FINANCIAL PLANNING

Most international students who have resided and studied in the US for one or more years will agree that the problem which they fear most is the inability to complete their studies due to inadequate finances. All other obstacles, whether social, legal or academic in nature, can usually be surmounted, given adequate advice and strong personal efforts. Financial problems, however, are totally different. They affect every area of your life, yet in extreme cases, advice and effort may be ineffective in resolving them.

It must be remembered that according to the terms of your visa, (which to obtain, you were required to demonstrate adequate financial support), in most cases you will not be allowed to seek off-campus employment. Some on-campus jobs are available but should not be counted upon to contribute significantly toward your overall expenses. Furthermore, once you have entered the US , you will find that very little financial help is available, especially to undergraduate students.

Thus, given the paramount importance of adequate financing, and the inherent difficulties in supplementing your income once in the US, it is important that you plan your finances for your entire studies (not just one year) prior to coming to the US. Once here it is recommended that you establish a strict budget and adhere to it.

Since this booklet is for students who have already arrived at Sacramento State (and have thus obtained the necessary documents demonstrating adequate financial support), we will concentrate on post-arrival budgeting and other financial tips.

PERSONAL BUDGET

Most international students who have studied in the US agree that it is necessary to establish a realistic budget, and to stay with it. Since your income and a number of your expenditure categories will be fixed by sources outside of your control (tuition, fees, health insurance, books & supplies) you will have relatively few areas from which to minimize your overall level of expenses (housing, clothing, food, etc.). Therefore, your budget must be prepared before you select an apartment, sign a lease, or enter into any other long-term fixed contract.

Other international students will have different income levels and spending priorities from yours. Thus, do not depend on them to make major spending decisions for you. You may ask others for specific advice, but always prepare your own budget. Keep in mind that the staff of the OGE is anxious to help you. Please contact them if you begin to have financial difficulties.

Finally, you should prepare a new budget every year. Many types of expenses may increase while your income remains stable, forcing you to make decisions about housing, transportation, board, vacation travel, and entertainment.

The following sample budget form may be helpful to you as you prioritize your expenses. Given the rapid changes in prices, we have not included any specific figures. However, it might be useful to you to pick up a copy of the sample international student budget prepared each academic year by the OGE and the International Admissions Office.

SAMPLE YEARLY BUDGET
Income:	Relatives ...................................................................	$________
	Savings......................................................................	$________
	Scholarship.................................................................	$________
	Other (On/Off campus work)..........................................	$________
TOTAL Income..............................................................................		$________
Expenses:	Academic
	Academic year non resident tuition and fees..........................	$________
	Summer Session non resident tuition and fees........................	$________
	Winter Intersession....................................................................	$________
	Books and Supplies....................................................................	$________
TOTAL Academic Expenses.............................................................................		$________
Expenses:	Room and Board
	Academic year room and utilities................................................	$________
	Academic year board...................................................................	$________
	14-week summer vacation room & utilities.................................	$________
	14-week summer vacation board................................................	$________
TOTAL Room and Board Expenses.....................................................................		$________
Expenses:	Transportation
	Local.............................................................................................	$________
	To, from, and within US..............................................................	$________
TOTAL Transportation......................................................................		$________
Expenses:	Miscellaneous
	Clothing.......................................................................	$________
	Entertainment...............................................................	$________
	General Maintenance......................................................	$________
	Health Insurance...........................................................	$________
	Laundry.......................................................................	$________
	Other..........................................................................	$________
TOTAL Miscellaneous Expenses..........................................................		$________
TOTAL EXPENSES............................................................................		$________

REMEMBER:
1.	Live within your budget;
2.	Keep your expenses as flexible as possible (try not to enter long-term fixed rate leases, financial contracts, etc.);
3.	Cost of living in the US increases every year; plan ahead of time;
4.	Certain categories of expenses will be dramatically increased if your family chooses to accompany you. Plan for adequate funds to compensate for these increased expenses.

FINANCIAL AID

Although, financial aid is scarce (especially for undergraduate students) and very difficult to obtain once in the US , several sources exist which you might wish to investigate. These sources include your own government, the US government, the United Nations, multinational business enterprises, religious organizations, international foundations, special interest groups, US colleges and universities, and others. The OGE maintains reference materials which might be useful to you in your search for financial help.

Graduate students at Sacramento State may wish to contact their departments to find out about the availability of graduate and/or teaching assistantships. A number of departments at Sacramento State grant one or several graduate assistantships each year, which offer cash stipends. Recipients of graduate assistantships are usually required to perform teaching or research duties related to their major field of study. Once again, contact your department for requirements and application procedures.

EMERGENCY LOANS

The OGE may, in some circumstances, be able to authorize a “short term” emergency loan from funds donated by community groups. If an unexpected situation arises in which you need immediate help, please contact one of the advisors in the OGE for information and application procedures.

TAX RESPONSIBILITIES

OGE advisors offer tax workshops in February and March to assist students in understanding US tax requirements. The information provided in this section of your Handbook is of a general nature and is not intended to provide specific guidance regarding your tax liability.

Federal Income Tax
The manner in which international students, scholars, and participants in cultural and educational exchange programs are taxed depends primarily on whether they are considered resident aliens or non-resident aliens for tax purposes and on the types of income which they receive. In some cases, whether or not a tax treaty between your country of citizenship and the US exists may also affect your US tax liability. For specific information you may review the appropriate Internal Revenue Service (IRS) publications. Publications are free and may be obtained online at www.irs.gov. Some publications that may be of interest include:

1.	Publication 519-“US Tax Guide for Aliens.”
2.	Publication 520-“Scholarships and Fellowships.”
3.	Publication 901-“US Tax Treaties.”
4.	Any other appropriate IRS publication.

