21 FAQ’s About Filing Income Tax for International Students in USA

Filing taxes for international students can be a daunting task for some and for others, it can walk in the park.

How do you feel about filing taxes? Do you jump on the computer with enthusiasm to file your taxes on your own or twist and turn and make your way to prepare and file your taxes online?

Here’s a quick guide for International Students to learn about Preparing and Filing Taxes on F1 Visa, OPT and STEM OPT. A question from a reader 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 the USA?

Filing Tax Returns for International Students in USA

Usually, I self-prepare and file tax returns on my own.

For someone filing taxes for the first time, in the USA, it can be an overwhelming process. Back when I was doing my Grad School on F-1 Visa,  there weren’t any companies like SprinTax, who can help prepare taxes online.

I was curious to learn about taxes, so I read several websites and IRS.gov. Got help from seniors to understand the tax returns. The first year I had to file just one tax Form 8843.

When I started earning money from my part-time job and Internship, I spent several hours to find out how to file taxes. When you have one or two W-2 forms from your employer, filing tax for international students is not taking a lot of time. Most likely you are using standard deductions with Tax treaty benefits for your country (applies to India).

This guide should give you a basic understanding about Taxes in America. I’m not a Tax professional. Consult one, if you are not sure what you are doing.

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

1.What is IRS?

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

2. State Income Tax

In addition to IRS, individual states in the USA have the Department of Revenue. State income taxes will be paid to the specific state where you lived during the tax year. If you lived in two states, you may need to file two State Income Tax Returns. When I last checked, about seven states in the USA doesn’t have State Income taxes.

3. 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

4. What is an alien?

When you start reading IRS.gov, you are going to find the term Alien – Resident Alien and Non-Resident Alien. Any person who is not a U.S. Citizen for tax purpose is referred as Alien.

If you are an alien (not a U.S. Citizen), you are considered a nonresident alien unless you meet one of two tests. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1-December 31).

5. What is Withholding means in the W-2?

Withholding refers to U.S. Income tax automatically taken from your paycheck when employer paid you. If they withheld more than what you have to pay in Taxes, then you will get a refund after you file your taxes.

6. What is Income for tax purpose?

IRS considers Wages, salaries, tips, interest, dividends, some scholarship/fellowship grants as Income. If you worked Part-Time on campus and earned say $10 per hour and made $15,000 in that year, then your Gross Income is $15,000. While, your employer pays you, they could be withholding taxes. That’s why you don’t see your actual paycheck is less than your Gross Salary.

7. What is Income Tax Return?

Income tax return is the form that individuals, business, submits to IRS to file their taxes. For example, Form 8843 or Form 1040 NR or 1040NR-EZ are income tax forms.

8. 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. More on this here – International Student Taxes.

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

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

9. Income and Tax Classification of Students

  • Scholarship and fellowship grants –  Non Taxable Scholarship that is 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

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

If you have nontaxable scholarship, then file the form 8843. Your university may also send additional Form to report to IRS. Save that copy.

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

[Outdated] You do not need to file Form 1040-NR or 1040NR-EZ for 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.

Check with IRS for the recent value of this section. They change this frequently.

12. 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.

13. 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.

14. Special Not for Students from India

As per IRS – Nonresident aliens cannot claim a standard deduction unless they are filing Form 1040. Most international students in the USA would file Form 1040NR-EZ or 1040NR until they become a Resident Alien.

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

Form 1040NR and 1040NR-EZ are different from Form 1040. Indian students can claim the benefits of a tax treaty under Article 21 (2) of US-India tax treaty. If you are not sure how to claim this Tax Treay, use SprinTax to do the Math for you.

15. Personal Exemption Amount

The amount deducted from income for yourself and your dependents.  For 2017, the amount is $4,050.

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

Bonus Q&A International Student Taxes

1. What Tax form should I file?

If you are not sure what form to file and how to claim Tax Treaty Benefits, I recommend using SprinTax to prepare your taxes online and file manually.

2. I forgot to file my Taxes, what should I do next?

*I think* you can file your taxes for previous years with the correct forms. Often, you will see students on F1 Visa say that they did not have income and there’s no need to file taxes. That’s incorrect. If you don’t have the income for the specific calendar year, you would have to file Form 8843 at least.

Let’s say, you landed in the USA on Dec 31st, 2017 on F1 Visa. Would you have to file taxes? I would file for form 8843 at least. Be on the safer side.

3. Can I use Turbotax or H&R software to file taxes?

TurboTax actually recommends SprinTax for Non-Resident Tax preparation and filing. They don’t support 1040 NR and 1040 NR EZ when I last checked.

