Ibrahim Gardner
International students in the US who are classified as non-resident aliens for tax purposes may not need to fill out a W9 form. Instead, they may need to complete a W-8BEN (W-8BEN-E for companies, museums, non-profits, and other entities besides banks). However, there are specific requirements that mandate filing for non-resident alien students and scholars, such as having a taxable scholarship or fellowship grant, income partially or totally tax-exempt under a tax treaty, or any other taxable income as per the Internal Revenue Code.
Do international students fill out W9?
| Characteristics | Values |
|---|---|
| Who fills out W9 forms? | Residents for tax purposes, or US citizens |
| Who doesn't fill out W9 forms? | Non-resident aliens, or international students |
| What do international students fill out? | W-8BEN (IRS's one-page form for non-US individuals) |
| What happens if an international student fills out a W9? | They will need to pay taxes on their income |
| What are the tax requirements for international students? | They must report income that is not taxable due to a tax treaty on a US income tax return |
| Are there any income requirements for international students to file taxes? | No, there is no minimum income amount that triggers a filing requirement for non-resident aliens |
| What are some examples of taxable income for international students? | Taxable scholarships, fellowship grants, income partially or totally exempt from tax under a tax treaty, and other income taxable under the Internal Revenue Code |
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What You'll Learn
International students and tax treaties
International students on F1 visas are generally considered nonresident aliens for tax purposes. As such, they do not need to fill out a W-9 form. Instead, they should fill out a W-8BEN form.
Some countries have tax treaty agreements with the United States, where certain types of income may be exempt from federal taxes. International students and scholars who are non-residents 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 U.S. income provider in order to reduce or avoid tax withholding on income. This form is used by nonresident alien individuals to claim exemptions from withholding on specific income from U.S. sources.
Form 8233 must be submitted to each withholding agent from whom amounts will be received. Students must attach the appropriate statement shown in Appendix A (found in Publication 519, U.S. Tax Guide for Aliens) to the Form 8233 and give it to the withholding agent. For treaties not listed in the appendices, attach a statement in a format similar to those for other treaties.
The payee must also file Form 8833 if they receive payments or income items totalling more than $100,000 and determine their country of residence under a treaty, not under the rules for determining alien tax status. However, 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.
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International students and taxable scholarships
International students on scholarships may be subject to federal income tax on their scholarships, fellowships, and grants. This depends on several factors, including their visa status, the nature of the scholarship, and any tax treaties that may be in place between the United States and the student's home country.
Taxable Scholarships
Scholarships that cover tuition, fees, books, supplies, and equipment required for courses are generally tax-free. However, amounts used for room and board, travel, research, or other non-qualified expenses are typically taxable. It is important to note that these non-qualified expenses cannot include optional expenses that students elect to pay for and that are not relevant to their particular course or institution.
Visa Status
The tax rate for international students on scholarships is generally 30%. However, this rate may be reduced to 14% (or a lower treaty rate) if the student is on an "F," "J," "M," or "Q" visa and is temporarily present in the United States. To report a scholarship on a tax return, international students will need to collect all forms and documents related to their scholarship, including Form 1042-S (Foreign Person's US Source Income Subject to Withholding). They will then need to separate any qualified and non-qualified expenses and report the taxable portion on Form 1040 or 1040-NR.
Tax Treaties
Tax treaties between the United States and an international student's home country may provide exemptions or lower tax rates. It is important for students to check if such treaties apply to their specific situation. Additionally, students should be aware that failing to report taxable scholarships on their tax returns can lead to penalties and interest on unpaid taxes, loss of future financial aid, and legal issues that may affect their visa status and future visa and Green Card applications.
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International students and tax-free scholarships
International students often receive scholarships and grants to fund their education. While these monetary awards can be a great help, it's important to understand the tax implications, as failing to report taxable scholarships can lead to penalties and interest, loss of future financial aid, and even legal issues affecting your visa status and future visa applications. So, do international students have to pay taxes on their scholarships and grants?
The answer depends on several factors, including the nature of the scholarship or grant, the student's visa status, and the tax treaties between the United States and their home country. Let's break it down:
Qualified vs. Non-Qualified Expenses
Scholarships and grants that cover qualified expenses are generally considered tax-free. Qualified expenses typically include tuition, fees, books, supplies, and equipment required for courses. On the other hand, amounts used for non-qualified expenses, such as room and board, travel, or research, are usually considered taxable income.
