Lori Meadows
International students enrolled in US universities need to navigate a complex tax system, which can have a significant impact on their future visa applications and finances. The US has long been an attractive destination for international students, with over 850,000 enrolled in the 2022-23 academic year. This number includes graduate students who have chosen to further their education after completing an undergraduate degree. Most international students enter the US on an F-1 visa, which is the most common type for those wishing to study in the country. F-1 visa holders are considered non-resident aliens for tax purposes and are required to file a US tax return (Form 1040-NR) for income from US sources. This includes income from internships or practical training programs, which are popular options for international students looking to gain experience. The tax obligations for international students vary depending on their visa status, income sources, and state-specific regulations, so it is important to seek professional advice and carefully review the guidelines.
| Characteristics | Values |
|---|---|
| Tax forms | W-4, 1040-NR, 1099, 8843, 1042-S, W-7, 8233, CT-W4 |
| Visa type | F-1, J-1 |
| Tax residency status | Nonresident alien, resident alien |
| Tax treaty | May be eligible for partial/complete tax exemption |
| Tax software | Sprintax |
| Tax on income | Yes, if earned in the US |
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What You'll Learn
F-1 visa holders must file tax returns
F-1 visa holders are classified as nonresident aliens for tax purposes for the first five calendar years of their stay in the US. This means that they are only taxed on US-sourced income. F-1 visa holders are exempt from Social Security Tax and Medicare Tax on wages for services performed within the United States.
International students on F-1 visas are required to file their tax returns if they were in the US during the previous calendar year and earned income. They must pay federal income tax on their annual earnings, which is levied by the IRS and applies to all forms of a taxpayer's income, such as employment earnings. Additionally, 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.
There is no specific international student tax, and the amount of tax F-1 visa holders will have to pay will depend on their personal circumstances. They may be eligible for a tax treaty, which can reduce or fully exempt their income from taxes. In such cases, any overpaid amount will be refunded.
F-1 visa holders must fill out Form 8843, even if they did not earn an income. If they did earn income, they will need to fill out Form 1040-NR, detailing their income and any refunds or credits owed. They may also need to fill out Form W-4 with their employer.
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Non-resident alien status
International students on F-1 visas are typically considered nonresident aliens for tax purposes for the first five calendar years of their stay in the US. This means that they are taxed only on US-sourced income. Nonresident aliens with US-based income will need to fill out a 1040-NR form, which details to the IRS how much tax they owe and how much they should be refunded or credited.
Nonresident alien students must follow a different set of instructions when completing the Form W-4. They must complete the bottom half of the form, leaving the top half of page 1 and all of page 2 blank. On Line 3, they must check the 'Single' marital box, or the 'Married, but Withhold at Higher Single Rate' box, and they may not check the 'Married' box.
There is no minimum dollar amount of income that triggers a filing requirement for a nonresident alien. However, nonresident alien students and scholars who have a taxable scholarship or fellowship grant, income partially or totally exempt from tax under the terms of a tax treaty, or any other income that is taxable under the Internal Revenue Code, are required to file their tax returns.
If a nonresident alien student's country of residence has signed a tax treaty with the US, they may be partially or completely exempt from tax. Students from countries that have a tax treaty with the US that includes a wage article may claim exemption or a reduction of income tax withholding if the payment meets the requirements of the treaty and the student completes the required forms with the University's Tax Department.
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Tax treaties
International students on F-1 visas are considered nonresident aliens for tax purposes in the US for the first five calendar years of their stay. This means that they will be taxed only on income from US sources. If the country of residence of an international student has signed a tax treaty with the US, they may be partially or completely exempt from tax.
International students can benefit from tax treaties between their country of residence and the US. Tax treaties generally allow individuals to exclude a specified amount of US-source income on their tax returns, thereby reducing their tax liability. For instance, the US-China treaty allows Chinese students in the US solely for educational purposes to exclude up to $5,000 of income from work performed in the US. It also excludes taxable scholarships and fellowships from income.
