So. Confused.

[kaberett]

I hereby do solemnly swear that never again shall complaint regarding Her Majesty's most noble Revenue & Customs be issued from my lips. Or, for that matter, my fingers.

Because, you see: THE IRS. WHAT. THE ACTUAL. FUCK. SO, SO CONFUSED. (Though in making this post I have maybe unconfused myself a little? Perhaps?)

SO. Caltech informs me that I am required to fill in Form W-4 for the purposes of witholding the correct federal income tax from my pay.

• I will be in the US for 10 weeks, earning $600/week (i.e. $6000 in total). This is my only source of income in the US for the coming 12 months. I have never previously visited the US; I do not expect to return until 2016 or thereabouts.
  
• Within the past 12 months, I have earned approximately £600, of which £24 will be in the 2011-2012 UK tax year.
  
• I do not expect my earnings to exceed £250 within the 2011-2012 UK tax year...
  
• ... because my loans from Student Finance England do not count as income, and nor does the money my parents give me to support myself...
  
• ... though I may receive up to £1500 in bursaries, which I do not believe counts towards my personal allowance (and in any case would not take it over the threshold).

I believe:

• that as far as the UK is concerned, my income is within the Personal Allowance, so I do not need to pay income tax, whether or not I pay tax in the USA
  
• that Article 20 (see below) of UK/USA Double Taxation Convention applies, but means that I do have to pay tax in the US because my payment does arise within the USA
  
• that I am a non-resident alien for US tax purposes
  
• that I cannot be claimed as a dependent by any US taxpayer
  
• according to p28 of Publication 519, I am able to claim only one personal exemption ($3650 in 2010)
  
• that as a NRA I cannot write "exempt" in line 7 of Form W-4
  
• that I may be eligible for exemptions from federal income tax withholding under the aforementioned UK/US Double Taxation Convention if I additionally file Form 8233
  
• that I therefore need to find out whether and how I am eligible to file Form 8233, BUT that this probably doesn't apply because of Article 20 (see above/below)

AND SO IN SUMMARY I believe that on Form W-4: I may and should claim a single personal income tax exemption; my home address should probably be in the UK. FURTHERMORE I BELIEVE that there is no point filing Form 8233, because I am ineligible under the aforementioned Article 20.

... does... does that sound plausible?

Article 20 reads as follows [my additions]:
Payments received by a student or business apprentice who is, or was immediately before visiting a Contracting State [USA], a resident of the other Contracting State [UK], and who is present in the first-mentioned State [USA] for the purpose of his full-time education at a university, college or other recognised educational institution of a similar nature, or for his full-time training, shall not be taxed in that State [USA], provided that such payments arise outside that State [USA], and are for the purpose of his maintenance, education or training. The exemption from tax provided by this Article shall apply to a business apprentice only for a period of time not exceeding one year from the date he first arrives in the first-mentioned Contracting State [USA] for the purpose of his training.

Comments

[evilsusan]

It's been a long time since I filed any US tax returns, but I recall you could choose not to have anything withheld. That would mean paying everything at tax time, but if you're not going to owe anything....

But yeah, the IRS is... ungood. You can ring them for advice, but you get different advice depending on who answers the telephone.

[kaberett]

And an astronomical phone bill! I don't currently have ready access to a landline...

I honestly can't tell whether or not I'm going to owe anything :-/

[crazyscot]

Sounds like a plausible interpretation from what you've posted. But, I mean, Whisky Tango Foxtrot? My visa paperwork is quaking in its (scrupulously clean) boots...

Surely CalTech deals with NRAs from time to time? (However, it's possible that they may not be prepared to help you as they won't be qualified/licensed tax lawyers.)

[kaberett]

There is somebody I *can* contact, but there's also a very strident disclaimer saying that they WILL NOT help [people who aren't NRAs], and given the number of other questions I'm e-mailing them with, I'm slightly reluctant to get in touch, given that I'm struggling to condense the question more than it already has been above... I guess "I am in a maze of twisty turny passages tax laws, all alike, also I am a UK resident and <fx:wail>I don't understand how the tax treaties woooOOOOOoork...</fx>" might go some way, but. :-/

[kaberett]

Aha - moar instructions for Form 8233.

[gerald_duck]

I had to complete a W-8BEN form last year. I was doing OK-ish at reading the instructions until I reached "Do not use Form W-8BEN if you are a disregarded entity with a single owner that is a U.S. person and you are not a hybrid entity claiming treaty benefits. Instead, provide Form W-9." at which point I started to flounder.

My brain really started to hurt when I reached "A hybrid entity should give Form W-8BEN to a withholding agent only for income for which it is claiming a reduced rate of withholding under an income tax treaty. A reverse hybrid entity should give Form W-8BEN to a withholding agent only for income for which no treaty benefit is being claimed." I wouldn't have minded that paragraph so much had it not been billed as a handy tip. Gee, thanks!

Homeland security is worse, mind. And I gather the IRS used to be even worse…

[bjh21.me.uk]

I note that the small print at the top of form W-4 refers non-resident aliens to Notice 1392: Supplemental Form W-4 Instructions for Nonresident Aliens (http://www.irs.gov/pub/irs-pdf/n1392.pdf). Not sure if that helps, since I haven't read it yet.

[bjh21.me.uk]

Right. Notice 1392 referred me to Publication 901: U.S. Tax Treaties (http://www.irs.gov/pub/irs-pdf/p901.pdf) which seems pretty clear that you don't have any treaty exemption either as a worker or as a student, so you're right that you shouldn't use form 8233. It also provides instructions on filling in the rest of W-4, but I'm sure you can read them yourself.

[kaberett]

Thank you! Yes, that does seem pretty clear, and is a lot better than the morass of forms I was getting bogged down in.

[crazyscot]

Before you said the bit about not having access to a landline I was about to suggest somebody like SuperLine for discounted international calling. Nevertheless you can still use them with a mobile to call the US for 2.5p/min + the cost of a call to London, so it might be a slightly-less-usurious fallback position: http://www.superline.co.uk/mobile.html

[rmc28]

You can come and use ours. We have cheap international calling with 18185 (1p/min, will take you ages to rack up the cost of a beer)

[keris]

WTF is a "reverse hybrid entity"? I would boggle even if I came across the term in a cyberpunk novel. And a "disregarded entity with a single owner" sounds rather dubious, I thought they'd abolished slavery over there?

[keris]

Do you have a reliable net connection? (Reliable is more important than fast.) If so then SkypeOut has costs of around 1.4p/minute to the US (same as for Europe I think), rather a lot less than cellphone charges. And last time I used it (I don't have a landline at my lodgings) the audio quality was better than landline.