Visa Status
The student's visa status can also impact the taxability of their scholarships and grants. For example, nonresident alien students on F, J, M, or Q visas may be subject to a reduced tax rate of 14% on their taxable scholarships or grants.
Tax Treaties
Tax treaties between the United States and the student's home country may provide exemptions or lower tax rates. It's essential to review the applicable tax treaties to determine if any exemptions or reduced rates apply.
Reporting Requirements
Even if a scholarship or grant is tax-free, it may still need to be reported on a tax return. Nonresident alien students generally do not need to file a tax return if their income is exempt from tax under an income tax treaty. However, they may need to report the income on a federal income tax return, such as Form 1040NR, if it is considered taxable. To report a scholarship, students will need to collect all relevant forms and documents, including Form 1042-S, and separate qualified from non-qualified expenses.
In summary, international students may have to pay taxes on their scholarships and grants, depending on how the funds are used and their individual circumstances. It's important to carefully review the tax rules and regulations and seek expert advice to ensure compliance and avoid any negative consequences.
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International students and tax withholding
International students in the United States on F-1, J-1, or M-1 nonimmigrant visas are generally considered nonresident aliens for tax purposes. These students are exempt from Social Security and Medicare taxes on wages earned from performing services within the United States. However, they may be liable for these taxes if they have been in the country for more than five calendar years and meet the "Substantial Presence Test".
Nonresident alien students who have taxable income, such as income from a scholarship or fellowship grant, income exempt under a tax treaty, or other income taxable under the Internal Revenue Code, are required to file tax returns. They should complete Form W-4, even if they are exempt from withholding due to a tax treaty, as the treaty exemption is not claimed on this form. Additionally, students from countries with a tax treaty with the US may claim an exemption or reduction of income tax withholding if they complete the required forms, such as Form 8233 and a country-specific statement, with their university's Tax Department.
At the end of the year, nonresident alien students must report their exempt and taxable payments and remit any tax due using Forms 1040NR or 1040NR-EZ, along with corresponding state forms. They may also receive a Form W-2, Wage and Tax Statement, from their university's Payroll Services if they have received payments that are not completely exempt from income tax withholding under a tax treaty.
It is important to note that international students should not earn self-employment income in the United States, as it violates their nonimmigrant status. If an international student earns self-employment income, it will be subject to US income tax, and they may also become subject to self-employment tax if they become a resident alien. In such cases, they should contact their employer for a refund of any social security or Medicare taxes withheld in error.
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International students and tax reporting
International students in the US on F-1 visas are typically classified as non-resident aliens for tax purposes. As such, they are subject to different tax rules and requirements than US citizens and residents.
Tax Reporting for International Students
International students on F-1 visas who have US-source income, including wages, scholarships, or fellowships, may need to file a tax return, even if they don't meet the minimum income requirements that apply to residents. However, not all international students with income need to file a tax return. Those whose income comes solely from certain sources, such as US savings and loan institutions, US credit unions, US insurance companies, or investments that generate portfolio interest, may not need to file.
Tax Forms for International Students
When it comes to tax forms, international students typically cannot use the W-9 form, which is generally used by US residents. Instead, they may need to complete other forms, such as the W-8BEN, which is specifically for non-US individuals. This form helps determine the tax status and any applicable tax treaties that may impact withholding requirements.
Withholding Requirements
Universities and other payers must typically withhold a certain percentage of payments made to foreign individuals, such as international students. The default withholding rate is 30% of the payment, which is then remitted to the IRS. However, there may be options for reduced withholding based on various factors, including the type of payment and the student's country of residence.
Seeking Professional Guidance
Navigating tax obligations as an international student in the US can be complex. While the information provided here offers a general overview, it is always advisable for individuals to consult with tax professionals or seek guidance from their educational institution's international student services or tax office to ensure they understand their specific tax reporting and compliance requirements.
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Frequently asked questions
No, international students do not fill out a W9 form. They are considered non-resident aliens for tax purposes and should fill out a W-8BEN form instead.
A W-8BEN form is a tax form for non-US individuals to report income that is not taxable under an income tax treaty.
International students are required to file taxes if they have any income that is taxable under the Internal Revenue Code. This includes taxable scholarships, fellowship grants, or any other taxable income.
Yes, income from a U.S. savings & loan institution, U.S. credit union, U.S. insurance company, or investments that generate portfolio interest are exempt from tax for international students.
If an international student is hired as an independent contractor, they may need to fill out a W-8BEN form to claim a tax treaty and avoid backup withholding. The company hiring the student should provide guidance on which form to complete.
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