Are Temporary Exchange Visitors Subject to U.S. Taxes?

The answer is YES!

As tax day (April 17, 2012) approaches, most J-1 visa sponsors are bombarded by questions regarding taxes for the J-1 exchange visitors that they sponsor. Unfortunately most J-1 visa sponsors are not tax experts and are unable to answer the specific questions sent to us.

For those seeking more information, the IRS website (www.irs.gov) is by far the best resource for retrieving information about taxes for non-resident aliens participating in the J-Visa Exchange Visitor Program.

Important things to know:
(1) Exchange Visitors on J-1 visas are required to pay any Federal, State, and City (if applicable) taxes.

(2) Exchange Visitors on J-1 visas under the trainee and intern categories are exempt from paying Social Security and Medicare taxes.

(3) If they are paid in the U.S. during their active J-1 programs, J-1 exchange visitors must file a tax return in April.

Here are a few IRS links that are particularly useful:
Foreign Students and Scholars (Trainees & Interns are included in this category)
http://www.irs.gov/businesses/small/international/article/0,,id=96431,00.html

Taxation of Nonresident Aliens
http://www.irs.gov/businesses/small/international/article/0,,id=96477,00.html

Foreign Student Liability for Social Security and Medicare Taxes
http://www.irs.gov/businesses/small/international/article/0,,id=129427,00.html