Lori Meadows
International students on OPT with an EAD card who are employed part-time as freelancers in the US may be required to fill out a Form W-9 or Form W-8ECI. This is because the company they will be working for needs this information, or they cannot employ them. However, international students are not required to fill out a W-9 form if they are not working in the US. Additionally, non-resident alien students and scholars with certain types of income, such as taxable scholarships or fellowship grants, are required to file a US income tax return, while those with income from sources such as US savings and loan institutions or US credit unions are not required to file.
| Characteristics | Values |
|---|---|
| Who needs to fill out Form W-9? | Freelancers |
| Who is exempt from filling out Form W-9? | Employees |
| Who is considered a freelancer? | International students on OPT with a part-time job |
| What is OPT? | Optional Practical Training, which allows international students to work in the US |
| What is an EAD card? | Employment Authorization Document, which authorizes an individual to work in the US |
| What if I am an international student without a Social Security Number? | You can fill out Form W-7 to apply for an Individual Taxpayer Identification Number (ITIN) |
| Do international students need to pay taxes in the US? | It depends on the type of income and tax treaties. International students may need to file a US income tax return even if no tax is due. |
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What You'll Learn
International students on OPT with EAD cards
International students on OPT (Optional Practical Training) with EAD (Employment Authorization Document) cards are non-residents for US tax purposes for the first five years from the year they entered the US. This means that they only pay US taxes on their US income and are not subject to Social Security and Medicare taxes.
Starting in 2020, international students on OPT with EAD cards are considered US residents for tax purposes. This means that they will need to complete either a W-9 or a W-4 form, depending on their employment status. As a US resident, there is no minimum income threshold to file a US tax return.
For Form I-9, Employment Eligibility Verification, international students on OPT with EAD cards can present their EAD to establish their identity and employment authorization. The EAD card number and expiration date should be entered under List A in Section 2 of Form I-9. Additionally, F-1 students on OPT must enter the "Card Expires" date from their EAD in the "Authorized to Work Until" field in Section 1. When the EAD expires, employers must reverify the student's employment authorization, and the student may present any List A or List C document that shows they are authorized to work in the US.
F-1 students on OPT can seek off-campus employment after their first academic year and may accept on-campus employment during their first year, subject to certain conditions and restrictions. Certain F-1 students may qualify for an extension of their OPT, and are eligible for an additional 24 months of work authorization. STEM OPT students must work for employers enrolled in E-Verify, and if they change employers, the new employer must also be enrolled in E-Verify.
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W-9 for freelancers
If you're a freelancer, you may need to complete a Form W-9, Request for Taxpayer Identification Number and Certification. This form is used by your freelance clients to provide accurate compensation information to the IRS. They will use the information from the W-9 to complete another form, a 1099-NEC, which reports how much they have paid you in the tax year. This helps to ensure that the income you report on your tax return is accurate.
You will normally fill out and return a Form W-9 when you first start working with a freelance client. It is also possible that a client may request a Form W-9 later, for example, just before their deadline to send out 1099-NEC forms for the year. A client must complete a 1099-NEC if they have paid you more than $600 in the previous tax year.
The W-9 form asks for identifying information such as your name, mailing address, and taxpayer ID. You send the completed form to the person or institution with whom you have a financial relationship, such as a business owner who hires you to do freelance work. It is important to provide correct and timely information on a Form W-9, and you are legally required to complete and return an accurate W-9 on request.
The way you complete a Form W-9 will vary slightly depending on the type of legal business you run and the taxpayer number for you or your business. For example, if you are filling out the W-9 as a freelancer, your client will use the address you provide when they prepare your 1099-NEC for non-employee compensation. If you are filling out a W-9 for miscellaneous income, this address is where you will likely receive Form 1099-MISC.
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W-4 for employees
Form W-4, also known as an Employee's Withholding Certificate, is a document that employees fill out and give to their employers so that the correct amount of federal income tax can be withheld from their pay. This form is used to verify that the employer is withholding federal income tax according to the employee's instructions, and it must be available for inspection if the IRS requests it. It is important for employees to submit an accurate Form W-4, as they may be subject to a $500 penalty if they submit a form that results in less tax being withheld than is required.
Form W-4 includes information such as an employee's filing status, multiple job adjustments, amount of credits, amount of other income, amount of deductions, and any additional amount to withhold from each paycheck. This information is used to compute the amount of federal income tax that should be deducted and withheld from the employee's pay. Employers must ensure that their employees complete this form, and if an employee fails to do so, the employer must withhold federal income taxes as if the employee is single or married filing separately, with no other entries on steps 2, 3, or 4 of the form.
