Question from Satya on filing tax returns for International Students in USA (F1 Visa) for students from India.

Could you please start a thread on “Tax Returns” for international students. I am an international student at CSU, OH and I am in my 4th semester, I got a mail with subject “Important Tax return document” and how do I file a tax return in USA?

Filing Tax Returns for International Students in USA

Usually, I self prepare and file tax returns on my own. If you don’t have a business and filing simple individual tax returns, the process is simple and straight forward.

I was curious to learn about taxes, so I read several websites and IRS.gov. Got help from seniors to understand the tax returns. When I didn’t have any income in USA, all I had to do was file Form 8843- Tax forms  for international students.

When I had income during my part-time job and Internship, I spend several hours to learn how to file taxes.

When you have one or two W-2 forms from your employer, filing tax for international students is doesn’t take lot of time. Most likely you are use standard deductions.

Follow this simple guide to understand and file tax returns for International students in USA.  Most  of the terminology applies to all International students. I included Tax treaty benefits for  only for Students from India who will be filing taxes in USA.

What is IRS?

IRS stands for Internal Revenue Service.  We file out income tax with IRS.

State Income Tax

In addition to IRS, individual states in USA have Department of Revenue. State income taxes will be paid to specific state where you lived during tax year. If you lived in two states, you may need to file two State Income Tax Returns.

What is From W-2?

The form that an employer must send to an employee and to IRS at the end of the year. The W-2 form reports an employee’s annual wages and the amount of taxes withheld from the paycheck.

 

sample w2 form

Sample W2 Form

What is Alien?

Generally, any person who is not a U.S. citizen for tax purpose is referred as Alien.

What is Withholding means in the W-2?

Withholding refers to U.S. income tax automatically taken from your paycheck

What is Income for tax purpose?

IRS considers Wages, salaries, tips, interest, dividends, some scholarship/fellowship grants as Income.

What is Income Tax Return?

Income tax return is the form that individuals, business submits to IRS to file their taxes.

Does F1 Visa students file Income Tax?

All individuals temporarily in the U.S. on F1 visa or J1 visa must file income tax returns with the Internal Revenue Service.

Which Tax Forms to File?

F1 visa students who are in USA for less than 5 years MUST file the Form 8843 .

 What if I didn’t earn any income in USA?

You don’t have to pay taxes, but you are required to submit a form 8843 to the IRS.

Income and Tax Classification for Students

  • Scholarship and fellowship grants -  Non Taxable Scholarship that are used for tuition, fees, books, supplies and equipment required for courses AND if the student is pursuing a degree.
  • Room and Board Scholarship – Taxable.
  • RA, TA Income – Taxable Wages
  • Part Time Jobs – Taxable Wages

I have Scholarship, but not required to pay Taxes, what forms to file?

If you have nontaxable scholarship then file the form 8843.

What forms to file if I have taxable scholarship, RA or TA Income or Part Time Jobs?

  • File Form 8843 and
  • Form 1040NR OR  1040NR-EZ

 Income Limits to File Income Tax 1040Nr or 1040 NR EZ forms?

You do not need to file Form 1040-NR or 1040NR-EZ for 2011 if:

  • You have only taxable U.S. Source Wages that were less than $3,700   AND
  • You don’t need to claim a refund of over-withheld taxes.

Note : I need to update this for 2012.

What is Standard Deduction?

The Standard Deduction is a dollar amount that reduces the amount of income on which you are taxed. Your Standard Deduction may consist of the basic standard deduction and additional standard deduction amounts for age and blindness.

What is Itemized Deduction?

Itemized Deductions are allowable amounts that individuals may subtract from income before calculating taxes owed.

Examples: charitable contributions, state & local taxes withheld, etc.

No one can have both a standard deduction and itemized deductions.  You have to choose one. 

Special Not for Students from India

Only Indian students are eligible for a Standard Deduction and a Personal Exemption.
Unless you are an Indian student, you are only eligible for some Itemized Deductions and a Personal Exemption.

As per IRS – Nonresident aliens cannot claim a standard deduction unless they are filing Form 1040.

Most international students in USA would file Form 1040NR-EZ or 1040NR.

  • 1040 NR-EZ – Short Form
  • 1040 NR – Long Form ( the long form which few students ever need )

Form 1040NR and 1040NR-EZ is different from 1040.

But, Indian students can still claim Standard Deduction by filing 1040NR-EZ or 1040 NR.

To claim Standard Deduction, you would have to include the following line in the tax form .

Standard Deduction under Article 21(2) of US-India tax treaty.

Personal Exemption Amount

Amount deducted from income for yourself and/or your dependents.  For 2012, the amount is $3,900

Bank Interest Amount Taxes

Bank Deposits (including Certificates of Deposit) are exempt from taxes for Non-Resident tax.

Always contact a CPA or tax consultant if you have any questions. Usually, colleges will have a CPA who can help you with taxes.

Bookmark this page.

I will be adding screenshots and additional information to about Form 8843, 1040NR and 1040 NR-EZ.

Next Steps

I have spent ton of time to prepare this simple guide to file taxes for Indian students in USA. I would appreciate if you can do one or all of the following.

  • Like This post on Facebook (Like button is located right below )
  • Share this with your friends in Facebook
  • Forward this link to your University Indian Student Association Mailing List
  • Post the link in your University Facebook Groups
  • Post questions or Comments you may have about filing tax below.

 

Comments

  1. Hi HSB,
    I have a question regarding filing tax return for Tax year 2012. I am in US since Aug 2010 on F1. In 2012, I was on F1 until 30th Sept. From 1st Oct, my status changed to H1B. So my question is, can I still qualify for standard deduction of $5800 even though I was not on F1 for full year? Do I need to calculate Pro-rated standard deduction for the months I was on F1 in 2012?
    Thanks in advance for the valuable blog post !!
    - Shiv

  2. Indian students on F-1 visa status in first 5 years of their stay in USA should use CINTAX GLACIER software which is provided to them free by University. After 5 years, they can become tax residents. Professional services like those sitting in Walmart are normally not aware of deductions for foreign students. I have noticed that many Indian students commit tax-fraud by filing it as US citizens/residents. they do it as other Indian students tell them that in this way you get more refund. Students should be careful as later on- they may have to refund the amount with penalty which they have got by filing wrong tax return. After 5 years,you become tax resident and you can use Turbo-Tax. once you get job, you are ok. but on F-1 visa, CINTAX is the proper way.

      • International Student Office of most of the universities which admit international students have this facility CINTAX GLACIER for free. Students should know that wrong tax filing posing as US Citizens/Residents in search of more refund will create problems for them in future. If one reach Green Card stage in future, your Tax History may be scrutinised and some trouble may come at that time.

          • Okay My Point is that Indian students are using Turbotax for 1040 and claiming Education credit, Making work pay type credits which are strictly for those people who are either permanent residents, citizens or Tax residents for 5 years in USA. Other students advice them that if you file like this, you will get more refund. They hide the fact that they are Indian citizen while filing tax.

            • Yup. that’s exactly right. Indian students cal claim Standard Deduction due to India/USA Tax Treaty and Personal Exemption. Pretty much other deductions might not be applicable to a student in F1 and F2 Visa.

Comments are closed.