Anesthesiology & Pain Medicine >> Administration >> Tips for New Staff: >> Taxes

Tips for New Staff:
Taxes

Every country has a tax treaty with the US but some are more favorable than others. You will be paid by one and possibly two separate "employers". One is the University and the other is the billing agency which supervises the billing of all the patients having care (this group is called confusingly "University of Washington Physicians").

Income and Sales Tax

In the United States, there are several different kinds of taxes that one is required to pay. While everybody has to pay federal income tax, the taxes you pay from state to state may vary. In Washington State, there is no state income tax, but there is a sales tax. That means that a resident of Washington State had to pay a sales tax, in addition to the price listed for goods. The sales tax will be added at the till. There are exceptions from this rule, such as food. Foreign nationals from many countries may work in the U.S. income tax free for up to two years (depending on the specific tax treaties). The countries having tax treaties with the U.S. and the exact wording of these treaties can be found in U.S Tax Treaties - Publication 901, Department of the Treasury Internal Revenue Service www.irs.gov.

It is recommended that you directly consult with a tax adviser concerning specific tax liabilities.

Special considerations on Income Tax

You will be paid by one and possibly two separate "employers". One is the University of Washington and the other is the billing agency which supervises the billing of all the patients having care (this group is called confusingly "University of Washington Physicians"). If you are a Fellow, then the University of Washington will be your primary employer. If you are a visiting faculty member, you will be paid by both the University of Washington and University of Washington Physicians. You should know that your income tax deduction has VERY LITTLE to do with the actual amount you find you should have paid when you do your tax return (the tax year ends December 31 and the returns are done in early April). Some of us have had very nasty surprises. The reality is that you have to find out early what you will be liable for and the news is not always bad.

For example, if you have any children, substantial deductions are routine. If you come in the middle of the year (as most of you will), your income in the TAX year will be minimal and your tax will be reduced. Every country has a tax treaty with the US but some are more favorable than others. Another tax reducing method is to deduct all the expenses which were incurred getting to the US. There is a limit to this deduction but keeping all these receipts is useful.

For US federal income tax purposes, dependents need an identification number through the IRS (if they do not have a social security number) before they can be declared dependents. The IRS phone number to obtain a W7 form (identification number application) is 1-800-829-3676.

The Internal Revenue Service (IRS) has a local office which has awful delays on the phone but is quite helpful if you go in person.

It is recommended that you consult early with an accountant regarding US Taxation concerns.




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