Tax Refund for Nonresident Aliens Case Study Example | Topics and Well Written Essays - 3000 words

Tax Refund for Nonresident Aliens - Case Study Example Very few are aware that they are overpaying the taxes. Credits and deductions that they are eligible for either under a bipartite international treaty or under US laws are not being properly utilized. The main reason is their limited understanding regarding US tax laws and secondly, many of them do not file the returns. No filing of the returns means no possibility of any refunds. The endeavour has been to understand these complexities, which has piled up unclaimed overpaid taxes with IRS. It would be appropriate to note that in view of the vastness of the subject effort has been put toward depicting the main issues in a generalized way rather than any specifics to the issue involved. Dates of Co-op Assignment: August 30 -December 9, 2010 On interaction with many non-resident aliens, I came to know that many of them were not very clear on the various tax-related matter, on personal income taxes. They belonged to the varied nationalities. They were not aware of some important US tax requirements. At times, they do not file tax returns or filed them incorrectly, which results in a lot of overpaid tax and the substantial amount goes unclaimed in the refund. †¢ Those people who have come under non-resident visa (J, F, Q or M category) in the US they are statutorily required to file a 1040NR Tax Return in physical form. These are known as US non-resident income tax return. They cannot file e-return or online returns. H1B visa falls in the category of non-immigrant visa. If H1B visa holder is recognized as Resident alien then he is required to file the tax return like any other US citizen, otherwise, they are required to file 1040NR tax return form only. It has been found that most nonresidents miss to file a return or file it incorrectly. It has been further noted that there is a large amount of unclaimed taxes by nonresidents who refrain from filing tax returns. They are under the impression that since the employer has withheld tax amount their obligations are over and they are not aware that they have paid more than what is required by the law.  Ã‚