Can International Students Get a Tax Return for Tuition?
Understand how U.S. tax law applies to international students paying tuition. Eligibility for credits and deductions is based on specific circumstances.
International students often wonder if they can get a tax return for their tuition expenses. While it is possible to benefit from U.S. education tax credits and deductions, eligibility is not guaranteed and depends on specific factors defined by U.S. tax law.
Determining Your Tax Residency Status
An international student’s ability to claim education-related tax benefits depends on their tax residency status as determined by the Internal Revenue Service (IRS): either a “nonresident alien” or a “resident alien.” This classification is for tax purposes only and is not related to immigration status. Residency is determined by the Substantial Presence Test, which evaluates the number of days a person is physically present in the U.S. over three years.
However, a special exception exists for students on an F, J, M, or Q visa. They are considered “exempt individuals,” meaning their days of presence do not count toward the test for the first five calendar years. During this period, the student is classified as a nonresident alien for tax purposes.
After the fifth year, the student is no longer an exempt individual and must apply the Substantial Presence Test. If they meet its requirements, their status changes to a resident alien, which significantly alters their tax obligations and potential benefits.
Education Tax Benefits for Resident Aliens
Once an international student is classified as a resident alien for tax purposes, they gain access to the same education tax benefits available to U.S. citizens. The two most prominent benefits are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). These credits can reduce a taxpayer’s final tax bill on a dollar-for-dollar basis.
The AOTC is a credit worth up to $2,500 per eligible student for qualified education expenses paid for the first four years of higher education. To qualify, the student must be pursuing a degree, be enrolled at least half-time, and meet other requirements. A unique feature of the AOTC is that 40% of the credit, up to $1,000, is refundable, meaning a resident alien could receive this amount back even if they owe no tax.
The Lifetime Learning Credit offers a more flexible option for a broader range of educational pursuits. The LLC provides a nonrefundable credit of up to $2,000 per tax return for qualified tuition and fees paid for courses at an eligible educational institution. Unlike the AOTC, the LLC is not limited to the first four years of postsecondary education and can be used for courses taken to acquire job skills. A student cannot claim both the AOTC and the LLC for the same student in the same year.
Education Tax Benefits for Nonresident Aliens
For international students classified as nonresident aliens, the rules regarding education tax benefits are much more restrictive. Generally, nonresident aliens are not eligible to claim the American Opportunity Tax Credit or the Lifetime Learning Credit. This holds true even if the student receives a Form 1098-T, Tuition Statement, from their university, as this form is primarily intended for U.S. residents and citizens.
There are very limited exceptions to this rule. For instance, a nonresident alien who is married to a U.S. citizen or resident alien can make a special election to be treated as a resident alien for tax purposes for the entire year. By making this choice, the couple files a joint tax return, and the student may then become eligible for education credits.
A more common path to tax relief for nonresident aliens is through tax treaties. The U.S. has treaties with over 65 countries, many containing provisions for students that may exempt some scholarship or fellowship income from U.S. tax. Students should consult IRS Publication 901 or the specific treaty with their home country to determine eligibility.
Required Information and Forms to Claim Credits
For students who qualify as resident aliens and are eligible to claim education credits, specific documentation is required. To claim the AOTC or LLC, the student, their spouse if filing jointly, and any qualifying child claimed must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) by the tax return’s due date. An ITIN is a tax processing number issued by the IRS for those who need a taxpayer ID but are not eligible for an SSN.
The primary document needed is Form 1098-T, Tuition Statement, which is issued by the educational institution and reports qualified tuition and related expenses paid. While the amounts on Form 1098-T are a starting point, taxpayers must verify that the expenses meet all the requirements for the credit they are claiming. If a student who should receive a Form 1098-T does not, they should contact their school’s student accounts office.
To calculate and claim the education credits, taxpayers must complete and attach Form 8863, Education Credits, to their tax return. This form requires detailed information, including the student’s name and taxpayer identification number, the school’s name and address, and answers to a series of questions to confirm eligibility for either the AOTC or LLC.
How to File Your Tax Return
After determining eligibility and completing all necessary forms, the final step is to file the tax return with the IRS. A resident alien attaches Form 8863 to their Form 1040, while a qualifying nonresident alien attaches it to Form 1040-NR.
Taxpayers can submit their return by electronic filing or by mailing a paper copy. E-filing through tax preparation software or a tax professional is the method recommended by the IRS, as it generally leads to faster processing and quicker receipt of any refund.