Janice Lozano
International students in Canada must determine their residency status to understand their tax obligations. Those who are considered residents or have Canadian-source income must file a Canadian income tax return annually to receive eligible refunds and credits. Non-residents who have stayed in Canada for 183 days or more in a calendar year and have Canadian-source income must also file a tax return but are not eligible for benefits or credits. To file a tax return, international students need a Social Insurance Number (SIN) or Individual Tax Number (ITN). They can then deduct certain expenses from their tax payments, such as tuition fees, medical expenses, interest paid on student loans, and moving expenses.
| Characteristics | Values |
|---|---|
| Who needs to file a tax return? | International students in Canada who have Canadian source income or are considered residents. |
| What are the residency criteria? | International students are considered residents if they establish significant residential ties with Canada. |
| What if an international student is a non-resident? | Non-residents must declare their net income earned outside of Canada and meet the 90% rule to avail of non-refundable tax credits. |
| What are the common deductions and credits? | Tuition fees, medical expenses, interest paid on student loans, donations, moving expenses, etc. |
| How to file a tax return? | File in-office, online, or by mail. Seek help from a licensed accountant or use online software like UFILE. |
| What documents are required? | Social Insurance Number (SIN) or Individual Tax Number (ITN), T4 or final payslip, income and tax forms (e.g., T1), payslips, work-related expense receipts, etc. |
| When is the deadline for filing? | The tax year runs from January to December, and the deadline is usually April 30 or the next business day if it falls on a weekend. |
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What You'll Learn
Determining residency status
As an international student, determining your residency status is crucial for understanding your tax obligations and entitlements. This status depends on the residential ties you establish with your host country.
In Canada, for instance, international students are generally considered either residents or non-residents for income tax purposes. You are deemed a resident if you establish significant residential ties with Canada. This could include factors such as the duration of your stay, the nature of your accommodation, and any financial or employment connections you develop in the country. Conversely, if you do not establish significant ties and remain in Canada for less than 183 days in a year, you are typically considered a non-resident for tax purposes.
In the United States, the Internal Revenue Service (IRS) uses terms like "exempt individual" and "nonexempt individual" to determine tax residency status. Students on F-1 visas, for example, are often considered exempt individuals for a specified number of years. The IRS also employs tests like the "substantial presence test" to determine residency status, which counts the number of days spent in the country.
It is important to note that the criteria for determining residency status can vary between countries, and specific conditions may apply based on tax treaties between nations. To ensure compliance and maximize benefits, international students should refer to official sources and seek guidance from relevant government agencies or tax experts.
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Filing requirements
International students in the US are required to file their tax returns if they were in the country during the previous calendar year. This is true even if they did not earn any income. The Internal Revenue Service (IRS) is the US tax collection agency. The IRS deadline to file tax returns on the federal level is usually on April 18, though the exact date may vary from year to year.
International students on F-1 visas are considered nonresident aliens for tax purposes. Most nonresident aliens do not qualify for the standard deduction. They will need to file Form 1040-NR (federal tax return) to assess their federal income and taxes. They will also need to file Form 8843, which is required for all non-resident international students to remain legal under F, J, M, and Q visas. If the student has received income in the last calendar year, they will likely also need to file Form 1040NR. These forms can be mailed to the IRS or submitted online.
Nonresident aliens, including international students, are not eligible for education credits, and generally do not need to use Form 1098-T when filing their taxes. If they do include Form 1098-T, they will be filing as a resident, which is not compliant with the IRS. Nonresidents must file in the correct status.
If an international student has had social security or Medicare taxes withheld in error from pay that is not subject to these taxes, they 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 IRS using Form 843 (Claim for Refund and Request for Abatement). They will need to include a copy of their Form W-2, a copy of the page from their passport showing the visa stamp, and a statement from their employer indicating the amount of the reimbursement.
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Claiming tax credits
International students in Canada and the US may be eligible for tax credits and refunds. Here is some information on claiming tax credits as an international student in these two countries.
