US tax season survival guide for international students on F-1 visas

US tax season guide for international students on F-1 visa

While tax filing might not be the most exciting aspect of international student life in the US, the importance of completing these forms correctly cannot be underestimated.

In fact, the way you handle your international student tax affairs will have a major impact on future Green Card and visa applications.

With this in mind, we’ve created this handy tax guide for international students and scholars in the US on an F-1 visa.

We’ve covered everything you need to know about tax returns, refunds, and how to stay in the taxman’s good books! So, let’s get started!

To easily navigate this guide, we’ve listed the main covered topics in the table of contents below.

Table of Contents

What is an F-1 visa?

The F-1 visa is a non-immigrant visa for those wishing to study in the US. It is the most popular visa choice for foreign students in America.

Do international students pay tax in the US?

An international student will be taxed in the same manner as a nonresident alien for US federal income tax purposes, which means that they will be taxed only on US-source income. Every international student is required to file their tax return if they were in the US during the previous calendar year and earned income. Even if you don’t earn income during your time in the US, you will still have a tax filing requirement. What type of tax will I have to pay?

F-1 international students, like all nonresidents, must pay tax in the US on the following types of income:

  • Wages and compensation
  • Salaries
  • Tips
  • Interest
  • Dividends
  • Some scholarships/fellowship grants
  • Prizes/awards

The amount of tax you will have to pay will largely depend on your personal circumstances.

Do F-1 students pay taxes on OPT (Optional Practical Training)?

OPT is a program that allows international students to work in the US after their graduation, and gain practical experience. Students with F-1 visas may apply for 12 months of OPT after each level of education complete.

If you earn an income from an OPT, you will be required to pay tax. You must also fill in a W-4 tax form with your new employer when you start work.

Learn more about your tax obligations under OPT in this guide.

Do CPT (Curricular Practical Training) students need to pay any type of tax on their income?

Yes – students with an F-1 visa that are on CPT will not be exempt from Federal Taxes. F-1 students are considered nonresident aliens in the US, and are required to file a US tax return for income (1040NR) from US sources.

Do F-1 visa holders pay more or less tax than H-1B?

In general, if the F-1 and H-1B visa holders are considered nonresident aliens, the same tax rate will be applied to their income level. In certain cases F-1 students could be able to claim a tax treaty which can reduce or fully exempt their income from taxes. In such cases, the overpaid amount will be refunded to the F-1 student.

You can find a detailed guide on filing taxes on an H1B visa here.

Federal tax

Federal income tax is the tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities. It applies to all forms of a taxpayer’s income, such as employment earnings. It is also the largest source of revenue for the US government.

State income tax

Most states in the US will collect state income tax in addition to federal income tax. Tax rates and deductions will differ for each individual state in the US, so the amount you will pay will depend on where you are. Because of this, F-1 students may have to a file state tax return and pay state income tax even when no federal return is due

 What is income for tax purposes?

Income taxes in the US may be imposed by federal, state, and even local governments. As a nonresident for tax purposes, you only pay tax earned on income in the US. The amount of tax you’ll have to pay will depend on how much you earn, the tax rates of each state, and your entitlement to tax treaty benefits.

The US has income tax treaties with 65 countries. For nonresident aliens, these treaties can often reduce or eliminate U.S. tax on various types of personal services and other income, such as pensions, interest, dividends, royalties, and capital gains.

F1 students in US preparing their tax return

Do I have to file a tax return on an F-1 visa?

Most F-1 students are considered nonresident aliens by the IRS. As a nonresident alien, you will need to file Form 1040NR-EZ or 1040-NR to assess your federal income and taxes.

Even if you don’t earn money during your time in the US, you will still need to file Form 8843 with the IRS by the 15 April deadline (due to Covid-19 outbreak, the tax filing deadline has been extended to 15 July in 2020). Read more about the extension here.

You may also be required to fill out state tax documents, depending on the state.

How do I file a tax return on an F-1 visa?

If you have received US-sourced income during the calendar year then you will need to file Form 8843 and most likely Form 1040NR-EZ to complete your tax return.

You will be required to enter your name, current address, and social security number (SSN) or IRS individual taxpayer identification number (ITIN) as well as other general personal information.

Prepare your F-1 tax return easily with Sprintax here

 I didn’t earn any income in the US, do I still have to file a tax return?

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

You must file a form 8843 with the IRS before the deadline.

What tax return form should I file from transitioning for F-1 to H-1B visa?

There is no special return that needs to be filed due to the visa change from F-1 to H-1B visa. If a person changes their visa from F-1 to H-1B they may still qualify as nonresident for tax purposes. In this case they need to submit a 1040NR or 1040NR-EZ to the tax office. The H-1B visa is not an exempt visa, if the visa holder stays more than 183 days in the US under this status, they will be considered as residents for tax purposes and would need to file the resident 1040 form.

Do F-1 students have to pay tax on their capital gains in the US?

