Janice Lozano
International students on F-1, J-1, or M-1 visas are considered nonresident aliens for tax purposes during the first five calendar years they are present in the US. During this time, they are exempt from paying Social Security and Medicare taxes on their income. However, if they become resident aliens, they are liable for these taxes. If an international student's income is subject to Social Security and Medicare taxes in error, they can request a refund by filing a claim with the Internal Revenue Service using Form 843 and Form 8316, along with other relevant documents.
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What You'll Learn
- International students with F-1, J-1, or M-1 visas are exempt from Social Security/Medicare Taxes if they've been in the US for less than 5 years
- Students who become resident aliens may be eligible for exemption
- International students can claim tax refunds on their scholarships if they are covered by a tax treaty
- Students can apply for a FICA tax refund with the IRS using Form 843
- Students who worked on campus or off-campus under OPT or CPT are not subject to Social Security/Medicare tax withholding
International students with F-1, J-1, or M-1 visas are exempt from Social Security/Medicare Taxes if they've been in the US for less than 5 years
International students with F-1, J-1, or M-1 visas are considered nonresident aliens for tax purposes during the first five calendar years they are present in the US. During this time, they are exempt from paying Social Security and Medicare taxes on their US income. This exemption only applies if the services performed are allowed by the United States Citizenship and Immigration Services (USCIS) for these nonimmigrant statuses and are carried out to fulfil the purposes for which the visas were issued. On-campus student employment of up to 20 hours a week (40 hours during summer vacations) and off-campus student employment allowed by USCIS are examples of services that meet these criteria. Practical Training student employment, whether on or off campus, is also permitted.
The exemption does not apply to F-1, J-1, or M-1 students who become resident aliens. Generally, foreign students in the US on these visas who have been in the country for more than five calendar years become resident aliens for US tax purposes if they meet the "Substantial Presence Test" and are liable for Social Security and Medicare taxes. However, students may be eligible for the special "student FICA exemption" if they meet certain criteria.
If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, international students can contact their employer for a refund. If they are unable to get a full refund from their employer, they can file a claim for a refund with the Internal Revenue Service (IRS). This involves submitting Form 843, Claim for Refund and Request for Abatement, and Form 8316, Information Regarding Requests for Refund of Social Security Tax Erroneously Withheld on Wages Received by a Nonresident Alien on an F, J, or M Type Visa, along with supporting documents. This process can take several months, and students are advised to wait at least 60 days before checking the status of their refund request.
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Students who become resident aliens may be eligible for exemption
Foreign students in the United States on F-1, J-1, or M-1 nonimmigrant visas are generally considered nonresident aliens if they have been in the country for fewer than five calendar years. These students are exempt from paying Social Security and Medicare taxes on wages earned within the United States, as long as the services performed are allowed by the United States Citizenship and Immigration Services (USCIS) and are related to the purpose for which their visas were issued.
However, foreign students who change their immigration status to resident aliens for tax purposes may become liable for Social Security and Medicare taxes. Generally, foreign students who have been in the United States for more than five calendar years and meet the "Substantial Presence Test" become resident aliens for tax purposes. At this point, they are subject to the same tax rules as U.S. citizens, including paying Social Security and Medicare taxes.
That being said, there is an exemption available for certain students, regardless of their U.S. tax residency status. Under Section 3121(b)(10) of the Internal Revenue Code, students employed by a school, college, or university where they are enrolled at least half-time are exempt from Social Security and Medicare taxes. This exemption only applies if the student's on-campus employment is incidental to and for the purpose of pursuing their course of study.
It's important to note that off-campus jobs or working for other employers do not qualify for this exemption. Additionally, if social security or Medicare taxes were withheld in error, students can contact their employer for a refund. If a full refund is not provided by the employer, a claim can be filed with the Internal Revenue Service using Form 843 and Form 8316.
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International students can claim tax refunds on their scholarships if they are covered by a tax treaty
International students on an F-1 visa are considered nonresident aliens in the US and are required to file a US tax return (Form 1040-NR) for income from US sources. Scholarships and fellowship grants are considered taxable income when paid to nonresident aliens. However, international students can benefit from tax treaties that the US has with over 65 countries. These treaties often reduce or eliminate US taxes on various types of income, including scholarships and fellowships.
