From: xiong@bsu-cs.bsu.edu (Bo Xiong)
Subject: [Info] Tax Return Information for Chinese Students in the U.S.
Organization: Indiana University
Date: Sat, 9 Jan 1993 06:56:39 GMT

The following is carried in January 9's CND-US:

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2. Tax Return Information for Chinese Students .......................... 54
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From: Edmund D. Fenton <FENTON@GONZAGA.BITNET>

[Editor's Note: CND has prepared a number of information packages including
ones on filing U.S. tax returns. For a list of these packages, please send
a "get china-nd filelist" command to <listserv@kentvm.kent.edu> or
<listserv@kentvm.bitnet>. ]

The time for filing tax returns in the U.S. is again approaching. While it
is still too early for most of us to file our tax returns because we have
not received the appropriate documents from our employers, we need to make
sure that 1993's tax matters are handled correctly.  If during 1993 you will
earn money that is tax-exempt under the U.S. - China tax treaty and you do
not want your employer to withhold taxes, then Form 8233 must be completed
and given to your employer.

Generally, a Chinese student studying in the U.S. may earn up to $5,000 tax
free under the tax treaty.  Adding the personal exemption amount of $2,300
to the $5,000 treaty amount, a total of $7,300 of earnings will be tax free
in 1992.  This will be a little more in 1993 since the personal exemption
amount is increased for inflation each year.  Scholarship and fellowship
grants for tuition, fees, books, supplies, and equipment related to
education leading to a degree is, of course, not taxable under the Internal
Revenue Code for all taxpayers, and therefore is not a tax treaty benefit.
Tuition reduction waivers for graduate level teaching and research
assistants are also not taxable, as long as the tuition is reduced directly
and cash is not received.

The $5,000 tax treaty benefit usually applies to wages being earned at part-
time jobs.  Most employers do not realize that Form 8233 must be completed
by the student requesting tax exempt status.  But the form is required by
law if the employer is not going to withhold taxes. The more familiar Form
W-4 will not suffice if a tax treaty benefit is being claimed.

Form 8233 also is to be used by Chinese teachers and researchers in the U.S.
whose income is usually tax exempt under the treaty.  For teachers and
researchers, an unlimited amount of money may be earned in that capacity for
up to a three-year stay in the U.S.

Obtain a copy of Form 8233 and read the instruction on the back for a more
complete explanation.  One thing to remember is that a statement must be
attached to the Form 8233 for students, teachers, and researchers.  The
statement must follow the wording contained in the back of IRS Publication
519.  The necessary forms and publications can be ordered free by calling
1-800-829-3676.

Also, do not forget that all students, teachers, and researchers from other
countries who are in the U.S. must file a Form 1040NR if they have any U.S.
sourced income whether taxable or nontaxable. This means that if a Chinese
student has a tax-free scholarship, Form 1040NR must be filed showing the
amount of the scholarship as income, and then showing it as a deduction to
net at zero. These tax returns are required to retain the tax exempt status.

Form 1040NR is to be filed by April 15th if you have income subject to
withholding, or June 15th if no income was subject to withholding.

All of this information relates to students and teachers who are considered
nonresident aliens.  So if you have a "green card" or other permanent status
you are taxed the same as U.S. citizens.

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Forwarded by Bo Xiong in Chicago
Newsgroups: soc.culture.china