paycheck stub as "FICA." This acronym represents
"Federal Insurance Compensation Act," which is the name of the social security legislation passed by the U.S. Congress.
Social Security Number and Card
Everyone who has earnings in the United States must obtain a social security number, the number used by the U.S.
government to identify wage earners for tax purposes. The number is printed on a light blue card, referred to as the social
security card. This card must be presented to a prospective employer before an individual may be hired.
It is not possible to obtain social security numbers for your spouse and children, despite the fact that routine forms used by
schools, doctors' offices, banks, and other services often ask for a social security number. Because of this fact, however, it is
advisable to obtain from the Social Security office a letter for your spouse and each child stating that a social security number
is not required for non-employment purposes.
To apply for a social security card, take your passport, other immigration documents (pink copy of IAP-66, I-94, I-20ID,
I-797, as appropriate), proof of eligibility to work, and a photo I.D. that is at least one year old (a passport that is one year
old or more will be accepted) to the Social Security Administration office at 52 Charles Street off Livingston Avenue in
downtown New Brunswick.
You will also need a letter confirming your employment at Rutgers; you can obtain this in your department or at the Center for
International Faculty and Student Services.
Individual Taxpayer Identification Numbers (ITINs)
ITINs are for those who do not have a social security number (SSN) and who are not eligible to get one. Since all individuals
in F or J status--including F-2 and J-2 dependents--are required by law to file non-resident tax returns, those who are not
eligible for SSNs must obtain an ITIN. Also, there may be other tax-related reasons why an individual might need an ITIN.
To apply for an ITIN, go to an office of the IRS; bring your passport and another form of identification. The IRS office closest
to New Brunswick is located at 100 Dey Place in Wick Plaza, Route 1, Edison.
A Final Note
The center has a flier summarizing nonresident tax matters; ask a staff member for "Tax Information for Nonimmigrant Visa
Holders." The university does not provide tax advising to American students or staff, nor can it offer detailed advice or
assistance to foreign nationals enrolled or employed at Rutgers. The above is intended to give you a general sense of your
obligations under the law; for in-depth analysis and assistance, you must consult a professional tax accountant or attorney
specializing in nonresident alien tax matters.
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last updated August 19, 1997