To claim a tax treaty exemption for a scholarship or fellowship grant, international students must submit Form W-8 BEN to the payer of the grant. This form certifies the individual's status as a foreign national and their eligibility for benefits under the applicable tax treaty. If the student receives wages and a scholarship or fellowship from the same institution, they can claim treaty exemptions on both types of income using Form 8233.
It is important to note that the tax treaty exemption for scholarships and fellowships may have time limits. Students should consult the applicable tax treaty article to ensure they are still eligible for the exemption. Additionally, students should be aware that they may still need to report the treaty-exempt income on their tax returns, following specific guidelines provided by the IRS.
In summary, international students can indeed claim tax refunds on their scholarships if they are covered by a tax treaty. By taking advantage of tax treaties and carefully navigating the tax filing process, international students can minimize their tax liability while studying in the US.
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Students can apply for a FICA tax refund with the IRS using Form 843
International students with F-1, J-1, or M-1 status are considered nonresident aliens and are generally exempt from Social Security and Medicare taxes for up to five calendar years of their stay in the United States. However, if a student becomes a resident alien or exceeds the five-year limit, they may become liable for these taxes.
If an international student has had social security or Medicare taxes withheld in error, they can first request a refund from their employer. If the employer is unable to provide a full refund, the student can file a claim for a refund with the Internal Revenue Service (IRS).
To apply for a FICA tax refund with the IRS, students can use Form 843, Claim for Refund and Request for Abatement. Along with Form 843, students will need to provide supporting documentation, including:
- A copy of Form W-2 to prove the amount of social security and Medicare taxes withheld.
- A copy of the passport page showing the visa stamp.
- A statement from the employer indicating the amount of reimbursement and any credit or refund claimed.
- If applicable, Form 8316, Information Regarding Requests for Refund of Social Security Tax Erroneously Withheld on Wages Received by a Nonresident Alien on an F, J, or M Type Visa.
It is important to note that Form 843 should not be used to request a refund of income tax or Additional Medicare Tax. There are specific forms for employers to request a refund or abatement of FICA tax, which cannot be done using Form 843.
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Students who worked on campus or off-campus under OPT or CPT are not subject to Social Security/Medicare tax withholding
International students on F-1, J-1, M-1, or Q-1 visas are considered nonresident aliens for tax purposes during the first five calendar years of their stay in the US. During this period, they are exempt from paying Social Security and Medicare taxes on their US income. This exemption applies to on-campus employment and off-campus work under Optional Practical Training (OPT) or Curricular Practical Training (CPT).
F-1, J-1, M-1, or Q-1 visa holders who become resident aliens for tax purposes after residing in the US for more than five years are then subject to Social Security and Medicare taxes, similar to US citizens.
In the case of F-1 students, if social security or Medicare taxes were withheld from their wages in error, they can request a refund. The first step is to contact the employer who withheld the taxes and request a refund. If the employer is unable to provide a full refund, the student can file a claim with the Internal Revenue Service (IRS). The required forms for this process include Form 843 (Claim for Refund and Request for Abatement) and Form 8316 (Information Regarding Requests for Refund of Social Security Tax Erroneously Withheld). Additionally, a copy of Form W-2, which shows the amount of social security and Medicare taxes withheld, and a statement from the employer indicating the amount of reimbursement or refund are also necessary. Obtaining a refund can take several months, and students are advised to wait at least 60 days before checking the status of their refund request with the IRS.
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Frequently asked questions
International students with F-1, J-1, or M-1 visas are exempt from social security taxes if they are considered non-resident aliens and have been in the US for less than five years. If social security taxes have been withheld in error, students can contact their employer for a refund.
Students can contact their employer for a refund of social security taxes withheld in error. If the employer is unable to provide a full refund, students can file a claim with the Internal Revenue Service using Form 843 and Form 8316, along with supporting documents. This process can take several months.
International students need to file Form 1040-NR (federal tax return) to assess federal income and taxes. They may also need to file Form 8843 and, if they received US-sourced income, Form 1040NR to complete their tax return. Some international students may also need an ITIN, depending on their personal circumstances.
