Lana Oconnell
International students in the US are required to file a tax return, even if they did not earn any income while studying in the country. The US tax system is a pay-as-you-go system, where taxes are withheld from paychecks, stipends, or financial aid. International students on F-1 visas are not required to pay employment taxes, but they are required to pay federal and state income taxes. They will be taxed only on US-source income, and some states do not have any tax-filing requirements. To file taxes, international students may need a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).
| Characteristics | Values |
|---|---|
| Who needs to file tax returns? | All international students who were in the US during the previous calendar year. |
| What do international students need to file? | Tax returns for federal and state taxes, and a non-employed federal form for those who did not earn income. |
| How do international students file tax returns? | International students cannot e-file their tax returns and must mail them to the IRS. However, they can use online tax software like Sprintax to prepare their federal tax returns. |
| What do international students need to file tax returns? | An Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN). |
| What are the benefits of filing tax returns? | International students might get a refund, and they also fulfill their visa obligations. |
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What You'll Learn
F-1 visa holders must file tax returns
F-1 visa holders are classified as nonresident aliens for US federal income tax purposes, which means that they are taxed only on US-source income. This includes income from a job, scholarship money from an American organisation, or interest on money in an American bank account.
International students on an F-1 visa are required to file a US tax return if they were present in the US during the previous year. They will need to file a federal tax return to assess their federal income and taxes. This is done by filing Form 1040-NR. F-1 visa holders are exempt from FICA taxes on wages for services performed within the US, as well as Social Security and Medicare taxes. However, they may still be required to file a state tax return and pay state income tax, depending on the state they are in. Nine states don't have any tax-filing requirements.
F-1 visa holders who are married to US citizens or residents can file joint returns. If both spouses are nonresidents for tax purposes, their filing status should be 'Married Filing Separate'.
To file a tax return, F-1 visa holders must first obtain an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN). They can then download the relevant forms, complete them, and mail them to the IRS, along with all required supporting documents. It is important to note that the IRS does not allow electronic filing for nonresident aliens. There is no cost to submit taxes to the IRS, but there may be a cost if a service or a certified public accountant is used.
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Non-F-1 visa holders must file tax returns
International students on non-F-1 visas, such as J, M, or Q visas, are categorised as "'exempt individuals" for the first five years they are in the US. This means they are exempt from the Substantial Presence Test, which is used to determine if someone is considered a resident.
Non-F-1 visa holders who have been in the US for more than five calendar years may become resident aliens for US tax purposes if they meet the Substantial Presence Test and are liable for Social Security and Medicare taxes. However, they may be exempt from FICA (Social Security and Medicare) taxes under the "student FICA exemption".
Additionally, non-F-1 visa holders who are considered nonresident aliens are not liable for self-employment taxes. However, they may be liable for self-employment taxes under the terms of a Totalization Agreement, which the US has with several nations to avoid double taxation of income regarding Social Security taxes.
When it comes to filing tax returns, non-F-1 visa holders who are nonresident aliens will need to file Form 1040-NR (federal tax return) to assess their federal income and taxes. They will need to complete the form and mail it to the Internal Revenue Service (IRS) along with all the required supporting documents. It is important to note that the IRS does not allow electronic filing for nonresident aliens.
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State tax returns
International students in the US on F-1 visas are considered nonresident aliens for tax purposes and are taxed only on US-source income. They are required to file their tax returns if they were in the US during the previous calendar year and earned income. This applies to all forms of income, including employment earnings, scholarships, and fellowships.
The US has income tax treaties with 65 countries, and these treaties can often reduce or eliminate US taxes on various types of income, such as pensions, interest, and dividends. F-1 students are generally exempt from FICA taxes and social security and Medicare taxes for up to five years from their arrival in the US.
While federal income tax is levied by the IRS, most states in the US will also collect state income tax. Tax rates and deductions will differ for each state, so the amount of tax owed will depend on the student's location and their income during the tax year. Nine states have no tax-filing requirements, but in states that do, international students may have to file a state tax return and pay state income tax even when no federal return is due.
For example, in Indiana, international students can complete their state tax returns using resources provided by the Indiana Department of Revenue (IN DOR). These resources are available in English and Spanish, and students can also contact IN DOR customer service or their district offices for assistance with state tax questions.
It's important to note that the IRS does not allow electronic filing (e-filing) for nonresident aliens, so international students will need to mail their tax returns. However, they can use services like Sprintax to help with the process, although this may incur a cost.
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Tax refunds
International students on F-1 visas are considered nonresident aliens for tax purposes and are generally exempt from paying FICA taxes on wages for services performed in the US. However, they are required to file a federal tax return (Form 1040-NR) to assess their federal income and taxes. Additionally, they may need to file a state tax return, depending on the state they reside in.
International students can benefit from tax treaties between their home country and the US, which may result in reduced tax rates or exemptions on certain types of income. If an F-1 student's income is completely or partially covered by a tax treaty, they may be able to claim a tax refund on their scholarship or fellowship grant.
To obtain a tax refund, international students should follow these steps:
- Find out which forms need to be filed and download them.
- Complete the forms with the required information.
- Print the forms and mail them to the Internal Revenue Service (IRS) along with any supporting documents.
- Wait for the IRS to process the refund claim.
It is important to note that the IRS does not allow electronic filing for nonresident aliens, so international students must submit their tax returns by mail. Additionally, the handling of tax affairs as an international student can impact future Green Card and visa applications, so it is crucial to complete the forms correctly and stay compliant with tax obligations.
Resources like Sprintax offer step-by-step guidance to international students for preparing non-resident tax forms and maximizing their tax refunds. They can help determine if a refund is due and provide support throughout the process.
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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 they are in the US. After this period, they will be subject to the test, which is used to determine whether they were in the US long enough to be considered a resident.
The US has income tax treaties with 65 countries. These treaties can often reduce or eliminate US tax on various types of income, such as pensions, interest, dividends, royalties, and capital gains. Students, trainees, teachers, and researchers can use Form 8233 to claim an exemption from withholding tax on compensation for services that are exempt from US tax under a US tax treaty. They must also attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of Publication 519, US Tax Guide for Aliens, to the Form 8233 and give it to the withholding agent. If the payee is not a student, trainee, teacher, or researcher, but their pay is exempt from US income tax under a tax treaty, they may be able to eliminate or reduce the amount of tax withheld from their wages by providing their employer with a properly completed Form 8233 for the tax year.
If the payee performs personal services as an independent contractor (rather than an employee) and can claim an exemption from withholding on that personal service income because of a tax treaty, they must submit Form 8233 to each withholding agent from whom amounts will be received. The payee must also file Form 8833 if they receive payments or income items totaling more than $100,000 and determine their country of residence under a treaty, not under the rules for determining alien tax status. The payee does not have to file Form 8833 if they 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.
International students and scholars who are nonresidents for tax purposes and intend to take advantage of a tax treaty benefit should provide IRS Form 8233 and a tax treaty statement to their US income provider in order to reduce or avoid tax withholding on income. For students and scholars at UC Berkeley, this is often completed through the GLACIER process. If not, GLACIER Tax Prep will help determine if they are eligible for a tax treaty and provide the necessary documentation.
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Frequently asked questions
Yes, all international students are required to file a federal tax return each year they are in the United States.
International students can file their tax returns online through software like Sprintax, or by mailing their tax forms to the IRS.
Sprintax is a tax preparation software that helps international students with their tax filing obligations.
There is no cost to submit your taxes to the IRS. However, if you use a service like Sprintax or a certified public accountant, there will be a cost for their services.
Yes, many international students can claim tax refunds from the US. This can be done by filing a tax return.
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