Savanna Hoffman
International students in the US are required to file a tax return, but not all will be taxed by the US government. Students on F-1 visas are considered nonresident aliens for tax purposes for the first five calendar years of their stay, and are exempt from paying FICA (Social Security and Medicare) taxes. Students who have been in the US for more than five years may be considered 'resident aliens' and are liable for Social Security and Medicare taxes. International students can also be exempt from US taxes if their country of residence has signed a tax treaty with the US.
| Characteristics | Values |
|---|---|
| Student status | Any individual who is temporarily in the United States on an "F," "J," "M," or "Q" visa for the primary purpose of studying at an academic institution or vocational school |
| Nonresident alien status | Students on F-1 visas are considered nonresident aliens for tax purposes for the first five calendar years of their stay in the US |
| Tax exemptions | Exempt from FICA (Social Security and Medicare) taxes; exempt from federal income tax on non-US-sourced income |
| Tax treaty benefits | Must be a nonresident, receive US income from salary/scholarship, be on an F-1, J-1, or H1-B visa, and be a resident of a country with a tax treaty with the US |
| Tax forms | Form 8843, Form 1040-NR (federal tax return), Form 843 (refund claim for erroneously withheld taxes), Form 8316 (request for a refund of Social Security tax) |
| Filing method | Nonresident aliens cannot file tax returns electronically and must mail their forms to the Internal Revenue Service Center in Austin, Texas |
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What You'll Learn
Non-resident alien status
International students in the US on an F-1 visa are generally considered non-resident aliens for tax purposes for the first five calendar years of their stay. This classification means that you will only be taxed on US-sourced income. Non-resident aliens cannot claim the standard deduction, except for certain non-resident aliens from India, who can claim it under Article 21 of the US-India Income Tax Treaty.
If you are a non-resident alien, you will need to file Form 1040-NR (federal tax return) to assess your federal income and taxes. The IRS does not allow electronic filing for non-resident aliens, so you will need to send in your tax return by mail. You will need to send your forms to the Internal Revenue Service Centre in Austin, Texas.
If you are an international student, you are still required to file a tax return as a condition of your visa, even if you did not earn any income. You must file Form 8843 with the IRS before the deadline of 15 June.
To claim a tax treaty benefit, you must be a non-resident for tax purposes, have a US source of income from salary and/or a scholarship, be on an F1, J-1 or H1-B visa, and have been a resident of one of the countries that the US has an income tax treaty with. The US has income tax treaties with 65 countries, and under these treaties, residents of foreign countries may be eligible for reduced tax rates or exemptions from US taxes on certain types of income.
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Tax treaties
International students who are in the US on an F-1 visa are generally considered nonresident aliens for tax purposes for the first five calendar years of their stay. This means that you will only be taxed on US-sourced income. If your country of residence has signed a tax treaty with the US, you may be partially or completely exempt from tax. The US has income tax treaties with 65 countries, and these treaties can often reduce or eliminate US tax on various types of income, such as pensions, interest, dividends, royalties, and capital gains.
To claim a tax treaty benefit, you must typically fulfil the following criteria:
- You must be a nonresident for tax purposes (this is different from your immigration status).
- You must receive US-sourced income from a salary and/or a scholarship.
- You are on an F1, J-1, or an H1-B visa.
- You were a resident of one of the countries that have a tax treaty with the US immediately prior to coming to the US.
If you are a nonresident alien student, apprentice, or trainee, you can claim a tax treaty exemption for remittances from abroad, including scholarship and fellowship grants for study and maintenance in the US. If you entered the US as a nonresident alien but are now a resident alien for tax purposes, the treaty exemption may still apply if the tax treaty has an exception to the treaty's saving clause. In this case, you can avoid income tax withholding by providing a Form W-9 to the payor.
To claim a tax treaty exemption as an independent contractor or employee, you will generally need to submit Form 8233. If you are claiming treaty benefits that override or modify any provision of the Internal Revenue Code, you must attach a fully completed Form 8833 to your tax return. If you are a student, trainee, teacher, or researcher, you must also attach the appropriate statement from Appendix A or B of Publication 519, U.S. Tax Guide for Aliens, to the Form 8233 and give it to the withholding agent.
