Lori Meadows
International students in the United States are required to file a tax return as a condition of their visa, but not all will be subject to paying taxes to the American government. International students are entitled to a number of benefits and exemptions, and many will qualify for a refund due to tax treaties and a lack of serious income. F-1 visa holders are considered nonresident aliens and are generally taxed at the same rate as their income level. However, they may be eligible for a tax treaty that can reduce or fully exempt their income from taxes, resulting in a refund for any overpaid amount. Additionally, F-1 students may be exempt from Social Security and Medicare taxes under certain conditions. It is important to note that international students should not use resident tax preparation services like TurboTax, as this may result in inaccuracies and potential penalties. Instead, they should use nonresident services like Sprintax to ensure compliance with tax requirements.
| Characteristics | Values |
|---|---|
| International students' eligibility for tax return | International students are subject to taxation for money made while in the US and must file a tax return. However, not all will pay taxes and may even be eligible for a refund. |
| Tax treaties | The US has tax treaties with 65 countries, under which residents of foreign countries may be eligible for reduced or exempt US taxes. |
| F-1 visa holders | F-1 visa holders are generally considered nonresident aliens and are taxed at the same rate. They may be able to claim a tax treaty and receive a refund. |
| FICA tax | Most F-1 students are not required to pay FICA tax unless they have been in the US for more than 5 years. |
| Social Security and Medicare taxes | Foreign students are generally liable for Social Security and Medicare taxes on wages for services performed in the US, with certain exceptions. Students employed by their school, college, or university for at least half the time may be exempt. |
| Tax preparation services | TurboTax is only for US residents. Sprintax is a popular choice for international students as it is the nonresident partner of TurboTax. OISS at Yale University also provides access to Sprintax. |
| Tax forms | International students must file Form 8843 and may also need to file Form 1040-NR. |
| State taxes | Some states require international students to file state tax returns, such as Connecticut (CT). |
| Tax deadlines | The IRS deadline to file federal tax returns is April 18, 2023, while state deadlines vary. |
| Substantial Presence Test | International students on F, J, M, or Q visas are exempt from the Substantial Presence Test for the first 5 years in the US. |
| Tax Identification Number | International students require an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN) to file taxes. |
| Tax benefits | International students are entitled to benefits and exemptions, and many will not owe anything. |
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What You'll Learn
International students and tax treaties
International students on F, J, M, or Q visas are considered "exempt individuals" and are excused from the Substantial Presence Test for the first five years in the US. However, international students are required to file a tax return as a condition of their visa, and they may be eligible for tax treaty benefits. The US has income tax treaties with 65 countries, and under these treaties, residents of foreign countries may be eligible for reduced tax rates or exemptions on certain items of income.
To claim a tax treaty benefit, international students must fulfill certain criteria: they must be non-residents for tax purposes, receive US-source income from salary and/or a scholarship, be on an F1, J-1, or H1-B visa, and were residents of one of the countries with a tax treaty with the US prior to coming to the US. Additionally, F-1 students may be able to claim a tax treaty that can reduce or fully exempt their income from taxes, and in such cases, they can receive a refund for any overpaid amount.
When claiming income tax treaty benefits, international students must complete specific forms, such as Form 8233 and Form W-8BEN, which help ensure that tax treaty benefits are applied to their income. These forms can be tricky to complete, and it is important to ensure they are filled out correctly. Additionally, students and scholars at certain universities may be able to complete the process through the GLACIER Tax Prep process, which helps determine eligibility for tax treaty benefits and provides the necessary documentation.
It is recommended that international students use a professional tax preparation service, such as Sprintax, to properly prepare and file their tax returns. These services can help ensure compliance with IRS requirements and claim any tax treaty benefits that the student may be entitled to.
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Tax preparation services
International students in the United States are required to file tax returns as a condition of their visa, but not all students will have to pay taxes to the US government. International students are entitled to a number of benefits and exemptions.
There are a number of tax preparation services available to international students, including:
- Sprintax: This is a popular choice for international students as it is the only online federal and state self-prep tax software for non-residents in the US. It is also the non-resident partner of choice for TurboTax, the biggest online tax preparation service in the US. Sprintax can help you prepare the required forms before you send them to the IRS. The software also has a help team that can answer your queries.
- TurboTax: TurboTax is a service for US residents, so it is not suitable for international students who will be filing as non-residents. However, TurboTax and Sprintax work together, so you can use Sprintax to prepare your non-resident tax return and then file it with TurboTax.
- Certified Public Accountants (CPAs) or Registered Tax Return Preparers: These professionals can provide tax advice and help prepare and file your tax return. However, they will charge a fee for their services.
Other Options
It is possible to file taxes without the help of a professional by using software offered by universities, such as SISS, and by researching the necessary information. The IRS website also has information and forms that can be used to prepare your tax return yourself.
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Tax forms and deadlines
Every international student in the US is required to file a tax return as a condition of their visa. However, not all students will be subject to paying taxes to the US government. There are a number of benefits and exemptions that international students can take advantage of, so many will not owe anything.
International students on F, J, M, or Q visas are considered "exempt individuals" for the first five years they are in the US. This means they are excused from the Substantial Presence Test during this time. After this period, they will be subject to the test, which determines whether they have been in the US long enough to be considered a resident for tax purposes.
