OK firstly I have to say I am not an accountant or any form of tax advisor so don’t hold anything I say to be 100% gospel…yu know all that disclaimer stuff about seeking your own advice and be sure when you do anything and blah blah blah 🙂
Ok that said, the US tax year as far as personal income tax is concerned is the Calendar Year (so Jan 1 – Dec 31)
This differs from many countries which have the July-June or April to April year and it is important to note not all US corporations us the above as thier tax year but as you filing your taxes that is what you need to do.
So this is the visa where you have most likely been working on a Work and Travel Program, Internship, Au Pair or programs like Camp USA. As far as tax treatment goes, you get it pretty easy in that only Federal, State (if applicable) and Local (if applicable) taxes apply.
You DO NOT have to pay either Social Security or Medicare taxes which is a great saving and given that neither you nor people on H1B, E3, L1, etc. have access to Social Security or Medicare it seems fair that you don’t have to pay it.
For H1B, E3, L1:
So this being the regular working visa group with slightly different entry criteria and benefits. Here you are obliged to pay all of Federal, State (if applicable), Local (if applicable), Social Security and Medicare. So it is important to look at the tax rates of your State and possibly city and factor in the other taxes beyond your federal tax bracket.
Check out http://en.wikipedia.org/wiki/State_income_tax for the different tax rates of states
Now the reason why I said if applicable for state and city is that a few states like Texas, Florida and a couple of smaller populus states like New Hampshire, Alaska do not have state income tax which is a great saving to you.
For cities, well New York CIty charges you the privilige for living there but am not aware of any other city in the US that charges a city income tax.
Now the question comes up, what if I reside in one city but work in another, what is my tax rate then? am I taxed twice? do I get a credit?
The answer is, it depends on which 2 states you are talking about, whether there is another party involved like a spouse who may live in your same state but work in the same state or a third state and what the relative difference is in tax rates between the states in question. IN SHORT IT IS CRAZY!
For example in normal circumstances a common occurence is the case of living in the state of New Jersey but working in New York. More often than not you will ultimately only pay NY taxes as the NJ government recognizes your taxes paid in NY and the rate in NY is higher than NJ. However that does not work as easily in reverse and with other states it depends on the treaties regarding tax they have with each other.
Your employer should be withholding tax correctly during the year as you are beign paid but ensure you are getting your full credit/refund or paying taxes owed if this is your circumstance and consult with experts if necessary.
Generally you will have until mid April to file your taxes and you should receive your W2 form from your employer sometime in January for the previous year. Go to the IRS website to find people to do your taxes through for both Federal and State.
Stupidly it is not free for most people as you will invairably go through a 3rd party online portal like HR Block, Turbo Tax, Tax Slayer, etc but these are very straightforward and easy to use for most circumstances. Forget using an accountant unless you are really clueless (which I doubt given you got to the US to begin with) or you have a complex situation. Generally the online portals cost about $10-$30 to do both returns which isn’t too bad.
Most J1 visa holders should quality for free filing as you are probably young enough and/or have below the companies income threshold for charging you. You will still use one of the above companies except it will be FREE.
You can get refund checks mailed overseas (and you can file taxes from overseas). It is your obligation to do it so ask your employer for your W2 form if they don’t send it. It is their legal responsibility to give it to you. Contact the IRS if they refuse. You can also get your refunds deposited into your US Bank account from both Federal and State.
With deductions it probably similar to most places where you can get exemptions for travel, health, moving costs, education, work costs, mortgage repayments, etc. so just ensure you have all the documentation.
If you lived in multiple states during the year you will most likely have to file multiple state returns.
I hope this overview helped and do your own research too. As always send through your comments and I will try and help and otherwise I hope you get a Fat Refund Check!!