To claim a tax treaty exemption, international students must be nonresident aliens and provide IRS Form 8233 and a tax treaty statement to their US income provider. This will help reduce or avoid tax withholding on income. If the payee is not a student but an employee, they may be able to reduce or eliminate the amount of tax withheld by providing Form 8233 for the tax year. This form must include the payee's Taxpayer Identification Number (TIN), generally their US Social Security number or Individual Taxpayer Identification Number (ITIN).
If an international student's income is not taxable because of an income tax treaty, it must still be reported on a US income tax return, even though no income tax is due. 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, US Tax Guide for Aliens, to the Form 8233 and give it to the withholding agent. If the treaty is not listed in the appendices, a statement in a similar format should be attached.
International students who are nonresidents for tax purposes and intend to take advantage of a tax treaty benefit can refer to IRS publication 901 for more information.
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Tax forms
The tax forms you need to fill out as an international student in the US will depend on your residency status for tax purposes, the type of income you receive, and the state you are in.
Nonresident Tax Filer
If you are an international student on an F-1 visa with no US-based income, you may only need to fill out Form 8843. If you are on an F-1 visa and have US-based income, you will likely need to fill out Form 1040-NR, in addition to other forms depending on your income type. For example, if you are a student on scholarship, you will need to fill out Form 1042-S. If you are receiving payments from the university (e.g. compensation, stipend, financial aid, fellowship, etc.), you will need to complete Form W-4 and the relevant state tax withholding form (e.g. CT-W4 for Connecticut). If you are a non-resident alien student with a Social Security Number and your country of residence has a tax treaty with the US, you may be able to claim exemption or reduction of income tax withholding by completing Form 8233 and a country-specific statement.
Resident Tax Filer
If you are considered a resident for tax purposes, you will need to file your taxes using the same forms as US citizens and residents. This means you will need to fill out Form 1040, in addition to any other relevant forms depending on your income type.
Other Forms
Other forms you may need to fill out include Form W-7 if you need to apply for an Individual Tax Identification Number (ITIN) or extend/renew your ITIN.
Tax Preparation Software
Some universities provide access to tax preparation software such as Sprintax to help international students complete their tax returns. This software can guide you in determining your residency status for tax purposes and completing the correct forms.
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Tax residency status
International students 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 they are taxed only on US-sourced income. After five years, they may be considered resident aliens for tax purposes, which means they are taxed in the same way as US citizens.
There are three main types of residency for tax purposes in the US: residents, nonresidents, and dual-status aliens. To be considered a resident for tax purposes, an individual must pass the substantial presence test, which takes into account the number of days they have been present in the US over a period of time.
International students who are considered nonresident aliens for tax purposes must still pay tax on certain types of income, including income from US sources such as employment earnings, scholarships, and fellowships. They may also be eligible for tax treaty benefits if their country of residence has signed a tax treaty with the US, which could result in partial or complete exemption from tax.
To comply with tax obligations, nonresident alien students must complete specific tax forms, such as Form 8843 for those with no US-based income, and Form W-4 for those with income from employment. They may also need to fill out Form 1040-NR to detail their income and taxes owed to the IRS. Additionally, students with scholarships may need to file Form 1042-S with their tax returns.
It is important for international students to understand their tax residency status and to file their taxes correctly, as it can have implications for future visa applications and their overall financial situation. Seeking guidance from tax professionals or university resources is recommended to ensure compliance with tax laws and to take advantage of any applicable tax benefits.
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Frequently asked questions
Yes, international graduate students have to pay taxes in the US. The amount of tax depends on the student's personal circumstances.
International graduate students on F and J visas are generally considered nonresidents for tax purposes. However, they may be considered residents for tax purposes if they pass the substantial presence test.
International graduate students need to fill out Form 8843 if they have no US-based income. If they are earning income in the US, they will need to fill out a W-4 tax form and a 1040-NR, detailing how much they owe and how much they should be refunded or credited.
Yes, students from countries that have a tax treaty with the US may be able to claim an exemption or reduction in income tax withholding if they meet certain requirements and complete the necessary forms.
International graduate students can seek help from their university campus advisors, tax professionals, or online resources such as Sprintax, which is provided by some universities to assist with tax preparation.
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