I have J1 visa and is exempted from Federal tax. I am a nonresident alien, because I came to USA last October.

I referred my friend to our apartment and will get referral fee. I got a W-9 form to fill in before I can get the check.

Question 1.

Should I fill W-9 or W-8 form?

Question 2.

Should I report referral fee on Federal tax claim? I guess it is taxable by state.

Thanks a lot!

You SHOULD file Form W-8BEN because of your non-resident alien status.

If you are exempt from federal income tax, then the referral fee is als exempt from federal income tax.

The referral fee, along with your regular salary, is LIKELY subject to state income taxes, because most states do NOT HONOR the provisions of the tax treaty, to include your tax-exempt status.

Refer to the tax treaty between the U.S. and your country to find out what income is exempt.

I disagree. The income you are earning as a result of your J1 work/role may be exempt under the treaty but other income you earn will not be exempt. It does not look to me like the referral fee would be exempt.

On further consideration and based on MukatA's and TTE's postings, the referral fee MAY be taxable.

However, if the referral fee is less than $3,500, it will not need to be reported on a tax return, because your personal exemption will offset the income and NO tax will be due. In fact, no tax return will even have to be filed In my opinion.