Taxes and Payroll
Taxes and Payroll
J-1 participants are not considered employees of [an agency such as Camp Connections], they are considered employees of the camp as a J-1 host employer. Therefore, the camp is responsible for complying with all applicable employment laws. This includes ensuring compliance with all federal, state, and local tax obligations. Camps should process J-1 visa holders through payroll in the same manner that they do for American staff members.
The Tax Reform Act of 2017 eliminated personal exemptions (which had been $4,050 per individual). As such, J-1 participants will now be taxed on their first dollar of U.S. wage income unless an applicable U.S. Income Tax Treaty provides otherwise. The clear majority, if not all of Camp America participants, do not fall under a tax treaty. However, it should be noted that a J-1 visa holder’s wages are not subject to FICA taxes (Social Security and Medicare taxes).
In general, employers should withhold income tax from their employees’ (both U.S. income tax residents and J-1 visa holders) wages at graduated withholding rates. For this purpose, employees must submit IRS Form W-4 (Employee’s Withholding Allowance Certificate) to their employers.
Great summary of all tax information: Sprintax
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