F-1 students who, at the time of their arrival in the US, intend to reside in the states for longer than one year are subject to the 30% taxation on their capital gains during any tax year in which they are present in the US for 183 days or more, unless a tax treaty provides for a lesser rate of taxation.

This assumes that such capital gains are not effectively connected with the conduct of a US trade or business. These capital gains would be reported on page 4 of Form 1040NR because they are being taxed at a flat rate of 30% or at a reduced flat rate under a tax treaty.

Do paid summer interns on an F-1 visa need to file US tax returns?

Yes, if you earned income as an intern. Even if you did not earn an income, you are still required to fill out a form 8843.

What will I need in order to file my tax documents?

The first thing you will need is your W-2 form, officially known as a “Wage and Tax Statement”. This is an IRS tax form used to report wages paid to employees and the taxes withheld. You’ll need your W2 to file your tax return and your employer should give it to you at the end of January. It will state the previous year’s earnings and tax withheld.

You will also need your Social Security Number or ITIN.

You will receive a 1042-S form from your school or institution if you received a taxable scholarship (such as, for example a stipend or housing allowance). You may also receive a 1099 form, though this is less common, but you may receive it if you earned rental income, investment income or if you worked as an independent contractor.

Prepare your international student tax return

Do F-1 students need an ITIN?

Some international students may need an ITIN, based on personal circumstances.

However, you do not need an ITIN if you have a Social Security Number (SSN) or are eligible for an SSN, or if you are only required to file IRS Form 8843.

Where do I send my F-1 tax return?

The address you need to send the forms to will depend on where you stayed during your visit.

Generally, you will be sending your tax return to the Department of the Treasury Internal Revenue Service in whichever state you were in.

When is the F-1 tax return deadline?

The deadline for all F-1 students to file their tax documents is 15 April 2020 (due to Covid-19 outbreak, the tax filing deadline has been extended to 15 July in 2020).

Missing the deadline may lead to some unwanted penalties, and jeopardise your chances of securing a US visa or Green Card in the future.

What happens if I don’t file a tax return on an F-1 visa while in the US?

If you are not able to file your federal income tax return by the deadline, you may be able to get an automatic 6-month extension. To apply for the additional time, you must file ‘Form 4868: Application for Automatic Extension of Time to File US Individual Income Tax Return’ by the original deadline.

You should note that Form 4868 is an extended deadline to file your tax return but is not an extension of time to pay any money due. If you owe any tax, you must estimate your tax liability on Form 4868 as well as pay any amount due at that time. As mentioned, it is very important to comply, as failing to file a tax return may lead to some unwanted penalties, and can severely jeopardise your chances of securing a US visa or Green Card in the future.

How can I determine my residency status while in the US on an F-1 visa?

In general, international students who are in the US on an F-1 visa are considered nonresident aliens for tax purposes for the first five calendar years of their stay in the US. The IRS uses the substantial presence test to determine whether an individual who is neither a US citizen nor a US permanent resident should be taxed as a US citizen or a nonresident alien for a specific year. The main difference is that US citizens are taxed on their worldwide income while nonresident aliens have to report only their US-sourced income.

For more information about US residency status, check out this post.

What is a nonresident for tax purposes?

If you do not pass the substantial presence test you will be classified as a nonresident alien for tax purposes. This means you will only be taxed on US-sourced income. As well as this, if your country of residence has signed a tax treaty with the US, you may be either partially or completely exempt from tax.

What is the substantial presence test?

An individual will meet the substantial presence test if they were present in the US for at least 31 days in the current year and a combined total of 183 equivalent days during the current year and prior two years.

Sprintax tax preparation software will easily determine your residency status for tax purposes.

Simply create an account to get started.

 Can F-1 students become “residents for tax purposes” under certain conditions?

Most F-1 students and scholars who are in the US are nonresident aliens for tax purposes.

However, some can be considered ‘residents’ or ‘resident aliens’. This does not mean that the student isn’t a resident – it is only a tax filing status. You will be considered a resident for tax purposes if you pass the substantial presence test.

International students in US can be residents for tax purposes

Can I claim any deductions on my F-1 tax return?

The State and Local Taxes (SALT) deduction decreases taxable income by the amount paid to state and local tax government during the tax year. Most nonresidents (including students and other exchange visitors) can only use SALT as an itemized deduction on their Schedule A, 1040NR form or line 11, 1040NR-EZ form.

There is a cap on SALT deductions at $10,000, which may not affect the deduction most of the students and scholars are eligible for. However, some nonresidents who are paying larger state and local taxes may be unable to use all of them as a deduction.

Can F-1 students claim the personal exemption?

No! The personal exemption was reduced from $4,050 to $0 for F-1 international students in 2018.

Are F-1 International students exempt from Social Security and Medicare (FICA) taxes?

Most F-1 visa holders who are temporarily present in the US are exempt from FICA taxes on wages paid to them for services performed within the country.

The Internal Revenue Code grants an exemption from social security and Medicare taxes to nonimmigrant students in F-1 status. The exemption period of the F-1 visa is five years from the date of their arrival in the US.

