Tax Guide
From WDWIP Walt Disney World International Programs Wiki
WARNING: This information should be used at your own risk as it has not necessarily been written by a tax specialist and does not apply to all situations.
Contents |
Overview
Filing taxes in the United States for the money earned while in the WDWIP can be a very tricky task, to say the least. Some countries have income tax treaties which allow reciprocal tax exclusion for certain individuals, typically students. Participants from other countries (all but Canada and Japan to the best of my knowledge) must file and pay taxes as a normal U.S. citizen would, and are usually eligible for a return. This tax guide is designed primarily for Canadians taking advantage of the Canada/US Tax Treaty. One word of caution, since I am by no means an expert on the subject, take the information here only as advice from one person, not an official source. Below you will find the format for filing I have used, what others have commented about filing, and of course, the forms you will need are located on the left bar.
UPDATE: Gary W. Carter is a U.S. tax practitioner with an on-line service, [www.thetaxguy.com] specializing in returns for international visitors, especially students, scholars and trainees. His site features a Tax Guide for Aliens, and an open forum for tax questions. For the most up-to-date information on filing U.S. taxes while in the WDWIP, check out his site!
Suggested Method for Canadians
The following is the method of filling out the 1040NR-EZ as it was done in previous tax years. This resulted in rebates for everyone who filed in this manner.
Address information should be filled out as instructed; Identifying number is your Social Security number
Line-by-line information:
- 1. Check this box
- 3. Enter 0.00
- 6. Enter number from box #1 on the W-2
- 7. 0.00
- 14. 0.00
- 18. 0.00
- 19. Enter number from box #2 on W-2
- 22. same number
- 23. same number
- 24. same number
- 24a. direct deposit info - if you have an account with SunTrust or Vista, this is a much simpler and faster option
- A. Canada (hopefully)
- B. No (ditto)
- C. Participant in an International Cultural exchange program on a Q visa at Walt Disney World, Orlando Florida
- D. This info is on the card in your passport and/or written in it
- E. Visa issue date
- F. No
- G. If you went to the Bahamas, for example, enter dates
- H. Get a calculator
- I. Could be yes or no, depends on you
- J. Enter the $amount followed by "US/Canada Income Tax Treaty, publication 597, Article XX - students *see below
- *Okay, line J is a tough one. Check out http://www.intltaxlaw.com/treaties/canada/treaty.htm and compare articles XX and XV. I'm pretty sure XV is the right one (which was backed up by my article I posted to the VLB). I think article XX only applies to money received outside of the states.
Here's what article XV says according to my source:
2. ...renumeration derived by a [Canadian resident] in respect of employment exercised in a calendar year in [the United States] shall be taxable only in [Canada] if: (a) Such renumeration does not exceed ten thousand dollars ($10,000) in the currency of [the United States]... Thus if you had less than $10,000 in earned income from U.S. sources in a calendar year, you may exclude this income from federal income tax in the U.S. by claiming Article XV of the U.S.-Canada tax treaty
Here's how I translated article XX (which may be wrong):
Payments which a student, apprentice or business trainee, who is or was immediately before visiting [the United States] a resident of [Canada], and who is present in [the United States] for the purpose of his full-time education or training, receives for the purpose of his maintenance, education or training shall not be taxed in [the United States] provided that such payments are made to him from *outside* [the United States].
(this basically says, I think, if you're a student (which I guess we are) and receive scholarship money and/or money from parents to support yourself or pay for school you don't have to pay tax on it *if it came from Canada*).
My source backs this up as well when it says: "The U.S.-Canada tax treaty contains no *specific benefits* for either students or visiting scholars who are residents of Canada.
As well, what you have written for item J is not entirely correct (but I don't think it's really incorrect either).
"J. Enter the $amount followed by "US/Canada Income Tax Treaty, publication 597, Article XX - students"
The US - Canada Income Tax Treaty is not really Publication 597. Publication 597 is really only an overview/synopsis of what the US-Canada Income Tax Treaty provides. It does not contain the individual articles. The IRS doesn't publish the treaty because it's a common document shared between the United States and Canada. My source suggests that you should specifically claim that you made less than $10,000 by writing "earned income less than $10,000, Article XV" for the second part of item J.
What others have said
excerpts from the VLB:
"Just to let you know I checked it all out on both ends and you only have to file taxes on money you made in Canada in Canada, and in the USA on the money you made in the USA this is according to the guy from the IRS here in Florida. There is no tax treaty between the US and Canada and you don't have to pay tax on the same money twice. He also told me that there has been a problem with the way that Canadian pavilion people have done there us taxes for the last five years, and that the days of full refunds are over. No one is exempt because of there citizenship. All of us that are down here now owe from 10$$ to about 300$$ so be careful when you file your US taxes because they are no longer playing around!" - Patrick B.
