Foreign Students and Scholars Tax Implications

Summary

Most international students are considered non-residents for tax purposes. If you have not received any source of income you’ll need to file Form 8843.

If you have received income in the last calendar year then you will need to file Form 8843 and most likely Form 1040NR-EZ. Every international student along with their dependents will need to file Form 8843.

​Every individual, regardless of whether they are one family, will need to file their own Form 8843 and send it in a separate envelope. 
As an international student, researcher, or faculty member in the U.S, it is important that you are aware of your U.S. income tax obligations. U.S. tax laws distinguish between residents and non-residents for U.S. tax purposes. Non-residents only pay taxes on U.S. source income, while residents follow the same tax rules as U.S. citizens and pay taxes on their worldwide income. Most incoming F and J visa holders are considered non-residents (F and J students for the first five calendar years in the United States and J-1scholars for the first two calendar years in the United States).
The U.S. tax system is organized according to the calendar year and is a pay-as-you-go system, which means that taxes may be deducted from salaries, stipends, and scholarships if these funds are from U.S. sources. In most cases, taxes are automatically withheld from your pay. Your available income after taxes, therefore, may be less than anticipated as you may be subject to federal, state and/or Social Security taxes that can range from 14% to 30% of your total income. The amount of taxes you will pay will depend on the type of income you receive and your tax status in the United States.
Tax Treaties

There are many tax treaties between the United States and other countries. Such treaties may exempt earnings, scholarships, and stipends from taxes.

Please note: In order to claim a tax treaty benefit you must have either a Social Security Number (SSN) or an Individual Tax Identification Number (ITIN).

FAQ for Tax Filing
What is the difference between Tax Non-Residents and Tax Residents?
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  • Tax Non-Resident - May take advantage of any applicable tax treaty benefits and exemption from U.S. Social Security and Medicare/Medicaid taxes. Tax Non-Residents generally only pay tax on U.S. source income.
  • Tax Resident - Cannot take advantage of tax treaty benefits or other possible tax exemptions available for Tax Non-Residents. 

How do I know if I am non-resident for tax purposes?

​International students on F, J, M, or Q visas are considered “exempt individuals,” which means you are excused from the Substantial Presence Test for the first 5 years you are in the US if you are an international student or the first 2-3 years if you are a scholar (depending on the country of tax treaty). After this period you will be subject to the Substantial Presence Test, which is used to determine if someone was in the US long enough to be considered a resident.

Do I have to file a tax return?

There is at least one tax form (IRS Form 8843) you and any of your dependent family members must complete if you held any U.S. immigration status other than a tourist status in 2016. You do not need to file any U.S. tax documents at this time if you were not present in the U.S. during 2016 or only visited the U.S. with a tourist status.

Since I already had taxes withheld from my paychecks, do I need to file a tax return?

Yes. You must file a federal income tax return to determine if you paid too much tax and are due a refund. It is also possible that you will have to pay additional taxes if the amount previously withheld is insufficient to meet your tax liability.

What do I need before I prepare my tax return?

First and foremost, you will need an Individual Taxpayer Identification Number (ITIN). If you don’t have one, you’ll need to apply for one in conjunction with filing your tax return by filling out a W-7. Depending upon whether you had US source income, you may also need W-2’s, 1042-S’s, and 1099’s, which will be mailed to you from the university and your employer. 

What is IRS Form 8843?

The IRS Form 8843 notifies the IRS that you are a Tax Non-Resident. All Tax Non-Residents must file IRS Form 8843 regardless of whether they had U.S. source income or must also file a 1040-NR.
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How do I know if I’m eligible to claim a tax treaty benefit?

You must fulfill four criteria in order to claim a tax treaty benefit:
  1. You must be a nonresident for tax purposes (this is different than your immigration status).
  2. You must receive US source of income from salary and/or a scholarship.
  3. You are on an F-1, J-1 or an H1-B visa.
  4. You were a resident of one of the following countries immediately prior to coming to the US:
What Happens if I Don't File Tax Documents with the IRS?

Filing tax documents each year is an important part of maintaining your immigration status and is a federal requirement for international visitors and their dependents.  Not filing your required taxes could lead to penalties, such as fines, or even negatively impact your immigration status.

If you apply for future immigration benefits, such as H-1B, Permanent Residency, or other statuses, you will likely be asked to provide copies of tax filings for all previous years you were in the U.S. If you forgot or didn't file in previous years when you should have, the IRS recommends that you file now for previous years. You can find the relevant forms from past years on the IRS website.
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The IRS expects you to file your taxes each year--even if you file late.  Penalties for late filing may include fines, interest on taxes owed, or other consequences.