Student Visa For Tax Purposes

If you are studying in the UK and want to work while you are a student, remember that as a student you need a Student Visa. If you just come to the UK and try to get work, then you will not be allowed to work unless you have permission from the Home Office. If you do get permission, most likely this will be given for 12 months only.

Many students are able to come to the U.S. on a F1 visa (student visa). There are actually two types of F1 visas, one being the M-1 which is for vocational schools, and the other being the F-1 which is for academic schools. Students will often use their school as a home base before returning to their home country. The countries from South America are especially good sources of students here in the U.S. with Brazil and Venezuela being the front runners for many years.

Student Visa For Tax Purposes

The H1-B and L1 visas are perhaps the most popular non-immigrant visas in the U.S. for those who wish to take up employment here for more than a year. However, these are not the only non-immigrant visas available for this purpose. There is another option – the F-1 visa for students studying in the U.S.. To apply for an F-1 visa, you must be enrolled as a full time student on a valid F-1 visa. You would need to complete an I-20 application form (for first time applicants) and have it signed by your school’s Registrar and your prospective employer (if applicable). The I-20 indicates that you have been accepted as a student at that school and allows the American Embassy or Consulate where you will apply to issue you an F-1 student visa. This can be done on the same day of your application but you need to allow a few hours between appointments to ensure there is no delay with issuing the visa and then being able to apply for admission into the U.S.. Once you have entered the U.S., you can work here while pursuing your studies provided that your employer obtains permission from USCIS (the Department of Homeland Security

Overview of the American Tax System

Most people with earned income in the United States pay taxes on each paycheck they receive, F-1 students included. Do students have to file a tax return? Yes, if they earn money in several ways (outlined below). Taxable income can include everything from salaries to specific gifts and awards. Those taxes go to the federal government’s Internal Revenue Service (IRS), as well as the department of revenue for the state where you earned your money. 

Here is a short summary of how the US tax system works:

  • If you earn money in the United States, you must pay a certain percentage of that money in taxes.
  • You pay taxes to the federal government, and you pay taxes to the state government in the state in which you reside. Tax returns detailing your income are usually due in April each year.
  • After you file your tax returns, the revenue departments at each level reconcile the amount of income taxes you owe against the amount you have already paid throughout the year. 
  • If you have paid more taxes than you owe, you are eligible for a refund. If you have paid less money in taxes than you owe, you are responsible to pay the difference. 

Do International Students Have to File a Tax Return?

Yes. According to the Internal Revenue Service (IRS), all international students and scholars on F or J visas must file Form 8843, even if they do not earn an income while studying in the United States. 

According to the IRS, Form 8843 is used by “alien individuals” to explain the basis of [a] claim that [one] can exclude days present in the United States for purposes of the substantial presence test because [they] were:

  • An exempt individual
  • Unable to leave the United States because of a medical condition or medical problem

If the above explanation sounds confusing, think of Form 8843 as a declaration of the time you were studying and not working in the United States. If you still have questions, first try this tutorial provided by the IRS, then reach out to Shorelight for further student visa support

While you may not owe taxes if you did not make money, you still have to return the tax form for international students. Failure to complete this form may result in visa processing delays and other international documentation issues. 

Do international students pay taxes if they are working or interning? Yes, students who hold employment or internships through Optional Practical Training (OPT) most likely also fill out a W-4, especially if they are also getting paid. A W-4 is the tax form new employees fill out when they are first hired at a company, nonprofit organization, government agency, or other institution in the United States. At the end of the year, non-resident income earners turn in their Form 1040-NR when filing their tax returns. 

Income can come in many forms, including:

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

If you received any of the above from an internship or Curricular Practical Training (CPT) position, you would likely have to declare your compensation on your tax return. (Do not let this deter you from pursuing internships, CPT, OPT, or other career development programs and opportunities!) 

CPT is an excellent option for students currently in the process of earning a degree. While pre-completion OPT is available, OPT is better known for post-graduate opportunities in the United States and even offers a 24-month STEM extension to continue working and earning in the US. Learning how to apply for OPT and CPT status and considering professional experience opportunities in the United States can help you get noticed later when it’s time to start a career. 

Do I Have to Pay Taxes on Income I Received from my Home Country?

Do international students have to file a tax return for income they earned back home? Generally speaking, non-resident aliens who file the proper paperwork and have legal status in the United States as students on F-1 visas do not have to declare and will not be taxed on international income sources.  

Does it Cost Anything to File My Tax Return?

If you prepare and file your taxes yourself, it is free. However, if you don’t feel comfortable doing it yourself, several affordable services will help you complete your tax return for a fee. Before you agree to pay for any assistance, make sure you check with your advisors to see if there are any free resources available on campus first. Talking to an advisor can also direct you to reputable services as well — fees for non-resident tax return filing online range from USD$15-$70, depending on the requirements. 

How Do I Know if I’m a Non-resident for Tax Purposes?

The best way to determine if you are a non-resident in the United States for tax purposes is to follow the guidelines set forth by the IRS. According to the IRS, you are considered a non-resident of the United States for US tax purposes unless you satisfy the qualifications of either the green card test or the substantial presence test.

There are exceptions to the rules as well, according to the IRS, and – to make it even more confusing – you can be both a non-resident and a resident for US tax purposes within the same year, which requires a dual-status income tax return. Some of the IRS-approved exceptions include the following:

 If you are unclear about your residency status for tax purposes because of one of the above reasons, it is best to reach out to visa assistance services or a tax professional. 

How Do I Know if I Made US Income?

Sourcing your income is important and can save you from unnecessary tariffs or taxes on your money. A US citizen is subject to worldwide taxation, no matter where that money came from; however, a citizen of a different country only has to pay US taxes on income from sources within the United States. 

To determine where you made your income and if you are subject to US taxes, it’s important to consider the same factors determining the source of income that the US government uses to ensure compliance. For the most part, however, the important things to remember deal with location: 

  • Where did you perform the services for which you were paid? 
  • Where is your residence?
  • Where is the address of the payer of a scholarship, grant, or fellowship? 

What Information Do I Need Before I Prepare My Tax Return?

If you decide to prepare your tax return, you will need some basic information to get started. The first question to ask is whether you worked and earned a taxable income. If the answer is no, you will need, at the minimum, your Form 8843. 

In addition, you will also need an Individual Taxable Identification Number (ITIN) or a Social Security number. Nonresidents receive a specific Social Security number and card that comes with the following restriction: “VALID FOR WORK ONLY WITH DHS AUTHORIZATION.”

If you worked in the United States and collected an income, you probably already filled out your 1040-NR. Your employer, or whomever you collect an income from, will mail you a W-2 form, which documents your earned income from the perspective of the person or entity paying you. You should receive your W-2 before the beginning of February. Note: depending on the type of employment, you may receive a 1099 for contract work or a 1042-S for income that falls under tax treaty benefits. 

Can I Claim a Tax Treaty Benefit?

Can international students get tax refunded to them in the United States? Yes, and one reason may be a tax treaty rule between your home country and the US. There are very specific rules governing tax treaties between the US and other countries. Make sure you understand the laws governing your situation if you plan to file for reduced or refunded taxes based on a treaty. 

Here is a list of high-level requirements for pursuing tax treaty benefits. Remember, your country of origin must share tax treaty status with the US for you to qualify, even if you meet the following requirements:  

  • You earned money while working 
  • You are a non-resident alien for taxes 
  • You have a valid F, J, or H-1B visa

Leave a Comment