Here's some more information I found regarding declaring tips and allocated tips. I found a page from another university with step by step instructions for filling out a 1997 1040NR-EZ form. Most importantly is what it says for step #15.
If you are employed in a job where you earn tips, and you did not report $20 or more in tips in any one month to your employer, you must complete Form 4137 to calculate social security tax on those tips and record it here. (F-1, J-1, M-1, and Q nonresident aliens employed with INS permission are not subject to social security tax and may disregard this item.)
You can find this document at: http://www.wooster.edu/oisa/1040NR-EZ.html - Trent S.
As for those of us who were not servers and made more "official" money on our W-4's from what I could find I think that if we made over $10,000 we're screwed. From the IRS site it says you are only exempt from taxes if you made less than $10,000 or if you were in the US for less than 183 days in the year AND the money doesn't come from a US employer. Neither of these last 2 conditions are true for us. If this is right and I am not exempt from paying tax I am in trouble because my rough calculations show I will owe another $300 US on top of what Disney deducted! I hope I made a mistake or that I am wrong about something.
- Darren B.
First of all, there is most definitely a Canada-U.S. tax treaty. Second of all, how would this guy have any idea about how the Canadian pavilion has been filing taxes for the last five years??? He's correct in saying that you don't have to pay taxes twice--you pay them all in Canada. Now I am most definitely not an expert in this area but I can't see how everyone could have gotten their money back last year, and now this year everyone has to pay?! Nothing has changed with tax laws. I did some investigation on the 'net and think I found a pretty relevant link. I reproduced the information below. But if you want to check the original page, here's the URL: http://www.upenn.edu/oip/fsa/tax/canatre.html This is from the University of Pennsylvania, Tax Information for International Students page.
Hey there guys I hate to break it to you, but the good old Canadian government somehow found out that I declared my taxes in the US, and I got a nice little note saying that I had already been issued my foreign tax credit on my Canadian cheque, therefor I now owed the Canadian government the money I got in the states back to them!!!! It could be different because I am an American citizen, but I never told them, so somehow they found out.
I believe yes you are supposed to claim your taxes here as that is why we get our taxes back in the states--b/c os some treaty...however no the likelihood of them ever finding out that you worked there is very doubtful ( this is what I have been told) For years now no Canadian has filed and they haven't gotten in and trouble. But a few have claimed. If I would have claimed last year I would have had to pay the cdn government over 2,000 dollars..more than the money I got back from Disney. I landed up not filing last year and I was refunded about 300. Its up to you.
Thanks to everyone else who has been contributing to the tax thread on the VLB!
Information about the U.S.-Canada Tax Treaty
The U.S.-Canada tax treaty contains no specific benefits for either students or visiting scholars who are residents of Canada. The treaty does, however, contain several general provisions that will apply to some students and scholars from Canada and which a few may find beneficial. The first provision, contained in Article XV of the U.S.-Canada tax treaty, applies to Canadian residents who had less than $10,000 of earned income in the U.S. in the calendar year. Article XV provides that: 2. ...renumeration derived by a [Canadian resident] in respect of employment exercised in a calendar year in [the United States] shall be taxable only in [Canada] if: (a) Such renumeration does not exceed ten thousand dollars ($10,000) in the currency of [the United States]... Thus if you had less than $10,000 in earned income from U.S. sources in a calendar year, you may exclude this income from federal income tax in the U.S. by claiming Article XV of the U.S.-Canada tax treaty when you file Form 1040NR, "U.S. Nonresident Alien Income Tax Return," or Form 1040NR-EZ, "U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents." To claim this provision of the U.S.-Canada tax treaty on Form 1040NR, write "0" on page 1, Line 8 of the form,"Wages, salaries, tips, etc." Write the amount of your earned income for the year (which must be less than $10,000, of course) on page 1, Line 22, "Total income exempt by a treaty from page 5, Item M." On page 5, Item M, claim the tax treaty for "Canada," and write the amount of your earned income (i.e. the same amount you wrote on page 1, Line 22); after the amount write "earned income less than $10,000, Article XV." To claim this provision of the U.S.-Canada tax treaty on Form 1040NR-EZ, write "0" on page 1, Line 3 of the form,"Wages, salaries, tips, etc." Write the amount of your earned income for the year (which must be less than $10,000, of course) on page 1, Line 6, "Total wages and scholarships exempt by a treaty from page 2, Item J." On page 2, Item J, claim the tax treaty for "Canada," and write the amount of your earned income (i.e. the same amount you wrote on page 1, Line 6); after the amount write "earned income less than $10,000, Article XV."
Bottom Line
How you file your return and who you listen to is your choice, and all advice, including that here, should be carefully scrutinized. Remember, if you DO happen to file incorrectly, you can always petition it, if you don't mind waiting for your $$.
External Links
- ETS TAXrefund Get your TAX BACK
- The Tax Guy
- Canada Tax Treaty
- International Tax Law
- Internal Revenue Service - IRS
- IRS forms
