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American Tax Center

The US government receives the majority of their budget revenue by levying income tax which is collected by the federal government via the IRS, and some states/cities, depending on the local rules and resident status.

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Introduction
US Income Tax 1

The US government receives the majority of their budget revenue by levying income tax which is collected by the federal government via the IRS, and some states/cities, depending on the local rules and resident status.

Part 1 Income tax withheld
Part 2 Income tax systems
Part 3 Earned vs unearned
Part 4 Tax residency status
Part 5 Contributions
Part 6 Tax withholding
Part 7 I wanna ask...

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Part 7 I wanna ask...

What is FICA (Federal Insurance Contributions Act)? Are exchange visitors exempt from FICA taxes?
FICA is a US federal payroll tax. 6.2% of an American’s gross wages goes to Social Security tax and 1.45% goes to Medicare tax (the employer matches these percentages for a total of 15.3%). Yes, the IRS grants an exemption from FICA taxes to exchange visitors as long as they are deemed as nonresident aliens in J-1 status. Click HERE.

If I have already paid US taxes, do I still pay taxes to my home country (and vice versa?
Generally, wages earned by exchange visitors while in the United States are subject to US taxation. If the exchange visitor’s home country has a tax treaty with the United States, the exchange visitor may not need to pay taxes in both countries. Exchange visitors from a country that have no tax treaty agreement with the US may be subject to double taxation.

If I need to pay FICA taxes in the US, do I also have to pay social security taxes in my home country?
If you need to pay FICA taxes in the United States, you may not need to pay social security taxes for your home country: (a) If your country has a International Social Security Agreement (Totalization Agreement) with the United States, you generally only pay social security taxes for the country where you are employed (in this program, that would be the US). Check your country’s specific agreement for exact details and how to claim US social security benefits in your home country. (b) If your country does not have a Totalization Agreement with the US, you need to pay social security taxes for both the US and your home country.

If my home country has a tax treaty with the US, does it mean that I don’t have to pay US taxes?
No, the idea of a tax treaty is to avoid double taxation: the exchange visitor either pays taxes to his/her own country or to the US government. Even if the exchange visitor isn’t obligated to pay US taxes, s/he is still required to follow state/local tax requirements and complete any state/city tax forms.

Can exchange visitors claim standard deduction?
Generally no as most exchange visitors are considered nonresidents for tax purposes, and nonresident aliens cannot claim the standard deduction. However, if the exchange visitor is considered as resident alien, s/he will then be taxed as residents. Also, exchange visitors from certain tax treaty countries may also be eligible to claim the standard deduction, e.g., Indian exchange visitors under Article 21 of the USA-India Income Tax Treaty.

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