Janice Lozano
International students from Vietnam who are in the US on an F-1 visa are considered nonresident aliens for tax purposes and are required to file a US tax return for income from US sources. This includes any taxable scholarship or fellowship grant, income partially or totally exempt from tax under a tax treaty, or any other income that is taxable under the Internal Revenue Code. Additionally, international students may have to file a state tax return and pay state income tax, depending on the state they are in. It is important to correctly determine one's tax filing status as a resident or nonresident, as this determines how one is taxed and which forms need to be filled out. US citizens or residents living in Vietnam are generally required to file income tax returns with the Internal Revenue Service (IRS) and may be subject to mandatory disclosure laws if they have income or assets in Vietnam.
Characteristics and Values Table for International Students from Vietnam Filing for Taxes
| Characteristics | Values |
|---|---|
| Tax Filing Status | Non-resident alien for tax purposes: International students with an F, J, or M visa who have been in the USA for less than five calendar years |
| Resident alien for tax purposes: International students with an F, J, or M visa who have been in the USA for more than five calendar years | |
| Tax Forms | Form 8843: Required for all international students and their spouses and dependents, regardless of income |
| Form 1040NR or 1040NR-EZ: For those with taxable income | |
| Form 1099: Documents miscellaneous income, such as earnings from working as an independent contractor | |
| Form 1098-T or Form 1095: Not needed if a non-resident for tax purposes | |
| Form 1042-S: For non-resident alien students with scholarship or fellowship money exceeding tuition and related fees | |
| Form W-2: Documents earnings as an employee of an organization | |
| Form 8843: Non-Employed Form for those who did not earn income | |
| Tax Software | Sprintax: Assists international students in preparing federal tax returns |
| Volunteer Income Tax Assistance: Offers free tax return preparation | |
| Tax Treaties | Some countries have tax treaties with the USA, which may result in exemptions or reduced rates for international students from those countries |
| Tax Deadlines | April 15th or the following Monday if it falls on a weekend: Deadline for filing tax returns for the previous calendar year |
| March 30th: Deadline for filing tax returns and making final tax payments in Vietnam | |
| Tax Exemptions | Income from foreign sources, interest income from specific U.S. financial institutions, tax-free scholarships or fellowships, and certain tax-free investments |
| Taxable Income | Wages from working or training in the U.S., taxable scholarships or fellowships, income from stock options, and other income taxable under the Internal Revenue Code |
| Employment income, employment benefits, dividends (except government bonds), interest (with some exceptions), capital gains, private business income, income from franchising, inheritance, transfer of land use rights, gifts, winnings, and prizes |
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What You'll Learn
International students and taxes in the US
International students in the US, including those from Vietnam, are required to file a tax return with the Internal Revenue Service (IRS) each year they are in the country. This is the case even if they have no income or if their income comes from sources outside the US. The deadline for filing is April 15 (or the following Monday if that falls on a weekend).
The US tax system is a pay-as-you-go system, meaning there are usually automatic tax withholdings from your paycheck, stipend, or financial aid. This amount is estimated based on information you provided in your W-4 or other tax documents, as well as your tax filing status and possibly your residency (due to a tax treaty).
International students with an F, J, or M visa who have been in the USA for less than five calendar years are considered non-resident aliens for tax purposes. Those with an F, J, or M visa who have been in the USA for more than five years are considered resident aliens for tax purposes.
International students on F-1 visas are not required to pay employment taxes (Social Security and Medicare, also known as FICA), but are required to pay both federal and state income taxes. M-1 visa holders are not allowed to accept employment (except during practical training) and are therefore not required to file income tax unless they are paid for practical training. J-1 visa holders must pay income taxes on their earnings, the same as US citizens.
Some types of income are not taxable for international students, including:
- Income from foreign sources
- Interest income from a US bank, savings and loan institution, credit union, or insurance company
- Tax-free scholarships or fellowships
- Certain types of tax-free investments
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Tax treaties between Vietnam and the US
International students from Vietnam who are in the US on an F-1 visa are considered nonresident aliens for tax purposes for the first five calendar years of their stay in the US. This means that they will be taxed only on US-source income. Every international student is required to file their tax return if they were in the US during the previous calendar year and earned income.
The US has income tax treaties with 65 countries, and under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate or are exempt from US taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and specific items of income. Under these same treaties, US residents or citizens are taxed at a reduced rate or are exempt from foreign taxes on certain items of income they receive from sources within foreign countries.
As an international student from Vietnam, you may benefit from a tax treaty between your country and the US. To determine if you are eligible for any benefits, you should review the tax treaty between the two countries. This information can be found on the IRS website or the Treasury Department's tax treaty documents page.
