International Students: File Taxes The Right Way

International students in the United States have a federal tax filing requirement, even if they do not have US-source income. International students on F-1 visas, who are considered nonresident aliens for tax purposes, must pay tax in the US on income earned as an intern, income from donating plasma, and income exempt from tax under the terms of a tax treaty. They must also file a state tax return, depending on the state. To file taxes, international students will need to submit Form 8843 and may need to submit Form 1040-NR.

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F-1 visa requirements

International students in the US on an F-1 visa are considered nonresident aliens for tax purposes and are required to file tax returns. This is true even if they did not earn an income—in this case, they must fill out Form 8843. If they did earn an income, they must file a US tax return (Form 1040-NR) for income from US sources.

F-1 visa holders are not required to pay employment taxes (Social Security and Medicare, also known as FICA), but they are required to pay federal and state income taxes. These taxes are withheld from their pay, and they must file a tax return as part of the process. F-1 visa holders are taxed in the same way as nonresident aliens for US federal income tax purposes, meaning they are taxed only on income from US sources.

The amount of tax F-1 visa holders must pay will depend on their personal circumstances. Federal income tax is levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities. Most states in the US will collect state income tax in addition to federal income tax, and tax rates and deductions will differ for each state.

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". They will then be liable for Social Security and Medicare taxes, unless they are exempt under the "student FICA exemption". Under this exemption, Social Security and Medicare taxes do not apply to services performed by students employed by a school, college, or university where the student is enrolled at least half-time.

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Non-resident tax status

International students on F and J visas are generally considered nonresident aliens for tax purposes for their first five calendar years in the US. This means that students on F-1 and J-1 visas are nonresidents for tax purposes for five calendar years. For J-1 scholars, this period is two calendar years.

If you are a nonresident alien for tax purposes, you will need to file a nonresident tax return (1040-NR). You will also need to file Form 8843, and you may need to file Form 1040NR to complete your tax return. You will be required to enter your name, current address, and social security number (SSN) or IRS individual taxpayer identification number (ITIN), as well as other general personal information.

The first thing you will need is a W-2 form ("Wage and Tax Statement"), which your employer should give you at the end of January. It will state the previous year's earnings and tax withheld.

You may also be required to file a state tax return, depending on the state.

Nonresident alien students and scholars with the following income sources are required to file taxes:

• A taxable scholarship or fellowship grant
• Income partially or totally exempt from tax under the terms of a tax treaty
• Any other income that is taxable under the Internal Revenue Code

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Tax treaties

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. The tax treaty statement can be found in IRS Publication 901. The actual tax treaty text may also be found on the IRS website. The list of countries with treaty benefits for scholarship or fellowship grants can be found on the IRS website.

If the payee is not a student, trainee, teacher, or researcher, but performs services as an employee and the pay is exempt from U.S. income tax under a tax treaty, the payee may be able to eliminate or reduce the amount of tax withheld from the payee's wages. Provide the payor with a properly completed Form 8233 for the tax year. The Form 8233 must report the payee's Taxpayer Identification Number (TIN), generally the payee's U.S. Social Security Number or Individual Taxpayer Identification Number (ITIN). If the payee claims treaty benefits that override or modify any provision of the Internal Revenue Code, and by claiming these benefits the payee's tax is, or might be, reduced, the payee must attach a fully completed Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the payee's tax return.

If the payee performs personal services as an independent contractor (rather than an employee) and the payee can claim an exemption from withholding on that personal service income because of a tax treaty, submit Form 8233 to each withholding agent from whom amounts will be received. Alien students, trainees, teachers, and researchers who perform dependent personal services (as employees) can also use Form 8233 to claim exemption from withholding of tax on compensation for services that is exempt from U.S. tax under a U.S. tax treaty. Students, trainees, teachers, and researchers must attach the appropriate statement shown in Appendix A (for students) or Appendix B (for teachers and researchers) at the end of 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.

Generally, the payee must be a nonresident alien student, apprentice, or trainee in order to claim a tax treaty exemption for remittances from abroad (including scholarship and fellowship grants) for study and maintenance in the United States. However, if the payee entered the United States as a nonresident alien, but is now a resident alien for U.S. tax purposes, the treaty exemption will continue to apply if the tax treaty has an exception to the treaty's saving clause. If the payee qualifies under an exception to the treaty's saving clause and the payor intends to withhold U.S. income tax on the scholarship, fellowship, or other remittance, the payee can avoid income tax withholding by giving the payor a Form W-9, Request for Taxpayer Identification Number and Certification, with an attachment that includes the following information: The payee's name and U.S.

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State tax returns

International students in the USA are required to file a federal tax return. Depending on the state, they may also be required to file a state tax return. Nine US states do not have any tax-filing requirements. The amount of tax paid depends on the personal circumstances of the individual.

International students with an F-1 visa are required to pay federal and state income taxes. They are subject to a 30% taxation on their capital gains during any tax year in which they are present in the US for 183 days or more, unless a tax treaty provides for a lesser rate of taxation. F-1 visa holders who are married to another F-1 visa holder must file their taxes as 'Married Filing Separate' unless the other spouse is a US citizen.

International students with an M-1 visa are not required to pay taxes, as they are in the US solely to learn and therefore do not earn income. However, they must file Form 8843, which is an informational form that lets the IRS know how long they have been in the USA. If they earned income through practical training, they may be required to file income tax.

International students with a J-1 visa are required to pay income taxes on their earnings, including federal, state, and local taxes.

To file a state tax return, international students will need their W-2 form, which is a Wage and Tax Statement that reports wages paid and taxes withheld. They will also need to provide their name, current address, and social security number or Individual Taxpayer Identification Number, along with other general personal information.

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Tax software

There are several tax software options available for international students to file their taxes. These include:

• Sprintax: This is a popular choice for international students and scholars, offered by many universities, including Yale and Stanford. It is user-friendly cloud-based software with helpful customer support. Sprintax is free for students and scholars to complete their federal tax returns, but there is a charge for state tax returns. It is IRS-compliant and can be used to file Form 8843 and Form 1040NR.
• GLACIER Tax Prep: This software is available for F-1 OPT students or J-1 students on Academic Training at the University of Michigan.
• TurboTax: This is a commercial tax software option that can be purchased.
• H&R Block At Home™: Another commercial tax preparation website that can be used for a fee.

It is important to note that while these software options can assist in tax preparation, they are not a substitute for advice from a qualified tax professional or the Internal Revenue Service (IRS). International students should carefully review their tax obligations and consult with a tax expert if they have any concerns or complex tax situations.

Frequently asked questions