The following information highlights common questions involving tax issues. It is not intended as complete information or to address every individual’s situation and is not to be relied upon as a substitute for professional tax advice.

You may be responsible to file a U.S. Income Tax form by April 15.

What the Seminary will provide

U.S. CITIZENS:

The Seminary will provide the form 1098-T (Statement of tuition and financial aid) to all U.S. citizens who are in a degree, diploma, or certificate program. If you are a non-degree student you will not receive a 1098-T as you don’t qualify for that form. The Seminary provides this form, but we do not advise students on whether or not they need to file a tax return or not. You should consult a tax professional for this information

CANADIAN CITIZENS:

The Seminary will provide form TL11A Tuition, Education, and Textbook Amounts Certificate-University Outside Canada for Canadian students. An official from the Seminary must sign this form verifying the tuition, and fees.r Further information about this form and it’s use can be found on the Canada Revenue web-site www.cra.gc.ca.
Pamphlet P105 explains more about this.

Income Tax on Financial Aid

Scholarships, bursaries and CARE that exceed costs of tuition, fees and books for a degree-seeking student are considered to be taxable income for U.S. tax purposes. Students should keep receipts for other fees and books in case they can be used as a tax advantage.

One of the questions on every student’s mind is whether the money received via financial aid is taxable. What counts as financial aid? Financial aid includes scholarships, grants, bursaries, tuition reductions, service scholarships (campus employment), and CARE or Organizational Aid funds originating in the US.

United States Income Tax (Federal)

The following information highlights common questions involving tax issues. It is not intended as complete information or to address every individual’s situation and is not to be relied upon as substitute for professional tax advice.

Should I file a tax return: If you are Canadian student in the U.S. on an F or J visa you may need to file a 1040NR-EZ or 1040NR U.S. tax form by April 15. Basically, the U.S. is interested in getting any taxes owing to it from income acquired from United States sources. If any taxes, either federal or state, have been withheld from your salary, this is the way to recoup any monies above what you owe.

While we want to pass along important information on these items to you, we cannot assume responsibility for your relationships with the Internal Revenue Service or the State of California Franchise Board. You may look over the following bulletins for yourself. They are available in the Financial Aid Office or on the internet at www.irs.gov.

• 519 – U.S. Tax Guide for Aliens
• 520 – Scholarships and Fellowships
• 597 – Information on the United States-Canada Income Tax Treaty
• 901 – U.S. Tax Treaties

Get Your Taxpayer Identification Number

As a general rule, we recommend that all Non-Resident Alien Students should apply for a Social Security Number from the Social Security. This number is necessary on all transactions with the IRS, the California Tax Board, and the Department of Motor Vehicles. You need a Social Security Number for each member of your family when you file your income tax return. If you do not have, and are not eligible to obtain, a Social Security Number you need to apply for an individual Taxpayer I.D. number (I-10). This is done by submitting a W-7 Form which is available in the Financial Aid Office.

Other Tax Questions

What, If Anything, do I Need to Report to the IRS?

All funds received directly from non-U.S. sources do not have to be considered in calculating your US taxes (excludable). This means, for example that any funds received from a church or individual in Canada do not have to be counted as far as the U.S. is concerned [518, 15].

Interest on U.S. Bank savings account income is not taxable for foreign students (Ref. IRC #871 (i)).

Degree students are required to consider as income any financial aid from US sources that exceeds the expenses of tuition, fees, and books. (Loans are excluded from taxable income).

However, “no amount can be excluded which represents payment for teaching, research, or other services required of the student as condition for receiving the grant” [518, 3]. This means that all income from on campus work (e.g., maintenance, library, T.A.) and financial aid as remuneration for working in a church is taxable.

If you are not a student enrolled in a program designed to meet the requirements of an academic or professional degree, all financial aid, received from within the U.S. counts toward your $10,000 of allowable earnings.

Will Social Security Tax be withheld from my wages?

If you are a student on an F or J visa, working on campus or in a practical training assignment, social security tax will not be withheld from your wages. If you are a U.S. citizen working on or off campus social security taxes will be witheld from your wages. Non-students (ie. spouses) will have social security taxes withheld from their wages.

Will I Be Taxed on My Income in both the U.S. and My Home Country, in Effect Double-taxed?

Very unlikely. Canada, for example has a “foreign tax credit” section built into its tax structure which means that any taxes paid in the U.S. are considered in computing the Canadian tax liability.

California Income Tax

The following information highlights common questions involving tax issues. It is not intended as complete information or to address every individual’s situation and is not to be relied upon as a substitute for professional tax advice.

As a student, you are considered to be a resident of California. You must file the California Tax Form 540 only if you have significant taxable income or California taxes have been withheld from your salary.

Consult the California State Franchise Tax web-site for more information about California Income Taxes www.ftb.ca.gov.

Moving Expenses

It is possible for Canadian students to deduct your expenses incurred while moving to Seminary. You will need to obtain and keep receipts and records in order to document your expenses. “You may be able to claim moving expenses to return to a post-educational institution…to the extent that you have included on your return award income such as bursaries, scholarships” (1990 General Tax Guide for Non-Residents and Deemed Residents of Canada).

Apparently, it is possible for you to claim these expenses each time you return to MBBS following a summer back in Canada.

Clarifying Your Tax Status

It is important to establish that you continue to be a “resident of Canada” for tax purposes while away and if you are in J-1 Exchange visitor status.

If you do not, and give your Canadian bank a U.S. address, they will be obliged to withhold nonresident tax on interest income from your bank accounts (this fits under the Section 212 referred to in the Family Allowance discussion).

Child Tax Credit

Canadian students on a student visa should be eligible for Child Tax Credit payments while at seminary. The Child Tax Credit regulations indicate that a person does not break their “resident” category if:

• the absence is for the purpose of vacationing, receiving medical treatment or attending a school or university, and for a period of less than one year

OR

• the absence is longer but the person’s income is subject to income tax under any section of the Income Tax Act other than Section 212 (Section 212 relates to the payment of withholding taxes on certain types of income by non-residents of Canada).

From the experience of our students, one route to avoiding interruption of benefits is to have the Child Tax Credit sent to a Canadian address.

The other route is to go to the local District Taxation office and get a form identifying you as a “resident of Canada,” then going to the Child Tax Credit office and making arrangements (you will need this form from Revenue Canada). You are entitled to receive Child Tax Credit while in the U.S. If the advisor does not agree with this policy, please ask them to check with their supervisor. Be sure to document whom you spoke with, when you talked to them, and what they said. If you encounter a solid negative answer, write to:

Assistant Director General of Income Security Programs
1230 Bank of B.C. Building
10055 – 106th Street
Edmonton, AB T5J 2Z6

(This on the advice of the Honorable Jake Epp as per letter November 4, 1987).

There are two ways to handle this. One is to go to your District Taxation office and obtain certification that you are officially remaining a “resident of Canada.” The other is to have all of your official mail (including bank mail) sent to a Canadian address.

When you file your Canadian Income Tax, do not answer the question, “When did you leave Canada?” It is helpful to write a letter to accompany your tax return indicating whether you:

• have a form from your District Taxation office regarding your residency
• maintain any bank accounts in Canada
• are eligible for Family Allowance
• own property in Canada
• maintain a provincial medical plan
• plan to return to Canada following your studies

ALL OF THE INFORMATION ON THIS WEB PAGE IS ONLY INFORMATION AND IS NOT INTENDED TO BE EXPERT TAX ADVICE. PLEASE CONSULT A TAX PROFESSIONAL TO DETERMINE WHETHER OR NOT YOU OWE TAXES IN ANY COUNTRY.