Read more about claiming your FICA tax refund here.

What is the Standard Deduction and can F-1 students claim it?

In the US, Standard Deduction is an amount of money that some taxpayers may subtract from their income before tax is applied. However, nonresidents cannot use Standard Deduction. The only case where nonresidents can use Standard Deduction is Indian students, who can claim it under Article 21 of the US-India Income Tax Treaty.

Nonresident aliens cannot claim the standard deduction. However, there is a special rule, described next, for certain nonresident aliens from India.

A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. They can claim the standard deduction provided they do not claim itemized deductions.

The US has income tax treaties with 65 countries. Under these treaties, residents (not necessarily citizens) of foreign countries may be eligible to be taxed at a reduced rate or exempt from US. Income taxes on certain items of income they receive from sources within the states. These reduced rates and exemptions vary among countries and specific items of income.

Can F-1 students get a tax refund?

Yes! Many F-1 international students are entitled to claim tax refunds from the US.

You can claim your refunds by filing your tax return.

Can an F-1 Student claim a tax refund on their scholarship?

An F-1 student could be able to claim a tax refund on their scholarship if it is completely or partially covered by a tax treaty.

How can I claim a FICA tax refund?

Most F-1 students are not required to pay FICA tax. You will only be obligated to pay this tax if you were in the US for more than 5 years. 

If social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. If you are unable to get a full refund of the amount from your employer, file a claim for refund.

You can apply for your FICA refund directly with the IRS. Alternatively, you can apply for your FICA tax refund with Sprintax!

Sprintax is the easy way to find out if you’re due a tax refund. We will help you prepare the required forms before you send them off to the IRS.

To apply for a FICA tax refund with the IRS, you need Form 843, Claim for Refund and Request for Abatement.

Attach the following items to Form 843:

  • A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld,
  • A copy of the page from your passport showing the visa stamp,
  • INS Form I-94,
  • If applicable INS Form I-538, Certification by Designated School Official, and
  • A statement from your employer indicating the amount of the reimbursement your employer-provided and the amount of the credit or refund your employer claimed or that you authorized your employer to claim. If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer
  • If applicable, Form 8316, Information Regarding Request for Refund of Social Security Tax Erroneously Withheld on Wages Received by a nonresident alien on an F, J, or M Type Visa (PDF)

File Form 843 (with attachments) with the IRS office where your employer’s Forms 941 returns were filed. You can locate the IRS office where your employer files his Form 941 by going to Where to File Tax Returns on the IRS website.

I filed the wrong F-1 tax return last year. What should I do?

The IRS acknowledges that tax code is complex, and that people can make mistakes with their documents. Issues can range from small things like forgetting to sign a form to big issues like reporting the wrong income or incorrectly calculating a deduction.

You will need three things to complete your amended tax return: a form 1040X, your original tax return, and any new required documents. Once you complete the form, you’ll have to mail it to the IRS along with all required supporting documents. Amended returns are only filed on paper.

Check out this guide to filing an amended tax return.

International Student US tax return Sprintax

I am an F-1 student and married, can I file a joint tax return?

Generally F-1 students cannot file joint returns unless their spouse is a US citizen or resident. If both F-1 visa holders are nonresidents for tax purposes the filing status on their returns should be ‘Married Filing Separate’.

Who can help me with my F-1 tax return?

You can file your tax return yourself directly with the IRS. However, every year many F-1 international students feel daunted by the prospect of filing US tax documents and enlist the help of a tax agent or accountant to help them with their return.

But it is important to be careful when choosing who to assist you with your taxes.

Can international students use Turbotax?

Many F-1 international students choose TurboTax to manage their tax returns, but Turbotax is a service for residents..

While TurboTax – the biggest online tax preparation service in the US – offers a fantastic product that helps millions of US residents prepare their taxes and claim refunds, their offering can only be used by US residents.

If you do use TurboTax to file your US taxes, you will be filing as a resident. This means your tax return will be inaccurate and you may be subject to fines and penalties.

Sprintax is the non-resident partner of choice for Turbo Tax.

Why use Sprintax?

Sprintax is the nonresident partner of choice for TurboTax and the only online federal and state self-prep tax software for nonresidents in the US.

By creating a Sprintax account you can easily prepare fully completed and compliant 1040NR or 1040NR-EZ (non-resident tax return) and form 8843 tax documents.

Sprintax will also help you to claim your maximum legal tax refund.

With Sprintax you can:

  • Save time and stress!
  • Determine your residency status
  • Prepare a fully compliant US tax return
  • Claim your maximum US tax refund
  • Discuss your US tax questions anytime 24/7 with or Live Chat team.

Prepare your international student tax return with Sprintax

Join the more than 250,000 people who have prepared their US tax return with Sprintax!

 

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Stacy
Hey I'm Stacy! I'm dealing with US taxes and can't wait to help you prepare your tax return! I've been working with taxes for like forever, so you can totally trust my expertise. Sprintax can make things much easier for you. Check out my blog posts and feel free to ask me any questions.

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