Hi,

I recently strted work in Manhattan at a Private School in the City as a teacher. I am on a J1 Visa and am covering a maternity leave until January. I am a citizen of Ireland but a resident of Italy. I have a job in Italy and will be returning there in January. Nobody including my employer seems to know how much tax I will have to pay? Can you help me? I have lived in France and Italy where taxes are HUGE and am now afraid that after taxes, I will not survive Manhattan!!

It depends on the nature of your J-1 visa.

If your J-1 visa is a student or trainee visa, then you are liable for federal and NY state income taxes (plus NY city income taxes if you LIVE in NY City). You will pay taxes ONLY on your U.S.-sourced income. I cannot say if Italy or Ireland will tax the U.S.-sourced income, but I doubt it.

If your J-1 visa is one for visiting teachers/researchers, then you are totally exempt from both federal, state and city income taxes. You will need to file some documents with your employer so they will not withhold any taxes from your pay.

In either case, under U.S. tax law, you are exempt from FICA (Social Security and Medicare) taxes if you have been in the U.S. for less than two calendar years (2008 and 2009).

Dear Atlanta TaxExpert,

Thank you so much for the concise response. I am actually here in NY as a visiting teacher for four months. I work in our sister school in Rome. Do you have any idea what forms I need to fil in? At work, they are somewhat consufed as I doubt they have had too many legal aliens working for them before. Again, thank you tenfold for shedding light on this muddle.

The statement that needs to be filed with your employer's payroll department is listed at the end of IRS Pub 901, which can be downloaded from Internal Revenue Service.

Again, many thanks. My Business Office contacted Payroll Today who are not so convinced. They argue that I am required to pay Federal, state and city taxes which amounts to between 25 and 30 percent of my salary. They consult the IRS website a lot and advised me to check my facts with them :( So looks like I will have to pay. Again, thank you so much for your help but without documents or hard evidence, I will have to pay taxes.

You can claim the exemption when you file you federal and state tax return by filing Form 1040NR-EZ with Form 8833 to claim the treaty exemption.

You then attach copies of those forms to your NY state tax return when you claim the exemption from the state and city tax returns.

We file these types of returns every year; email at [email protected] come January for professional help in filing your return to claim exempt status. We can help you recover those withheld taxes even if you have returned to your home country come January 2010.

Many thanks yet again. Will be in touch in January! So, I pay these taxes and claim the back with your professionl help? Will I get a high percentage back like 50 per cent? I leave on Christmas Eve.

For the city tax, you should get it ALL back for sure as you can easily prove that you were NOT a city resident by providing a copy of your visa.

For the state and federal tax, you should also get it all back, as you are exempt from taxes under the "teacher" exemption for the J-1 visa.

Hello Atlanta Tax Expert,

I am Australian, working in the US on a J! visa category Research Scholar. Does the tax exemption apply to me? Can you refer me to an IRS publication that covers this topic?

Thanks.

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Originally Posted by AtlantaTaxExpert

It depends on the nature of your J-1 visa.

If your J-1 visa is a student or trainee visa, then you are liable for federal and NY state income taxes (plus NY city income taxes if you LIVE in NY City). You will pay taxes ONLY on your U.S.-sourced income. I cannot say if Italy or Ireland will tax the U.S.-sourced income, but I doubt it.

If your J-1 visa is one for visiting teachers/researchers, then you are totally exempt from both federal, state and and city income taxes. You will need to file some documents with your employer so they will not withhold any taxes from your pay.

In either case, under U.S. tax law, you are exempt from FICA (Social Security and Medicare) taxes if you have been in the U.S. for less than two calendar years (2008 and 2009).

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The FICA exemption noted above applies you for two calendar years. That is a matter of U.S. tax law and is NOT dependent on the tax treaty. You can find the citations under IRS Pub 519.

Unfortunately for you, there is NO provision for tax exemption for Research Scholars in the U.S.-Australia Tax Treaty, so you ARE liable for federal, state and local incomes taxes on any income earned while under the J-1 visa.