What Taxes Do International Students Pay?

International students in the United States have specific tax responsibilities. The tax obligations for students on visas are distinct from those for U.S. citizens, involving different rules, forms, and deadlines.

Determining Your U.S. Tax Residency Status

An international student’s tax obligations are determined by their tax residency status. The Internal Revenue Service (IRS) classifies individuals for tax purposes as either “resident aliens” or “nonresident aliens,” a status separate from one’s immigration status. Resident aliens are taxed on their worldwide income, similar to U.S. citizens, while nonresident aliens are taxed only on income from U.S. sources. This distinction dictates which forms to file and what income is taxable.

The primary tool for this determination is the Substantial Presence Test. This test calculates residency based on the number of days an individual is physically present in the U.S. over a three-year period. The formula involves 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. If the total equals or exceeds 183 days, and the individual was in the U.S. for at least 31 days of the current year, they meet the test and are considered a resident alien for tax purposes.

An exception exists for students on F, J, M, or Q visas, who are considered “exempt individuals.” This means they do not count their days of presence in the U.S. for the Substantial Presence Test for their first five calendar years. For example, a student who arrives on an F-1 visa on December 30th of a given year has used one of their five exempt calendar years. This five-year period is cumulative.

Once a student has been in the U.S. for any part of five calendar years, they are no longer an exempt individual. Starting in their sixth year, they must apply the Substantial Presence Test to determine their tax residency status. If they meet the day-count threshold in that sixth year, they will transition to being a resident alien for tax purposes, which changes their filing requirements.

Identifying Taxable Income and Exemptions

For a student classified as a nonresident alien, taxation focuses on U.S. source income. This includes wages from on-campus employment or authorized off-campus work through programs like Curricular Practical Training (CPT) or Optional Practical Training (OPT). This income is subject to tax at graduated rates, ranging from 10% to 37%, depending on the total amount earned.

Scholarships and fellowships also fall under scrutiny. The portion of a scholarship or grant used for qualified tuition and course-related expenses is not taxable. However, any amount used for non-qualified expenses, such as room, board, or travel, is considered taxable income. For students on F-1 or J-1 visas, this taxable portion of a scholarship is subject to a 14% withholding tax rate unless a tax treaty provides a lower rate.

Income from foreign sources is not subject to U.S. tax. If a student receives financial support from their family, a scholarship from their home country’s government, or income from investments outside the U.S., these amounts do not need to be reported on a U.S. tax return.

Another financial consideration is the exemption from FICA taxes, which fund Social Security and Medicare. Students on F-1 and J-1 visas who are classified as nonresident aliens for tax purposes are exempt from paying FICA taxes on wages from authorized employment. This exemption applies for the first five calendar years of their presence in the U.S. If FICA taxes are mistakenly withheld, the student should first request a refund from their employer and, if unsuccessful, can file Form 843 with the IRS to claim the refund.

The Role of Tax Treaties

The United States maintains income tax treaties with numerous countries to prevent double taxation. For international students, these treaties can provide tax relief by reducing or eliminating U.S. tax on certain types of income. A tax treaty is a formal agreement between two countries that overrides standard U.S. tax laws for residents of the treaty country.

To determine if their home country has a tax treaty with the U.S., students can consult IRS Publication 901, “U.S. Tax Treaties.” This publication provides a summary of the agreements and details the specific provisions applicable to students, teachers, and researchers.

Common treaty provisions for students often include an exemption for a certain dollar amount of earned income from personal services. For example, a treaty might allow a student to earn up to $5,000 in wages tax-free. Other treaties provide exemptions for scholarships or fellowships received from U.S. sources. Some treaties, like the one with India, even allow students to claim the standard deduction, a benefit not available to most nonresident aliens.

Claiming a tax treaty benefit is an active process that must be done on a tax return. The benefits are not automatic. Students should be aware of the specific conditions of their country’s treaty to ensure they remain in compliance, as benefits can be lost if circumstances change.

Required Forms and Information for Filing

Properly filing U.S. taxes requires gathering specific information and understanding several key forms. A student should collect all necessary personal and financial data, including a valid U.S. taxpayer identification number. This can be either a Social Security Number (SSN) for those authorized to work, or an Individual Taxpayer Identification Number (ITIN) for those who are not eligible for an SSN but have a filing requirement. Other information includes one’s passport, U.S. entry and exit dates for the tax year, and copies of immigration documents like the Form I-20 or DS-2019.

One of the primary forms for international students is Form 8843, “Statement for Exempt Individuals and Individuals with a Medical Condition.” Every nonresident alien in the U.S. under an F, J, M, or Q visa must file this form to officially declare their “exempt individual” status. This form must be filed even if the student had no U.S. income and requires details about your visa and academic institution.

If a nonresident student has any taxable U.S. source income, they must file Form 1040-NR, “U.S. Nonresident Alien Income Tax Return.” This is the main tax return where income is reported, deductions are taken, and tax liability is calculated. On this form, students will report wages, the taxable portion of scholarships, and claim any applicable tax treaty benefits.

To accurately complete Form 1040-NR, students will need their income statements for the year. The most common are Form W-2, which reports wages paid by an employer, and Form 1042-S, which reports scholarship income, fellowship grants, and income covered by a tax treaty. These forms provide the income figures and amounts of federal tax already withheld.

The Tax Filing Process

The standard deadline for filing tax returns like the Form 1040-NR is April 15th of the year following the tax year. For students who had no U.S. income and are only required to file Form 8843, the deadline is June 15th. It is important to meet these deadlines to avoid potential penalties.

When filing Form 1040-NR, the signed Form 8843 should be attached, along with copies of any income statements like Form W-2 or Form 1042-S. It is advisable to make a complete copy of the entire submission packet for personal records before mailing.

The mailing address for the return depends on whether a payment is being enclosed, and the instructions for Form 1040-NR provide the specific IRS service center addresses. While some e-filing options exist, they are often limited for nonresidents, and many students will need to file a paper return by mail.

If a refund is due, it will be mailed as a check to the address listed on the return. The IRS does not initiate contact with filers by email, so any such communication should be treated with suspicion. Responding promptly to any official correspondence received from the IRS by mail is important to resolve any potential issues.