Residence Status
International students on F-1 or J-1 visas are generally considered non-resident aliens for tax purposes for the first five calendar years they are in the US . Visiting scholars or professors holding J-1 visas are generally considered non-resident aliens for tax purposes during their first two calendar years in the US . US permanent residents (green card holders) are usually considered residents for tax purposes.

In general, Resident Aliens (for tax purposes) are taxed in the same manner as citizens of the US (on their worldwide income) while non-resident aliens are subject, with a few exceptions, to US income tax only on income from sources within the US .

US Source Income
Since most international students and scholars are considered non-residents for income tax purposes, they are usually not subject to US tax except with respect to US source income. According to the US Internal Revenue Service, “to determine whether wages for services are from sources in the US , the place where the services are performed, and not where the wages are paid, is the controlling factor. Thus, wages for services performed in the US are income from sources in the US even though paid by an employer located in a foreign country.”

For example, an F-1 or J-1 visa student employed at Sacramento State as a student, research or teaching assistant or off-campus (as a practical trainee for example) is considered to be receiving US source income and is subject to US income tax on these earnings.

Tax Exempt Income

1.	Scholarships or Fellowships. Students who are degree candidates at Sacramento State are not required to pay taxes on income received as a scholarship or fellowship to meet their tuition and related expenses. Qualified tuition and related expenses are defined as university tuition, and fees plus the costs of books, supplies, and equipment required for the courses. Scholarship / fellowship income received to meet expenses for room and board, transportation, and miscellaneous living expenses is included in gross income and thus potentially taxable. (Please refer to IRS Publication 520 for details.)
2.	Tax Treaties. The United States has tax treaties with numerous countries under which citizens, and in some cases residents, of those countries are exempt from US income tax on certain amounts received while they are temporarily in the US . Income that is exempted from US tax by these treaties is not included in the gross income of a non-resident alien individual for US income tax purposes. Thus, although some of your income (graduate assistantship, for example) might normally be taxable, it is possible that a tax treaty between your country and the US exists which makes a part or all of that income exempt. (For a review of all tax treaties which the US has signed with other nations, please consult either IRS Publication 519 or IRS Publication 901 “US Tax Treaties.”)
3.	Minimum Taxable Income. The US federal government establishes each year a minimum level of income which must be reached before a non-resident becomes liable for taxes on his/her income. Thus, if a non-resident’s taxable income is less than this minimum amount, he/she will not be required to pay any taxes or can claim a full refund (if estimated taxes were paid in advance by his/her employer).
4.	Income Tax Withholding. Employers will request that new employees complete the Form W-4, “Employee Withholding Allowance Certificate”. Form W-4 allows the employer to determine the amount of tax which should be withheld from the employee’s salary and remitted to the IRS. International students cannot opt to file exempt from this withholding, (unless a tax treaty exists and appropriate USCIS papers are filed) even if they expect their US based income to be too small to have a tax obligation. If you have any questions regarding completing this form, you may contact an advisor at the OGE.

Filing US Income Tax Returns (Non-residents)
Who must file? All nonresident F and J visa holders are required to file one or more US income tax documents (whether you had US income or not). Remember that if you have resided in the US for five years or more you may not be required to file (see OGE).

What to file? Those of you who did not earn any US source income need only file USCIS Form 8843 (Statement for Exempt Individuals and Individuals with a Medical Condition). Those of you who earned income from US sources (a job, scholarships) in excess of the amount determined for that calendar year (see OGE) are required to file the 1040NR or 1040NR-EZ and the Form 8843.

Where to file? Submit your tax return to the Internal Revenue Service Center site listed for non-residents.

When to file? If you have a US source of income to report, file on or before April 15 following the close of the calendar year for which the return is being filed. If you do not have Earned US Source Income to report, you may file the Form 8843 by June 15, following the close of the calendar year for which the return is being filed.

California State Income Tax
The State of California ’s income tax regulations are similar to the Federal regulations. Some students required to file a federal tax return will also need to file a California State tax return. The due date is also April 15, and no special extensions are granted to non-resident aliens. Most importantly, many exemptions for federal purposes are also applicable for state ones; thus, computing your California State Tax should be of little difficulty after you have completed your federal return. Form 540NR is the California income tax form to be filed by any nonresident alien required to file a return. For more information, please contact the California Franchise Tax Board.

Social Security Payroll Tax
The United States imposes a payroll tax to pay for retirement and certain medical benefits. Exemptions or deductions may be allowed for non-immigrant international students who have held that status for less than five years. This Social Security Tax is referred to as F.I.C.A. (Federal Insurance Contribution Act).

Although most aliens may never receive any of the Social Security benefits, the United States , like most other countries, usually does not allow refunds. Refunds are granted, however, to visiting scholars or students on “J” or “F” visas who are considered nonresidents for tax purposes (see residence status). Under the following circumstances, however, even F-1 and J-1 visa holders who are considered residents for tax purposes are still not responsible for FICA taxes.

1.	Services performed by an enrolled student for the school he/she regularly attends;
2.	Services performed for the state or local government, unless an agreement with the federal government is involved;
3.	Services performed for a foreign government; or
4.	Services performed for an international organization.

Since students may not work without an appropriate USCIS permit (or permission from the institution in the case of J visa students), only those who have received such a permit (as recorded on their I-94) can be exempt. In other words, students working illegally will not be able to apply for a refund even if working is necessary to meet the objectives for which they were admitted. Members of a student’s family are not allowed a refund. Refunds may be obtained from either your employer or the IRS. (See Publication 519 for more details.)

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