Understanding State Tax Requirements For International Students

International students in the USA are required to file a tax return, even if they did not earn any money during their time in the US. Students with F-1 visas are considered nonresident aliens for tax purposes and must pay federal and state income taxes on their US-sourced income. However, they are not required to pay employment taxes, such as Social Security and Medicare. The amount of tax they will have to pay depends on their personal circumstances and the state they are in, as each state has different tax rates and deductions. Additionally, some countries have a tax treaty with the USA, which may exempt international students from paying taxes or result in a reduced rate.

F-1 visa students and state tax

International students in the US on an F-1 visa are considered nonresident aliens for tax purposes for the first five calendar years of their stay. This means that F-1 students are exempt from paying Social Security and Medicare taxes (also known as FICA). However, they are still required to pay federal and state income taxes on their US earnings.

F-1 students must file a US tax return (Form 1040-NR) to assess their federal income and taxes. They may also be required to file a state tax return and pay state income tax, depending on the state they are in. It is important to note that each state has different rules and tax laws, so the amount of tax an individual will pay depends on their location and personal circumstances.

Even if an F-1 student does not earn money during their time in the US, they are still required to file Form 8843 with the Internal Revenue Service (IRS) by the deadline of April 15, 2025. This form is informational and lets the IRS know how long the student has been in the US. If an F-1 student earns income, they will likely need to file Form 1040NR to complete their tax return. Additionally, if an F-1 student earns income from Optional Practical Training (OPT), they will be required to pay tax and fill out a W-4 tax form with their employer.

It is mandatory for international students to file tax returns, and not doing so by the deadline could result in problems with or revocation of their visa, as well as possible ineligibility for a green card.

Non-resident alien status

International students in the US on F-1 visas are considered nonresident aliens for tax purposes. This means that they are not required to pay employment taxes, such as Social Security and Medicare (also known as FICA). However, they are required to pay both federal and state income taxes on any income they earn in the US. This includes income from internships.

To file their taxes, F-1 visa holders must complete Form 1040NR or 1040NR-EZ (the easy version of 1040NR). They will also need to fill in a W-4 tax form with their employer when they start work. Additionally, all international students and their spouses and dependents, regardless of income, must complete Form 8843, which lets the IRS know how long they have been in the USA. This form must be mailed directly to the IRS by the deadline of April 15 (or the following Monday if that falls on a weekend).

Nonresident aliens are taxed differently from resident aliens, who are taxed like US citizens. A nonresident alien is an individual who is not a US citizen or national and has not passed the green card test or the substantial presence test. The substantial presence test determines if a person is physically present in the US for a certain number of days. To pass this test, an individual must be present in the US on at least 183 days during a three-year period, including the current calendar year and the two preceding years.

It is important to note that international students from countries with a tax treaty with the US may be exempt from or have a reduced tax rate. Additionally, some states in the US do not have any tax-filing requirements. International students should consult their school's international student centre or a professional tax advisor to navigate their specific tax obligations.

Deadlines for state tax returns

International students in the US are required to file a tax return, even if they have no income to report. The Internal Revenue Service (IRS) has a strict deadline of April 15 (or the following Monday if that falls on a weekend) to file tax returns covering the previous calendar year of January 1 to December 31. This deadline applies to both federal and state taxes.

It is important to note that not all US states require international students to file a state tax return. Nine states have no tax-filing requirements at all. However, if you do need to file a state tax return, the deadlines may differ from the federal deadline. Each state has its own deadline for state tax returns, so it is essential to check the website of the state in which you reside to find out the specific deadline.

The process of filing a tax return can be complex, and there may be different forms and requirements depending on your individual circumstances. International students on F-1 visas, for example, are considered nonresident aliens for tax purposes and must file Form 1040-NR (federal tax return) to assess their federal income and taxes. Even if they have no income to report, they must still file Form 8843 with the IRS by the deadline. This form must be mailed directly to the IRS, and separate forms must be submitted for the student, their spouse, and any dependents.

It is important to comply with the tax filing requirements as missing the deadline can result in fines and penalties, and it may even jeopardize your chances of securing a US visa or Green Card in the future. If you have any questions or concerns about your specific situation, it is recommended to consult a professional tax advisor or contact the IRS directly for guidance.

Tax treaties and exemptions

International students in the US on an F-1 visa are considered nonresident aliens for tax purposes for the first five calendar years of their stay. Nonresident aliens are taxed only on US-sourced income. If the student's country of residence has signed a tax treaty with the US, they may be partially or completely exempt from tax. The US has income tax treaties with 65 countries. These treaties can often reduce or eliminate US tax on various types of personal services and other income, such as pensions, interest, dividends, royalties, and capital gains.

International students who are nonresident aliens for tax purposes must file Form 1040-NR (federal tax return) to assess their federal income and taxes. They may also be required to file a state tax return, depending on the state. Even if they don't earn money during their time in the US, they will still need to file Form 8843 with the IRS by the deadline. If they receive US-sourced income during the calendar year, they will likely need to file Form 1040NR to complete their tax return.

Students from countries that have a tax treaty with the US that includes a wage article may claim exemption or a reduction of income tax withholding if the payment meets the requirements of the treaty and the student completes the required forms. The taxes covered under a treaty exemption include Federal, Virginia, and/or DC tax. Maryland does not recognize tax treaties.

If the student's income is not taxable because of an income tax treaty, it must still be reported on a US income tax return even though no income tax is due. If the payee is relying on an exception to the saving clause of the tax treaty, they may be able to eliminate or reduce the amount of tax withheld from their wages. They must provide the payor with a properly completed Form 8233 for the tax year. Form 8233 must report the payee's Taxpayer Identification Number (TIN), generally their US Social Security number or Individual Taxpayer Identification Number (ITIN).

State-specific requirements

The specific requirements and procedures for filing state taxes differ from state to state. For instance, students in Connecticut (CT) and Illinois need to file a state tax return in addition to their federal return. In Illinois, the filing period for state taxes aligns with the federal filing period, and students can request a six-month extension by submitting IRS Form 4868 for federal returns and IL-505-I for state returns.

Furthermore, the tax rates and deductions vary across states, and some states do not have any tax-filing requirements. Nine states, which are not named, do not require international students to file state tax returns.

It is crucial for international students to understand their specific state's requirements and deadlines to avoid complications with their visas or future visa applications. They can seek guidance from their educational institution's international student center or consult professional tax advisors to navigate the complex tax filing process.

Frequently asked questions