Form W-4 can be downloaded, printed, and ordered in multiple copies from the IRS website, or by calling 800-TAX-FORM (800-829-3676). It is also available in other languages. Employers can choose to establish an electronic system to receive Forms W-4 from their employees. Additionally, a substitute Form W-4 can be used instead of the official form if it contains identical language and meets current IRS rules for substitute forms. However, employers may not accept substitute forms developed by employees, and employees submitting such forms will be treated as failing to furnish a Form W-4.
Form W-4 includes detailed worksheets to help employees figure out their correct adjustments. Employees may also access the IRS Tax Withholding Estimator for further assistance in completing the form. Nonresident aliens must follow special instructions when completing a Form W-4, which can be found in Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens, and the Instructions for Form. Employers can refer to Publication 15-T for the procedures for withholding income taxes on the wages of nonresident alien employees.
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W-8ECI for non-US persons
International students cannot fill out a W-9 form. Instead, they may need to fill out a W-8 form, specifically the W-8ECI form. This form is used by foreign individuals who receive income in the US that is effectively connected with the conduct of a trade or business within the country.
Who needs to fill out Form W-8ECI?
If you are a foreign person and you are the beneficial owner of US-source income that is effectively connected with a trade or business within the US, you must give Form W-8ECI to the withholding agent or payer. This form is used to establish that you are not a US person, claim ownership of the income, and assert that the income is connected with a trade or business in the US.
Form W-8ECI requires the following information:
- Date of birth
- Items of income that are effectively connected with the conduct of a trade or business in the US (e.g., rental income)
- Country of residence for tax purposes (if an individual) or country of incorporation (if a foreign corporation)
- Name of the disregarded entity receiving the payment (if applicable)
- Business address in the US (if applicable)
- US taxpayer identification number (SSN, ITIN, or EIN)
Generally, a Form W-8ECI will remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8ECI signed on September 30, 2008, remains valid through December 31, 2011. Upon the expiration of the 3-year period, a new Form W-8ECI must be provided.
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Tax requirements for nonresident alien students
The tax residency status of international students in the US determines how they are taxed and which tax forms they need to fill out. Most F and J students are considered nonresident aliens for tax purposes for the first five calendar years of their stay in the US. However, some F and J students may be reclassified as "residents" or "resident aliens" after this period. It is important to note that “resident for tax purposes” is solely a tax filing status and does not equate to residency by other definitions, such as for tuition or permanent residency (green card holder).
Nonresident alien students are required to file an income tax return using Form 1040-NR, U.S. Nonresident Alien Income Tax Return. Effectively Connected Income should be reported on page one of this form. FDAP income is taxed at a flat rate of 30% with no deductions allowed, and any FDAP income not connected to a US trade or business should be reported on Schedule NEC. If you are an employee receiving wages subject to US income tax withholding or have an office or place of business in the US, you must generally file by the 15th day of the 4th month after your tax year ends.
To claim any deductions or credits, nonresident aliens must file an accurate income tax return within 16 months of the due date. Before leaving the US, they must obtain a certificate of compliance or a sailing/departure permit by filing Form 1040-C, U.S. Departing Alien Income Tax Return, or Form 2063. Additionally, even after leaving the US and filing Form 1040-C, nonresidents must continue to file annual US income tax returns. If married, nonresident aliens must file separate returns from their spouses unless the spouse is a US citizen or resident alien, in which case a joint return can be filed.
To determine tax residency status, students can refer to the IRS's "Introduction to Residency Under U.S. Tax Law" and IRS Publication 519: U.S. Tax Guide for Aliens. Additionally, the GLACIER Tax Prep program can help determine residency status and complete federal tax forms.
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Frequently asked questions
Yes, starting in 2020, international students on OPT with a part-time freelance job in the US are required to submit a W-9 form.
If you are hired as an employee, you will complete Form W-4.
Filing is required if you have a taxable scholarship or fellowship grant as described in Chapter 1 of Publication 970, Tax Benefits for Education.
Filing is not required if your income is from a US savings or loan institution, a US credit union, a US insurance company, or an investment that generates portfolio interest.
Even if your income is below the tax threshold, you may still be required to file a US income tax return to report any income that is non-taxable due to an income tax treaty.