If you are a nonresident alien for tax purposes, the US will not tax your income from non-American sources. However, you must still report any income that is not taxable because of an income tax treaty on a US income tax return, even though no income tax is due.
The US has income tax treaties with 65 countries. Under these treaties, residents of foreign countries may be eligible for reduced tax rates or exemptions from US income taxes on certain items of income they receive from sources within the US. These reduced rates and exemptions vary among countries and specific items of income.
If you are an F-1 visa holder and considered a nonresident alien, you will be taxed at the same rate as other F-1 visa holders. In certain cases, F-1 students can claim a tax treaty that can reduce or fully exempt their income from taxes. In such cases, the overpaid amount will be refunded.
To file your taxes, you will need to mail your tax forms, along with copies of your W-2s, 1099s, and 1042-Ss, and a check if you owe anything, to the Internal Revenue Service Center, Austin, TX 73301-0215, USA. Federal forms must be postmarked by April 18th, but other forms, such as state tax returns and Form 8843, have different deadlines.
All international students must file at least Form 8843, even if they didn’t earn any money in the US. This form can be pre-populated with your details on the International Student Tax Return and Refund Center website. You will also need an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN). Depending on your income sources, you may also need W-2s, 1042-Ss, and 1099s.
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Tax residency status
International students on F, J, M, or Q visas are considered "exempt individuals" for the first five years they are in the US. After this period, they will be subject to the Substantial Presence Test, which determines whether someone has been in the US long enough to be considered a resident. Students who meet the IRS's substantial presence test are considered US residents for tax purposes.
International students and scholars with F and J visas are generally considered nonresidents for tax purposes. However, some students and scholars are considered resident tax filers even though they have a nonimmigrant visa status. Your tax filing status may change over time, so it is important to review the guidelines each time you complete your taxes.
Nonresident aliens, in general, are liable for Social Security and Medicare Taxes on wages paid to them for services performed in the US. However, there are certain exceptions. Foreign students temporarily present in the US on F-1, J-1, or M-1 visas for less than five calendar years are generally nonresident aliens and are exempt from Social Security and Medicare Taxes. Additionally, Section 3121(b)(10) of the Internal Revenue Code provides an exemption from Social Security and Medicare taxes for all students, regardless of their US tax residency status, if they are employed by a school, college, or university where they are enrolled at least half-time.
To file taxes as a nonresident, international students must use a nonresident partner of TurboTax, such as Sprintax, to prepare a fully compliant 1040NR (nonresident tax return) and Form 8843. TurboTax can only be used by US residents, and using it as an international student will result in an inaccurate tax return, potentially leading to fines and penalties.
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Social Security and Medicare taxes
International students on F, J, M, or Q visas are considered "exempt individuals" from the Substantial Presence Test for the first 5 years they are in the US. However, they are still required to file a tax return as a condition of their visa. While not all international students will pay taxes to the American government, they are subject to taxation for money made while in the US.
As a general rule, nonimmigrants are not permitted to earn self-employment income in the US. If a nonimmigrant student earns self-employment income in the US, their income will be subject to US income tax. Additionally, if they become a resident alien, they will also be subject to self-employment tax.
Wages paid to resident aliens employed in the US by an American or foreign employer are subject to Social Security and Medicare taxes, under the same rules that apply to US citizens. Wages paid to nonresident aliens are also generally subject to Social Security and Medicare taxes for services performed within the US, with certain exceptions based on their nonimmigrant status.
The following classes of nonimmigrants and nonresident aliens are exempt from US Social Security and Medicare taxes:
- A-visas: Employees of foreign governments and their families are exempt from taxes on salaries paid to them in their official capacities as foreign government employees.
- G-visas: Employees of international organizations are exempt from Social Security and Medicare taxes on wages paid to them for services performed within the US in their official capacity as employees of such organizations.
- H-visas: Certain nonimmigrants in H-2 and H-2A status are exempt from Social Security/Medicare taxes.
F-visas, J-visas, M-visas, and Q-visas: Nonresident alien students, scholars, professors, teachers, trainees, researchers, and other aliens temporarily present in the US in F-1, J-1, M-1, or Q-1 nonimmigrant status are exempt from Social Security and Medicare taxes on wages for services performed within the US, as long as:
- The services are allowed by the United States Citizenship and Immigration Services (USCIS) for these nonimmigrant statuses.
- The services are performed to carry out the purposes for which they were admitted into the US.
Additionally, under special exception rules, Social Security and Medicare taxes do not apply to services performed by students employed by a school, college, or university where the student is enrolled at least half-time. The student's on-campus employment must be incidental to and for the purpose of pursuing a course of study. Consequently, a foreign student who becomes a resident alien may be eligible for exemption if qualified. Off-campus jobs or working for other employers do not qualify.
The US has also entered into agreements with several nations called Totalization Agreements to avoid double taxation of income with respect to Social Security taxes. These agreements must be considered when determining whether any alien is subject to US Social Security and Medicare taxes.
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Frequently asked questions
Yes, all international students inside the United States must file a tax return each year.
International students may be eligible for a full or partial tax refund depending on their situation. For example, if an international student has overpaid on their income tax, they can claim a refund.
International students must file Form 8843 separately. If they have received income in the last calendar year, they will likely need to file Form 1040-NR as well.
The IRS deadline to file federal tax returns is April 18, 2023. State deadlines differ, so it is important to check the relevant state website.
