What Is IRS Pub 4011 for Foreign Student and Scholar Tax?

IRS Publication 4011, titled the VITA/TCE Foreign Student and Scholar Volunteer Resource Guide, is a specialized technical manual developed by the Internal Revenue Service. It is not intended for use by the general public, but is instead the primary reference for certified volunteers participating in the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. These community-based programs provide free tax return preparation to qualified individuals. The guide’s purpose is to equip VITA/TCE volunteers with the knowledge to accurately prepare federal income tax returns for foreign students and scholars. This group includes individuals temporarily present in the United States on F, J, M, or Q visas, whose filing requirements differ significantly from those of U.S. citizens.

Determining Taxpayer Residency Status

A volunteer’s first task when assisting a foreign student or scholar is to determine the individual’s residency status for tax purposes. This determination dictates which tax form to use, what income is taxable, and which deductions and credits can be claimed. The primary tool for this is the Substantial Presence Test (SPT), which measures the number of days an individual was physically present in the United States. An individual meets the SPT if they were in the U.S. for at least 31 days during the current year and a total of 183 days during a three-year period, calculated by counting all days in the current year, one-third of the days in the first preceding year, and one-sixth of the days in the second preceding year.

Publication 4011 provides exceptions to this day-counting rule for the specific population it covers. Individuals on F, J, M, or Q visas are often considered “exempt individuals,” meaning their days of presence in the U.S. do not count toward the SPT for a certain period. For students on these visas, their days are not counted for the first five calendar years they are in the country. For teachers or trainees on J or Q visas, this exemption applies for two of the last six years.

To formally claim this exception, the individual must file Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition. This form is a standalone statement, not an income tax return. Completing Form 8843 requires the volunteer to gather specific information, including the taxpayer’s visa type, the date they entered the U.S., and confirmation that they have not taken steps to become a lawful permanent resident. Failure to file this form when required can lead to the individual being classified as a resident alien by default under the SPT, resulting in an incorrect tax filing.

Analyzing Income and Withholding

Once a volunteer establishes the taxpayer is a nonresident alien, the next step is to identify their U.S. source income. Nonresident aliens are only taxed by the United States on income from U.S. sources. For foreign students and scholars, this commonly includes wages from on-campus jobs, stipends for research, or taxable scholarship and fellowship grants that cover expenses beyond tuition and required fees, such as room and board.

Volunteers will encounter two primary documents reporting this income: Form W-2, Wage and Tax Statement, and Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. A Form W-2 is used for wages paid to both resident and nonresident employees and shows total wages and taxes withheld. It looks identical for all recipients, so the residency determination is what governs how it is reported.

Form 1042-S is unique to foreign persons and is used to report other types of payments, such as scholarship or fellowship grants, royalties, or payments to independent contractors. A key feature of Form 1042-S is the income code in Box 1, which specifies the type of income. For example, code 16 is used for scholarship or fellowship grants, while code 20 is for compensation during study and training. This form also shows the amount of federal tax withheld, which is often done at a flat rate of 30% or a lower treaty rate of 14% for certain scholarships.

Applying Tax Treaty Benefits

After identifying U.S. source income, the volunteer must investigate whether an income tax treaty between the United States and the taxpayer’s home country can reduce or eliminate the tax liability. The U.S. has treaties with dozens of countries to prevent double taxation and promote cooperation. Publication 4011 contains charts and guidance that help volunteers quickly determine if a treaty exists and what specific provisions apply to students and scholars.

These treaties often contain articles that provide exemptions for certain types of income. A common provision for students exempts scholarship or fellowship grant income from U.S. tax entirely. Another frequent article allows students or trainees to earn a certain amount of income from personal services (wages) without paying tax, often up to a limit like $2,000 or $5,000 per year. For example, the treaty with Canada exempts up to $10,000 in earned income, but if the earnings exceed that amount, the entire sum becomes taxable.

To apply a treaty benefit, the volunteer must reference the specific article of the treaty that allows the exemption. This information is then used to correctly report the income on the tax return. The volunteer must verify the taxpayer’s country of tax residency and ensure they meet all conditions of the treaty article.

Completing Form 1040-NR

With residency determined, income analyzed, and treaty benefits identified, the volunteer synthesizes this information to complete Form 1040-NR, U.S. Nonresident Alien Income Tax Return. This form is specifically designed for nonresident aliens and has a different structure and set of rules than the Form 1040 used by U.S. residents. The front page of the form is used to report income that is “effectively connected with a U.S. trade or business,” such as wages from a W-2.

Income reported on a Form 1042-S, such as a taxable scholarship, is also reported on Form 1040-NR. Any income excluded by a tax treaty must be reported on Schedule OI (Other Information). On this schedule, the volunteer lists the amount of excluded income, the relevant treaty country, and the specific treaty article under which the exemption is claimed. This documentation is mandatory for the IRS to verify the treaty claim.

The tax calculation for nonresident aliens reflects several major differences from residents. Nonresident aliens cannot claim the standard deduction. Instead, they may be able to claim a limited set of itemized deductions, such as for state and local taxes paid or certain charitable contributions. The rules for claiming dependents are also highly restrictive, and most tax credits, including education credits, are not available to them.

VITA/TCE Procedural Requirements

Volunteers using Publication 4011 must operate within a strict set of procedural rules defined by the VITA/TCE program. A core concept is “scope,” which dictates which tax situations a volunteer is certified and authorized to handle. For the foreign student and scholar program, returns are considered “in-scope” if they involve common income types like wages, scholarships, and bank interest for a nonresident alien.

Certain situations are designated as “out-of-scope,” meaning a VITA/TCE volunteer cannot prepare the return, and the taxpayer must be referred to a professional tax preparer. Examples of out-of-scope returns include those for individuals who have become resident aliens for tax purposes, as their returns are prepared on Form 1040 and fall under a different certification level. Other out-of-scope situations involve certain types of investment income, such as capital gains from selling stocks, or self-employment income.

To ensure accuracy, the VITA/TCE program mandates a 100% quality review of every tax return prepared. Before a return is filed, a second certified volunteer must review it for correctness, comparing the source documents to the input in the tax software. This quality review process helps to catch errors related to residency status, treaty claims, or form selection.

Volunteers use Form 13614-C, Intake/Interview & Quality Review Sheet. The form includes a specific section for foreign students and scholars that guides the initial interview. It contains targeted questions about visa status, days of presence, and potential treaty benefits, ensuring the volunteer gathers all necessary information before beginning the return and that the quality reviewer can follow the preparer’s logic.