There is important information which the host organization and all candidates should be aware of when it comes to payroll and tax purposes. Every time one of our candidates has found a placement, he/she will be assigned a Program Advisor who will oversee that all the mandatory regulations are followed and all necessary steps are taken so that the placement is following the rules set forth by the Department of State. To make sure that everything is in check, we work alongside ASSE, which is the official sponsor organization designated by the Department of State. They are always present to answer any questions which both parties (J1 Interrn/Trainee and Host Company) may have, and they make sure they provide competent human resource solutions to any needs required. Considering that there are a few important forms which have to be filled out from the candidate and the host company, we are there to guide you along the way and make sure that this process is the least laborious and stressful as it can be. As we have received a couple of questions regarding taxes and payroll, our team is sharing with you with a list of 6 key things you should know on this topic provided by InterExchange.org.
1. I-9 Form (Employment Eligibility Verification)
Once the Host Company has chosen a candidate to join their firm there are a few steps which have to be taken. To begin, the candidate must complete an I-9 Employment Eligibility Verification Form. This form notifies the federal government that the participant has been given the permission to work in the United States. The participant will have to present four different things at this point: I-94 Arrival/Departure Record, J-1 Visa, DS-2019, and their passport. On this form, the participant will have to complete Section 1, and the Host Company will have to then complete Section 2. It is important that when completing Section 1 of the I-9, that the participant uses the address of the host company.
2. W-4 Form (Employee’s Withholding Allowance Certificate)
Once the candidate has arrived in the U.S. and has presented him or herself in the company, the participant will have to fill out the W-4 Employee Withholding Allowance Certificate. This has to be done upon arrival and a s soon as the internship/trainee program starts. Once all of this information is filled out, the Host Company will need to make the calculations of the amount of federal, state, and local taxes that will have to be withdrawn from the paycheck. It is important to remember that the candidate’s information has to be filled out under the “non-resident alien” tax category.
IMPORTNANT note: At the time that this form is being filled out, it must be done with the instructions that we are providing below, NOT with the instructions on the W-4 Form are they are for U.S. residents—not for J1 Visa exchange visitors.
Instead the participant MUST follow these instructions:
- Home address: This section must show the participant’s permanent U.S. mailing address during their stay
- Box 2: If known, the participant will have to enter their Social Security number here
- Box 3: Mark or check “Single”, this is EVEN if the participant is married
- Box 4: Leave blank
- Box 5: Write “1”
- Box 6: Write “NRA” for “Non-Resident Alien”
- Box 7: Leave blank
3. FICA and FUTA Withholdings
All non-resident aliens on J1 Visas don’t have to pay FICA (Social Security) and FUTA (federal employment) taxes during the first two years of employment abroad. It’s important to remember that all j1 visa participants have a maximum program duration of 18 months, so they do not need to pay these taxes.
4. Tax Refunds
Even though the j1 participants do not have to pay the before mentioned taxes, they are still subjected to paying some taxes. As every participant is considered a “non-resident alien”, they will have to fill out the W-4 form correctly to ensure that they will not owe any money to the U.S. Government. Some candidates may be eligible for a refund of some of the taxes that have been paid once their program has come to a completion. Given that all participants will be paid during the program, they will also have to file a U.S. tax return during the year which they had involvement with the company. To do so, the participant will have to follow the tax-filing deadline for that specific year. It will be the job of the Host Company to remind the participant of this tax filing requirement. Even if the participant has already returned to their home country, he or she will still have to file a U.S. tax return for the corresponding year/s. This is particularly true for those whose program has been active during the course of two calendar years.
5. W-2 Form (Wage and Tax Statement)
Participants that are still in the U.S. at tax time will need to be provided with a W-2 form for them to fill out. Since these forms can be issued once the candidate has already returned home, it may be a good idea for the Host Company to let the participant know that they may need to leave an already addressed envelope prior to their departure. This will give the Host Company the opportunity to mail the form during the corresponding time. It is mandatory that this information gets to the participant and every Host Company with one of our j1 participants will have to confirm that they have received this information.
6. Filing Form 1040NR-EZ
Host Companies may wish to offer you help and assistance when it comes to filing the tax return if the participant is in the country during tax time. It is here when the participant will have to fill out a 1040NR-EZ (Non-Resident Aliens with No Dependents) Tax Form. If you don’t know where to find this form, use the following link-www.irs.gov. Once that form has been completed, it will have to be mailed to the address that can be found in the “Where to file” section of the form.
If you or your team have any further questions on this, you can always reach out to us for any further assistance. We also have different blog posts that may answer any other questions that you may have. Additionally, make sure to check-out our FAQs for any other doubts you may be having. We cover all important aspects of the program as detailed as possible.