International Students: Tax Claims And Benefits Explained

International students in the US are required to file a tax return as a condition of their visa, but not all will be subject to taxation. International students are considered nonresident aliens by the IRS and are therefore not entitled to claim educational tax credits. However, they may be eligible for a tax refund and can benefit from tax treaties with their home country. The US has income tax treaties with 65 countries, and under these treaties, residents may be eligible for reduced tax rates or exemptions. F-1 visa students are exempt from FICA taxes on wages for services performed in the US and are also exempt from social security and Medicare taxes.

International students with F-1 visas are required to file tax returns, even if they didn't work

International students with F-1 visas are classified as nonresident aliens by the IRS and are required to file tax returns annually, even if they did not work or earn an income during their stay in the US. This is done by filing Form 8843 with the IRS, which is a statement required by the US government for certain nonresident aliens who are in the US on F-1, J-1, F-2, or J-2 visas. The purpose of this form is to assess an individual's federal income and taxes for the previous year. The deadline for filing this form is April 15, 2025.

It is important to note that international students may also be required to file state tax returns and pay state income tax, even when no federal return is due. This is because tax rates and deductions differ across US states. Additionally, international students on F-1 visas are exempt from FICA taxes on wages for services performed within the US. This exemption from social security and Medicare taxes is granted by the Internal Revenue Code and is valid for up to five years from the date of their arrival in the US.

International students who have earned wages from a job, received scholarship money from an American organisation, or made interest on money in an American bank account are considered to have made US source income and will need to apply for an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN). They may also need to submit additional forms, such as W-2s, 1042-S's, and 1099's, which will be provided by their university or employer.

While it is possible for international students to file their tax returns directly with the IRS, it is recommended to seek assistance from a professional tax preparation service or a tax agent/accountant to ensure accuracy and compliance with US tax laws.

Non-resident aliens are exempt from FICA taxes and social security/Medicare taxes

International students in the US are required to file a tax return as a condition of their visa, but not all will be subject to taxation. Non-resident aliens are generally liable for Social Security and Medicare taxes on wages paid to them for services performed in the US. However, there are certain exemptions based on their non-immigrant status.

Non-resident aliens with F-1, J-1, M-1, or Q-1 non-immigrant status are exempt from Social Security and Medicare taxes on wages paid to them for services performed within the US. This exemption applies only if the services are allowed by the United States Citizenship and Immigration Services (USCIS) and are performed to carry out the purposes for which they were admitted into the country. The exemption does not apply to spouses and children of those with F-1, J-1, or M-1 non-immigrant status. Additionally, the exemption does not apply if the non-immigrant changes their status to one that is not exempt or to a special protected status.

The exemption period for F-1 visas is five years from the date of arrival in the US. After this period, international students are classified as Resident Aliens for Tax Purposes and are subject to FICA tax withholding. However, if they remain students, they may be able to claim the Student Social Security and Medicare exemption.

International students can also benefit from tax treaties between the US and their home country. The US has income tax treaties with 65 countries, and residents of these countries may be eligible for reduced or exempt US taxes.

International students can claim tax refunds on scholarships if covered by a tax treaty

International students in the US on an F-1 visa are considered nonresident aliens and are required to file a US tax return (Form 1040-NR) for income from US sources. This includes scholarships and fellowship grants, which are taxable income when paid to nonresident aliens. However, if the scholarship is covered by a tax treaty, international students may be able to claim a tax refund.

The US has income tax treaties with 65 countries, and these treaties can often reduce or eliminate US taxes on various types of income, including pensions, interest, dividends, royalties, and capital gains. To claim a tax treaty benefit, students must be nonresidents for tax purposes, which is different from their immigration status. Even if no income tax is due under a tax treaty, the income must still be reported on a US income tax return.

International students can also benefit from specific tax treaty provisions that apply to students, trainees, and apprentices. For example, under the US-India Income Tax Treaty, certain nonresident alien students from India can claim the standard deduction if they do not claim itemized deductions. Additionally, international students may be able to decrease their federal income tax liability by claiming a tax treaty benefit, which can fully or partially exempt their US-sourced income from federal and/or state income taxes.

It is important to note that not all international students will qualify for a tax refund on their scholarships, and the specific tax benefits and exemptions may vary depending on the student's country of residence and the terms of the tax treaty between the US and that country. It is recommended that international students seek professional tax advice or use a specialized tax preparation service, such as Sprintax, to properly prepare and file their tax returns.

International students must file Form 8843 and likely Form 1040-NR if they received income

International students in the US are required to file a tax return as a condition of their visa, but not all will be subject to paying taxes to the US government. International students are entitled to a number of benefits and exemptions, so many will not owe anything.

If you are an international student in the US, you will need to file Form 8843, "Statement for Exempt Individuals and Individuals With a Medical Condition", regardless of whether or not you have earned an income during your time in the US. This form is required by the IRS for non-residents for tax purposes and should be submitted for every non-resident taxpayer present in the US at any point during the previous calendar year, including spouses, partners, and children. However, if you are considered a resident for tax purposes, you are not required to file Form 8843.

If you have received income during your time in the US, you will likely also need to file Form 1040-NR (federal tax return) to assess your federal income and taxes. This includes income from wages, scholarship money, or interest on money in an American bank account. If you are using Sprintax to file your tax return, your Form 8843 will be automatically generated and included with your Form 1040-NR. If you are preparing your Form 1040-NR yourself, you must also include a Form 8843.

It is important to note that the rules and requirements for international students' tax filings may vary depending on individual circumstances, such as visa status and residency status. It is recommended to use a professional tax preparation service or consult a qualified tax accountant to ensure compliance with US tax laws.

International students can benefit from tax treaties with their home country

International students in the US on an F-1 visa are generally considered nonresident aliens for tax purposes for the first five calendar years of their stay. This means that they will only be taxed on US-sourced income. International students are subject to taxation for money made while in the US, including wages from a job, scholarship money from an American organisation, or interest on money in an American bank account.

The US has income tax treaties with 65 countries, and international students can benefit from these tax treaties with their home country. Under these treaties, residents of foreign countries may be eligible for a reduced tax rate or exemption from US taxes. The reduced rates and exemptions vary among countries and specific items of income. For example, students from India can claim the standard deduction under Article 21 of the US-India Income Tax Treaty. 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.

To claim a tax treaty benefit, students must be a nonresident for tax purposes and fulfil other criteria, such as having an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN). They may also need to complete Form 8843 and other federal tax forms, as well as state tax forms depending on the state where they attend university. Additionally, students must complete a country-specific statement that details the terms of the treaty.

It is important to note that international students may still need to file a US income tax return even if their income is not taxable due to a tax treaty. They may also need to report their income to their home country and pay taxes there, depending on the tax laws of their home country.

Frequently asked questions