It is important to note that income tax treaties usually contain a "'saving clause'" that prevents US citizens or residents from using the treaty to avoid taxation on US-source income. Additionally, if the treaty does not cover a particular kind of income, or if there is no treaty between the US and Vietnam, regular tax rates will apply.
When filing your taxes, you will need to determine your federal tax filing status as either a nonresident or resident tax filer. This status will dictate how you are taxed and which forms you need to fill out. It is important to file with the correct status. Additionally, some states in the US will collect state income tax in addition to federal income tax, so you may need to file a state tax return as well.
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Tax residency in Vietnam
In Vietnam, an individual's tax residency status is determined by their length of stay and type of residence. An individual is considered a tax resident if they meet either of the following criteria:
- They have stayed in Vietnam for 183 days or more in a calendar year or over 12 consecutive months from their first date of arrival. If a foreigner stays in the country for less than 183 days in the first calendar year, the first tax year will be a 12-month period from their first arrival date. From the second year onwards, the tax year will follow the calendar year.
- They have a permanent residence or a long-term rental agreement in Vietnam.
Tax residents in Vietnam are taxed on their worldwide income, including earnings made both inside and outside of the country. The tax rates for tax residents are progressive, ranging from 5% to a maximum of 35%. Additionally, tax residents can avail of tax deductions based on family circumstances and donations.
On the other hand, non-tax residents are only taxed on their Vietnam-sourced income. The flat tax rate for non-residents is 20%.
It is important to note that Vietnam's Law on Personal Income Tax (PIT) recognizes several categories of income with various deductions, tax rates, and exceptions. Certain types of income are exempt from PIT, such as interest earned on bank deposits, income from a single residential property, and income from specific occupations like cultivation or fisheries. Additionally, there are provisions for dependents, where taxpayers can claim deductions for children, spouses, or parents who meet certain criteria.
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Tax filing status in the US
International students from Vietnam who are in the US on an F-1 visa are considered nonresident aliens for tax purposes for the first five calendar years of their stay in the US. This means that they will be taxed only on US-source income. Every international student is required to file their tax return if they were in the US during the previous calendar year and earned income.
The tax filing status in the US is used to determine an individual's filing requirements, standard deduction, eligibility for certain credits, and their correct tax. An individual's filing status is dependent on their marital status, spouse's year of death (if applicable), and the percentage of the costs that their household members paid toward keeping up a home.
There are five types of filing status:
- Single
- Head of Household
- Married Filing Jointly
- Married Filing Separately
- Qualifying Widow(er) with Dependent Child
Head of Household offers a larger standard deduction and generally lower tax rates than Single, which can result in significant tax savings. A joint tax return often provides a bigger tax refund or lower tax liability. However, if both spouses work and have large and unequal itemized deductions, it may be more advantageous to file separately.
Additionally, a surviving spouse can file as married filing jointly in the year their spouse dies and for the two tax years following. After two years, if they have not remarried, they must file as Single or Head of Household.
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Tax exemptions for international students
International students from Vietnam and other countries are generally required to file a tax return with the Internal Revenue Service (IRS) each year they are in the United States. However, there are certain exemptions from taxation available to international students.
Firstly, 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 exempt from the Substantial Presence Test during this period, which is used to determine if someone is considered a resident for tax purposes. After five years, international students may become resident aliens for tax purposes and be liable for taxes on their worldwide income.
Secondly, international students are not required to file taxes if their income comes solely from foreign sources, interest from US banks or financial institutions, tax-free scholarships or fellowships, or certain types of tax-free investments. It is important to note that even if income is exempt from tax, it may still need to be reported on a US tax return.
Thirdly, under the "student FICA exemption," international students employed by the school, college, or university where they are enrolled at least half-time are generally exempt from Social Security and Medicare taxes on their wages. This exemption applies to on-campus employment that is directly related to the student's course of study.
Finally, international students with income from self-employment may be exempt from taxes if they meet the requirements under Revenue Procedure 2005-11. Additionally, nonresident alien students are generally not liable for self-employment taxes.
It is important for international students to carefully review the tax regulations and consult reliable sources or tax professionals to determine their specific tax obligations or exemptions.
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Frequently asked questions
Yes, international students from Vietnam have to file for taxes.
International students from Vietnam are required to file a US federal tax return and may also have to file a state tax return.
International students can use software like Sprintax to prepare their federal tax returns and state tax returns for a fee.
International students from Vietnam need to file Form 8843 and may also need to file Form 1040-NR or Form 1040-NREZ. If they have a taxable scholarship, they may also need to file Form 1042-S.
The deadline to file taxes is usually in April for the previous calendar year. However, if an international student from Vietnam is residing in the US on the tax deadline, they can get an automatic two-month extension until June 15.