Canada
International students in Canada must first determine their residency status, as this affects their eligibility for tax credits and the process of filing for tax refunds. International students are generally considered one of the following types of residents: resident (including those who reside in Canada for part of the year) or non-resident. Your residency status is based on the residential ties you have with Canada. If you are a resident, you may be eligible for tax credits such as the harmonised sales tax credit. You can also claim tuition credits.
US
International students in the US on an F-1 visa are typically considered nonresident aliens by the IRS. Nonresident aliens are not eligible for educational credits, even if they receive a Form 1098-T. However, they can claim tax treaty benefits, which may allow them to fully or partially exempt their US-sourced income from federal and/or state income taxes. To claim a refund, you must file Form 1040-NR (federal tax return) and, depending on the state, a state tax return. If you are an international student who worked in the US, you may be eligible for a refund of social security taxes withheld from your wages by filing Form 8316.
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Deducting expenses
As an international student, you may be able to deduct certain expenses from your tax payments. These deductions vary depending on your country of residence and the country in which you are studying.
Canada
If you are an international student in Canada, you may be able to deduct moving expenses, such as transportation and storage costs, travel, and temporary accommodation. However, you cannot deduct these expenses if your only income is from scholarships, fellowships, or bursaries that are exempt from tax. You can also claim non-refundable tax credits for tuition fees, medical expenses, interest paid on student loans, and donations. To claim these deductions, you must keep the relevant documents for six years after receiving your Notice of Assessment from the tax office.
United States
In the United States, international students on F-1 visas are considered nonresident aliens and are generally not eligible for the same tax credits as US citizens and residents. While the US tax code does not typically allow for the deduction of personal or living expenses, some international students may be eligible to deduct qualified educational expenses, such as tuition, academic fees, books, and supplies. Additionally, international students can benefit from tax treaties between the US and their home country, which may result in reduced or exempt taxes on certain types of income.
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Filing methods
Filing your taxes as an international student in the US can be a daunting process, but there are several resources available to help you navigate it. The first step is to determine your residency status and whether you had any US-source income in the previous calendar year. If you were in the US and earned income, you are required to file a tax return.
Using a tax agent or accountant
Many international students choose to enlist the help of a tax agent or accountant to file their taxes. While this can be a helpful option, it is important to be careful when choosing who to assist you. One popular option for US residents is TurboTax, but international students should not use this service as it will classify them as residents, leading to inaccurate filings and potential fines or penalties. Instead, international students can use Sprintax, the nonresident partner of choice for TurboTax. Sprintax offers a simple step-by-step process to prepare nonresident tax forms online.
Filing yourself
You can also choose to file your taxes yourself directly with the IRS. All the necessary forms can be downloaded from the IRS website, and there is no cost to submit your taxes this way. However, it is important to note that the IRS does not allow electronic filing for nonresident aliens, so you will need to print and mail your forms along with any required supporting documents. The deadline for federal tax returns is typically in mid-April, but state deadlines may differ, and not all states require that you file a state tax return. Be sure to check your state's website for specific requirements and deadlines.
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Frequently asked questions
To get a tax refund as an international student in Canada, you must file your tax return annually with the Canadian Government. You will need to determine your residency status, as this will determine your income tax return filing requirements. If you are a non-resident, you must declare your net income earned outside of Canada on your tax return to avail of the non-refundable tax credits. If you are a resident, you can claim tuition credits and are eligible for benefits such as the harmonized sales tax credit.
You will need a Social Insurance Number (SIN) or an Individual Tax Number (ITN). You will also need your T4 or final payslip and other income and tax forms, such as the T1 (Income Tax and Benefit Return form). You will also need your payslips and receipts for any eligible expenses.
The most common expenses that students can claim as non-refundable tax credits are tuition fees, medical expenses, interest paid on student loans, and donations. You may also be eligible to deduct moving expenses, such as transportation and storage of personal effects.
