International Students' Tax Returns: African Students Pay More

International students in the US on F-1 visas are required to file a tax return, even if they did not earn an income. This is a condition of their visa, and the deadline for filing is usually in April. International students are entitled to a number of benefits and exemptions, and they will not be taxed on income from non-American sources. However, they may be liable to pay state income tax and federal income tax, depending on the state and their income. Students on F-1 visas are typically considered nonresident aliens and are exempt from social security and Medicare taxes for up to five years. In South Africa, there have been changes to the Foreign Employment Income Exemption, which now includes South African residents working overseas in low or zero-tax jurisdictions.

International students on F-1 visas are considered non-resident aliens and must file a US tax return

International students on F-1 visas are considered non-resident aliens for tax purposes for the first five calendar years of their stay in the US. This classification is important because it determines the type of income that is taxable. While US residents are taxed on their worldwide income, non-resident aliens only need to report their US-sourced income.

As a non-resident alien, you will need to file a US tax return (Form 1040-NR) to report any income from US sources. This includes income from employment, scholarships, or fellowships. Even if you did not earn any income during your time as an F-1 student in the US, you still need to file Form 8843 with the IRS. This form is required by the US government for certain non-resident aliens who are in the US on specific visa types, including F-1 visas. The deadline for filing Form 8843 is June 15, 2025, if you had no US income. However, if you received US-sourced income, you will likely need to file Form 1040-NR as well, and the deadline for filing tax documents is April 15, 2025.

It is important to note that there are different types of income that may be exempt from taxation for non-resident aliens. For example, income from a scholarship or fellowship that is entirely tax-free is exempt from federal income tax. Additionally, non-resident alien students are generally exempt from Social Security and Medicare taxes on wages earned for services performed within the United States during their F-1 status. This exemption typically lasts for five years from the date of their arrival in the US.

Furthermore, if your country of residence has signed a tax treaty with the US, you may be partially or completely exempt from certain taxes. To claim a tax treaty benefit, you must meet certain criteria, including being a non-resident for tax purposes and having US-sourced income. Additionally, international students may be eligible for tax refunds. For example, if your scholarship is covered by a tax treaty, you may be able to claim a tax refund on that income.

International students may be exempt from federal taxes but must file state tax returns

International students in the US on an F-1 visa are generally considered nonresident aliens for tax purposes for the first five calendar years of their stay. Nonresident aliens are exempt from federal taxes but must file state tax returns.

Nonresident Alien Status

To be considered a nonresident alien, you must be in the US on an F-1, J-1, F-2, or J-2 visa. Additionally, you must have been in the US for less than five calendar years to be considered a nonimmigrant. If you have been in the US for more than five years, you may be considered a resident alien and will be taxed on all income, including non-American sources.

Income from US Sources

If you are a nonresident alien and have income from US sources, you will need to file a US income tax return, even if no income tax is due. This includes income from a US savings or loan institution, a US credit union, a US insurance company, or an investment that generates portfolio interest. If you have a scholarship or fellowship grant that is entirely tax-free, this income does not need to be reported.

Deadlines

The deadline for filing Form 8843 with the IRS is April 15, 2025, for those who had income during their time in the US. If you had no US income, the deadline is June 15, 2025. The deadline for all F-1 students to file their tax documents is April 15, 2025.

Tax Refunds

International students may be eligible for tax refunds if they paid too much tax during the year. This includes F-1 students who may be able to claim a tax refund on their scholarship if it is covered by a tax treaty. Additionally, if social security or Medicare taxes were withheld in error, you can contact your employer for a refund.

Foreign students in the US for less than 5 years are exempt from Social Security and Medicare Taxes

Foreign students in the US on F-1 visas are typically considered nonresident aliens by the IRS. These students are exempt from Social Security and Medicare Taxes if they have been in the US for less than five years. This is known as the "student FICA exemption".

The exemption period of the F-1 visa is five years from the date of arrival in the US. After this period, foreign students may become resident aliens for US tax purposes and will be liable for Social Security and Medicare Taxes.

To qualify for the exemption, the services performed must be allowed by the USCIS for these nonimmigrant statuses, and such services must be performed to carry out the purposes for which the visas were issued. For example, on-campus student employment of up to 20 hours a week is generally allowed, as is off-campus student employment approved by the USCIS.

It is important to note that this exemption does not apply to spouses and children of nonimmigrants, nor does it apply to employment not allowed or closely connected to the purpose for which the visa was issued.

Foreign students in the US on F-1 visas are still required to file a federal tax return (Form 1040-NR) to assess their federal income and taxes. Even if they did not earn any income during their time in the US, they must file Form 8843 with the IRS by the deadline.

International students can claim tax refunds from the US if they've paid too much tax

International students in the US on an F-1 visa are considered nonresident aliens for tax purposes and are required to file a US tax return (Form 1040-NR) for any income from US sources. This includes wages, tips, scholarship and fellowship grants, and dividends. They will need to file Form 8843 with the IRS, even if they had no US income during their time as a student. The deadline for this is usually the 15th of April, but if you had no US income, the deadline is the 15th of June.

International students are entitled to a number of benefits and exemptions, so many will not owe anything. In fact, if an international student has paid too much tax throughout the year, they may be entitled to a refund. Students can also claim a tax treaty benefit, which will allow them to fully or partially exempt their US-sourced income from federal and/or some state income taxes. The US tax treaty network covers more than 65 countries, and most treaties have specific provisions that apply to students.

There are a few criteria that must be met to claim a tax treaty benefit: you must be a nonresident for tax purposes, you must have a US source of income from salary and/or a scholarship, you must be on an F1, J-1 or H1-B visa, and you must have been a resident of one of the countries that the US has a tax treaty with.

If you are an international student and you believe you have paid too much tax, you can apply for a refund directly with the IRS or use a service like Sprintax, which helps international students with their tax returns and aims to maximize their refunds.

South African residents working abroad for more than 183 days are subject to SA tax on foreign employment income

South African residents who spend more than 183 days working outside the country are subject to South African tax on foreign employment income. This rule applies to South African tax residents who are employees of a South African or foreign employer and work outside South Africa for more than 183 full days in any 12-month period, as well as for a continuous period exceeding 60 full days outside the country in the same 12-month period.

The foreign employment income exemption allows South African residents to qualify for exemption on the entire portion of their remuneration relating to services rendered abroad, provided certain requirements are met. For the 2020 and 2021 tax years, the requirement was reduced from 183 days to 117 days. The 183 days include all calendar days, not just workdays, and weekends, public holidays, annual leave, sick leave, and rest periods are all included in the calculation.

From 1 March 2020, South African residents who meet the above criteria will be subject to South African tax on foreign employment income over R1.25 million. This is because, from this date, South Africa moved from a source-based to a residence-based tax system, meaning that tax residents are subject to tax on worldwide income, while non-residents are taxed only on income from a South African source.

If a South African resident meets the requirements for the foreign employment income exemption, their employer may choose not to deduct employees' tax from the income related to services rendered abroad. In this case, the exemption will be noted on the employee's tax return, and they will need to provide evidence for the exemption. If the employee has paid foreign taxes on their income, they may be able to claim foreign tax credits from their South African normal tax liability.

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