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Social Security and Medicare tax exemption
International students on F-1, J-1, M-1, or Q-1 visas are considered nonresident aliens for tax purposes and are exempt from paying Social Security and Medicare (or FICA) taxes. This exemption is only valid for the first five calendar years of their stay in the US if they are full-time students. If they are not full-time students, they are exempt for the first two years. After this period, international students are classified as Resident Aliens for Tax Purposes and are subject to withholding of FICA tax. However, if they remain students, they may be able to claim the Student FICA exemption.
The Student FICA exemption states that 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 the time. The student's on-campus employment must be incidental to and for the purpose of pursuing a course of study.
Additionally, international students who are nonresident aliens are only taxed on US-sourced income. If their country of residence has signed a tax treaty with the US, they may be partially or completely exempt from certain taxes. The US has income tax treaties with 65 countries, and these treaties can reduce or eliminate taxes on various types of income, such as pensions, interest, dividends, royalties, and capital gains.
To claim a tax treaty benefit, nonresident aliens must fulfil certain criteria:
- They must be a nonresident for tax purposes, which is different from immigration status.
- They must receive US-sourced income from a salary and/or scholarship.
- They must be on an F1, J-1, or H1-B visa.
- They must have been a resident of specific countries before coming to the US.
It is important to note that nonresident aliens cannot file their taxes electronically and must submit their tax returns by mail. They will need to send their forms to the Internal Revenue Service Center in Austin, Texas. While there is no cost to submit taxes to the IRS, professional tax preparation services or certified public accountants will charge a fee.
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Tax on scholarships and grants
International students on F, J, M, or Q visas are considered "exempt individuals" and are excused from the Substantial Presence Test. This means that international students are taxed only on their US-sourced income.
In general, scholarships, fellowships, and grants are tax-free if you meet the following conditions:
- You are a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students.
- The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses.
However, if any part of your scholarship or fellowship grant is taxable, you may have to make estimated tax payments on the additional income. For example, US-sourced taxable scholarships, fellowships, and grants are subject to withholding when paid to nonresident aliens. The withholding tax rate is 30%. However, if a nonresident alien is a student, researcher, or grantee who is temporarily in the US on an F, J, M, or Q visa, the withholding tax rate may be reduced to 14% or a lower treaty rate.
If you are a nonresident alien for tax purposes, you will need to file Form 1040-NR (federal tax return) to assess your federal income and taxes. If you have a taxable scholarship, fellowship, or grant, you must report the taxable portion on Line 8 of Form 1040-NR.
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Tax refunds
International students in the US are required to file a tax return as a condition of their visa, but they may not have to pay taxes to the American government. International students are entitled to a number of benefits and exemptions, and if you have paid too much tax, you may be entitled to a refund.
To claim a tax treaty benefit, you must be a non-resident for tax purposes, receive a US source of income from salary and/or a scholarship, be on an F1, J-1, or H1-B visa, and have been a resident of a country with which the US has a tax treaty, prior to arriving in the US.
Most F-1 visa international students who are temporarily in the US are exempt from FICA taxes on wages for services performed within the country. The Internal Revenue Code grants an exemption from social security and Medicare taxes to nonimmigrant students in F-1 status. This exemption period is five years from the date of their arrival in the US.
If you are an international student or scholar who is not a US citizen or permanent resident and you will be receiving payments from your university (e.g. compensation, stipend, financial aid, fellowship, etc.), you are required to complete Sprintax Calculus with the International Tax Department.
If you are unsure about your tax status, you can create a Sprintax account, which will ask you a series of questions based on the substantial presence test to determine your residence status for federal tax filing purposes.
If you have any additional tax-related questions, your best option is to call the IRS directly on their free phone number: 1-800-829-1040.
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Frequently asked questions
An exempt individual is a student who is temporarily in the United States on an "F, " "J, " "M, " or "Q " visa for the primary purpose of studying.
You will need to send your forms to: Internal Revenue Service Centre, Austin, TX 73301-0215, USA. There is no cost to submit your taxes to the IRS.
The Internal Revenue Code grants an exemption from social security and Medicare taxes to nonimmigrant students in F-1 status. The exemption period of the F-1 visa is five years from the date of arrival in the US.
Nonresident aliens are exempt from certain taxes and are taxed only on US-sourced income. A resident alien is liable for the same taxes as a US citizen.
