Understanding Tax Returns: A Guide For International Students

International students in the US need to file their tax returns correctly to avoid future complications with visa applications. All international students and scholars have a federal tax-filing requirement, even if they have no US-source income. However, international students are taxed only on US-source income and are considered nonresident aliens for tax purposes. They must file Form 8843 and, in most cases, Form 1040-NR to complete their tax returns.

Understanding your tax residency status

To determine your tax residency status, one of the primary methods is the Substantial Presence Test (SPT). This test involves counting the days you have been physically present in the US to establish your tax residency. However, as an F1 visa student, you may be exempt from this test for a certain period, typically the first five calendar years of your stay. During this exemption period, your tax obligations are minimal, and you are not required to pay FICA taxes.

After the exemption period, F1 visa holders need to consider their days of presence in the US to determine their tax residency. If you meet the criteria of the SPT after this period, you will be considered a resident alien for tax purposes. Resident aliens are subject to US tax on their worldwide income and must report and pay taxes to the Internal Revenue Service (IRS) like US citizens.

It is important to note that your tax residency status may change over time, and it is not necessarily tied to your immigration status. Even if you travel back to your home country for a few months, it might not change your tax residency status. Therefore, it is advisable to review the guidelines and consult official sources or qualified tax professionals for accurate and up-to-date information regarding your specific circumstances.

Which tax forms to fill out

As an international student in the US, the tax forms you need to fill out depend on your income sources and your federal tax filing status.

Federal Tax Filing Status

Firstly, you need to determine whether you are a nonresident tax filer or a resident tax filer. This status determines how you are taxed and which forms you need to fill out. This status is only a tax filing status and does not mean that you are a resident for immigration or other purposes. Your tax filing status may change over time, so it is a good idea to review these guidelines each time you complete your taxes.

Nonresident Tax Filer

If you are a nonresident tax filer, you will need to file Form 1040-NR (federal tax return) to assess your federal income and taxes. Even if you did not earn money during your time in the US, you will still need to file Form 8843 with the IRS by the deadline. If you received US-sourced income during the calendar year, then you will need to file Form 8843 and most likely Form 1040NR to complete your tax return.

Resident Tax Filer

If you are a resident tax filer, you will need to file Form 1040 (federal tax return) to assess your federal income and taxes.

State Tax Return

In addition to filing a federal return, you may also be required to file a state tax return, depending on the state. For example, some students and scholars at Yale University must also file a CT State Income Tax Return.

Tax on Scholarships

If you received a taxable scholarship (e.g. a stipend or housing allowance), you will receive a 1042-S form from your school or institution.

Other Income

You may also receive a 1099 form if you earned rental income, investment income, or if you worked as an independent contractor.

Tax Treaty Benefits

If you are claiming a tax treaty benefit, you will need to fill out a W-7 form.

Social Security and Medicare Taxes

Nonimmigrant students in F-1 status are exempt from social security and Medicare taxes.

No Income

Even if you did not earn any income during your time as an F-1 student in the US, you still have a filing requirement.

Deadlines for filing

Federal Tax Returns

As an international student in the US, you are generally considered a nonresident alien for tax purposes. This means you will need to file a federal tax return, specifically Form 1040-NR, to report your US-source income. The deadline for filing federal tax returns is usually in April of each year, following the previous year's tax year. For example, the tax return for the year 2024 would be due in April 2025.

Form 8843

In addition to the federal tax return, all international students and scholars on F, J, M, or Q visas must file Form 8843, even if they did not earn any income in the US. This form is used to declare the time spent studying in the US and can be filed online through the IRS website. The deadline for Form 8843 is also typically in April, and failure to file this form may result in visa processing delays.

State Tax Returns

Depending on the state in which you earned income, you may also need to file a state tax return. Each state has its own tax authority and requirements, so the specific forms and deadlines may vary. Some states, like Connecticut and Missouri, require an income tax return if you earned income within that state. It's important to check the specific guidelines for the state(s) you resided in or earned income in to ensure you meet their filing deadlines.

W-2 and 1099 Forms

To file your tax returns, you will need certain documents, such as your W-2 form, which your employer should provide by the end of January. This form details your previous year's earnings and tax withholdings. Additionally, if you received income as an independent contractor or from sources like rental income or investments, you may receive a 1099 form. These forms are typically sent out by the end of January, and you will need them to accurately file your tax returns by the April deadline.

How to file

As an international student, you will need to file your tax return if you were in the US during the previous calendar year and earned an income. The Internal Revenue Service (IRS) is the US tax collection agency.

To file your tax return, you will need your W2 form, which your employer should give you at the end of January. This will state your previous year's earnings and tax withheld. You will also need your Social Security Number or ITIN (Individual Taxpayer Identification Number).

If you received a taxable scholarship (e.g. a stipend or housing allowance), you will need a 1042-S form from your school or institution. You may also receive a 1099 form if you earned rental income, investment income, or if you worked as an independent contractor.

As an international student, you will most likely be considered a nonresident alien for tax purposes. In this case, you will need to file Form 1040-NR (federal tax return) to assess your federal income and taxes. Even if you did not earn money during your time in the US, you will still need to file Form 8843 with the IRS by the deadline. The deadline for the 2024 tax year is 15 April 2025.

In addition to filing a federal return, you may also need to file a state tax return, depending on the state. Nine states don't have any tax-filing requirements.

Benefits of filing

As an international student in the US, you may be wondering about the benefits of filing tax returns. While it might not be the most exciting aspect of your time in the US, it is an important one. Here are some advantages to consider:

Compliance with Legal Requirements

Firstly, by filing your tax returns, you are complying with the legal requirements of the United States. All international students in the US, regardless of their income, are required to file their tax returns if they were in the country during the previous calendar year. This is an essential step to stay in compliance with US laws and regulations.

Impact on Future Visa Applications

The way you handle your international student tax affairs will have a significant impact on your future visa applications. By correctly filing your tax returns, you demonstrate your commitment to following US laws and can increase your chances of a smooth visa application process in the future.

Tax Refunds and Exemptions

International students can benefit from tax treaties between the US and their home country. These treaties may allow for reduced tax rates or exemptions on certain types of income. In some cases, if you have overpaid taxes, you may be eligible for a refund. By filing your tax returns, you can take advantage of these benefits and potentially get some money back.

Accurate Assessment of Tax Liability

When you file your tax returns, you will use tax software to calculate your exact tax liability for the calendar year based on your total income and personal circumstances. This accurate assessment ensures you are paying the correct amount of taxes and can help you manage your finances effectively.

Compliance with State-Specific Requirements

In addition to federal tax returns, some states in the US require international students to file state tax returns as well. By staying informed and complying with these state-specific requirements, you can avoid any legal complications and maintain your good standing in the US.

Remember, while filing tax returns as an international student may seem daunting, it is an important part of maintaining your legal status in the US and can provide several benefits, including potential tax refunds and a smoother visa application process in the future.

Frequently asked questions