International Students: Understanding Federal Tax Filing Requirements

International students in the US are required to file federal taxes, but the requirements vary depending on the type of visa and income sources. Most international students on F-1 visas are considered non-resident aliens by the IRS and are exempt from paying taxes on international income sources. However, they are still required to file Form 8843 and may need to submit Form 1040-NR to report any US-sourced income. Students with F-1 visas who earn income in the US, including from wages, scholarships, or investments, are generally required to file federal income taxes. Additionally, some states require international students to file state tax returns and pay state income taxes, even if they have no federal tax liability. Understanding the specific regulations and deadlines is crucial for international students to stay compliant with their tax obligations in the US.

F-1 visa holders

The Internal Revenue Service (IRS) requires all international students and scholars on F or J visas to file Form 8843, even if they did not earn any income while studying in the US. This form is used by "alien individuals" to explain their status as nonresident aliens. The deadline for filing Form 8843 is June 15 of the following year, while the deadline for filing federal income tax returns is April 15 (or the following Monday if it falls on a weekend). It is important to meet these deadlines, as failing to file tax returns on time can result in complications with visa applications or even revocation of the visa.

It is worth noting that F-1 visa holders are generally exempt from paying Social Security and Medicare taxes for up to five calendar years from their arrival in the US. This exemption is provided under the Internal Revenue Code and is based on the student's nonimmigrant status. However, once an F-1 visa holder becomes a resident alien for tax purposes, they may become liable for these taxes.

Non-resident aliens

A non-resident alien is an individual who is not a U.S. citizen or U.S. national and has not passed the green card test or the substantial presence test. Non-resident aliens are generally subject to U.S. federal income tax on their U.S. income. However, the tax rules for non-resident aliens can be complex and depend on various factors, including the type of income, the amount of time spent in the U.S., and the applicable tax treaties.

Taxation of Non-Resident Aliens

On the other hand, non-resident aliens who are not engaged in a trade or business in the United States and have U.S. income may be subject to a flat 30% tax rate (or lower treaty rate) on certain types of income, such as fixed, determinable, annual, or periodical payments. They must still report certain types of exempt income on their tax returns, even if no tax is due.

Tax Exemptions for Non-Resident Aliens

There are some cases where non-resident aliens are exempt from U.S. tax. For example, foreign government-related individuals and those with specific types of income, such as from a U.S. savings and loan institution or U.S. credit union, may be exempt. Additionally, non-resident aliens may be exempt from social security and Medicare taxes if they have an F-1 visa and are considered non-immigrant students.

State Tax Considerations for Non-Resident Aliens

In addition to federal taxes, non-resident aliens may also need to consider state taxes. Most states in the U.S. collect state income tax, and the tax rates and deductions vary by state. Even if an international student or non-resident alien does not have a federal tax filing requirement, they may still need to file a state tax return and pay state income tax.

State taxes

International students in the US on F-1 visas are generally considered nonresident aliens for tax purposes for the first five calendar years of their stay. However, some can be classified as 'residents' or 'resident aliens' based on the 'substantial presence test'. This is only a tax filing status and does not imply that the student is a resident for immigration or other purposes.

As a nonresident for tax purposes, you only pay taxes on income earned in the US. The amount of tax you pay depends on your income, the tax rates of each state, and your eligibility for tax treaty benefits. The US has income tax treaties with 65 countries.

Most states in the US collect state income tax in addition to federal income tax. Tax rates and deductions vary across states, so the amount you pay depends on your location. Therefore, international students may have to file a state tax return and pay state income tax even when no federal return is due.

Nine states have no tax-filing requirements. These are:

Tax treaties

International students in the US on F-1 visas are typically considered nonresident aliens by the IRS. As a nonresident alien, you will need to file a federal tax return to assess your federal income and taxes. This is the case even if you did not earn any income during your time in the US, in which case you will need to file Form 8843 with the IRS.

If you did earn income, you may also need to file Form 1040-NR. If you are an international student earning an income, you will be required to pay federal tax, and in most states, you will also need to pay state income tax.

To claim a tax treaty exemption, you generally must be a nonresident alien student. If you entered the US as a nonresident alien and later became a resident alien, the exemption will still apply if the tax treaty has an exception to the treaty's saving clause. In this case, you can avoid income tax withholding by giving the payor a Form W-9 with the appropriate attachments.

If you are a nonresident alien student claiming an exemption from withholding on personal service income because of a tax treaty, you must submit Form 8233 to each withholding agent from whom you will receive income. You must also attach the appropriate statement from Publication 519, U.S. Tax Guide for Aliens, to the Form 8233 and give it to the withholding agent.

If you are not a student but perform services as an employee and your pay is exempt from US income tax under a tax treaty, you may be able to reduce the amount of tax withheld from your wages by providing a completed Form 8233 for the tax year. If you are claiming treaty benefits that reduce your tax liability, you must attach a fully completed Form 8833 to your tax return.

You must also file Form 8833 if you receive payments or income items totaling more than $100,000 and determine the country of residence under a treaty, not under the rules for determining alien tax status. However, you do not have to file Form 8833 if you can claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income.

Tax refunds

International students in the US on an F-1 visa are considered nonresident aliens for tax purposes and are taxed only on US-source income. F-1 students are usually exempt from paying FICA (Social Security and Medicare) taxes for the first five years of their stay in the US. However, if you had these taxes withheld from your pay in error, you can request a refund from your employer or file a claim with the IRS.

International students with taxable scholarships or fellowship grants may be eligible for a tax refund if their home country has an income tax treaty with the US. The US has tax treaties with 65 countries, and these treaties can reduce or fully exempt income from taxes. In such cases, the overpaid amount will be refunded to the student.

To file your tax return and claim any refunds, you will need to complete Form 8843 and, if you received US-sourced income, Form 1040-NR. The deadline for filing your federal tax return is usually in mid-April of the following year, but you may be able to get an automatic six-month extension if needed.

It's important to note that, in addition to federal taxes, you may also be required to file a state tax return, depending on the state you reside in. While some states do not require a state tax return, others will have specific requirements and deadlines that you need to be aware of.

Frequently asked questions