4. What is 1040, 1040NR, 1040 NREZ?

They are tax forms. For Non-Resident Alien, you will file 1040NR or 1040NR-EZ. NR stands for Non-Resident. Well, I think EZ stands for Easy form (short form).

5. I filed 1040 last year, not 1040NR by mistake, what should I do?

You can file an amendment to fix the tax form.

6. What is an Amendment?

Amendments are done to find previous years tax errors and corrections. Sweet Deal right? Sprintax supports filing Amendments as well.

F1 Student Taxes Series

  1. Part 1: 10 FAQ’s about International Student Taxes
  2. Part 2: Frequently asked Questions About Filing Taxes for F1 Students  (this article)
  3. Part 3: How to get FICA Tax Refund for OPT and STEM OPT Students
  4. Part 4: Resident or Non-Resident Alien – Substantial Presence Test Calculator
  5. Part 5: SprinTax Reviews: Prepare F1 Taxes Online

Note: If you file your taxes using the SprinTax link, we get a small referral fee. We appreciate if you use the referral link. That’s one way for you to support HappySchools.com

27 Comments

  1. Manoj on February 20, 2018 at 6:29 PM

    On F1 OPT status, can we do e-tax filing or should we need to do paper tax filing !!!!!!

  2. maitri mehta on February 7, 2017 at 10:03 AM

    hello, do i get any refund for the student loan i have been paying off to an indian bank??

  3. Archit Sethi on January 26, 2017 at 12:55 PM

    Hi,

    I am on F1 visa and would be filing my tax return soon. My question is that do i need the form 1040 or 1040NR. I mean i read that there is something special for the Indian students but did not understand that well. Thanks.

  4. manoj on February 23, 2016 at 11:13 PM

    hi
    my name is manoj, i am an international student with F1 visa for 5 years and i don’t

    get income and unemployed in USA. so can i apply for tax returns here and i found

    1098 form in my UNIVERSITY STUDENT ACCOUNT.

    so please, let me know to apply for tax return or not?

    thanks,

    manoj

  5. manoj on February 23, 2016 at 11:12 PM

    Dear Raghu ,

    i am an F1 student here, and i don’t get any income (unemployed) here. still should i apply for tax ?

    thanks,
    manoj

    • Raghuram Sukumar on September 13, 2016 at 7:33 PM

      Yes, you may have to file just form 8843.

  6. Ajinkya on December 29, 2015 at 10:21 AM

    I am a J1 intern in the United States. Am i eligible to claim standard deductions as per India-US tax treaty? since article 21(2) states students and business apprentices are eligible for standard deductions?

  7. Nakul on March 19, 2013 at 1:41 AM

    http://www.irs.gov/publications/p17/ch03.html
    Says personal exemption amount is 3,800. You have mentioned is 3,900. Why so ?

  8. Satya Chandra on February 1, 2013 at 5:29 PM

    Thank you so much brother.

  9. Shiv on January 27, 2013 at 8:16 PM

    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

  10. munna on January 26, 2013 at 5:48 PM

    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.

    • Raghuram Sukumar on January 26, 2013 at 7:17 PM

      Do you know if its available in all the schools?

      • munna on January 26, 2013 at 7:42 PM

        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.

        • Raghuram Sukumar on January 26, 2013 at 10:38 PM

          Munna – for Indian students refund or dedications are going to be the same by filing 1040nrez or just 1040. But filing 1040 is incorrect.

          • munna on January 27, 2013 at 5:27 PM

            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.



          • Raghuram Sukumar on January 27, 2013 at 5:29 PM

            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.



          • Sac on April 26, 2014 at 11:46 AM

            what are the consequences of filing a wrong tax form?



  11. George Jason on January 26, 2013 at 2:36 PM

    Indians don’t pay taxes in India and pay taxes in United States.

    • Rajkamal on January 27, 2013 at 12:41 PM

      LOL.. True 😀 ..

      • George Jason on January 28, 2013 at 11:59 AM

        It’s true because Americans f the taxes out of every person who lives in United States.

  12. NRVidiyala on January 26, 2013 at 1:18 PM

    It was indeed a great help.

  13. Gourish on January 26, 2013 at 11:56 AM

    Pretty Helpful to begin with !!!

  14. manigandan on January 26, 2013 at 11:54 AM

    Dear Raghu,

    You have saved lots f student time by posting such a valuable info.

  15. Raj Goli on January 26, 2013 at 10:09 AM

    Great article Raghu… Very elaborate and easy to understand… Thanks 🙂

    • Raghuram Sukumar on January 26, 2013 at 10:48 AM

      Thanks Raj.

      • Priya on January 27, 2017 at 11:36 PM

        Hey raghu, iam a blogger and earns money from google. I used to receive my earnings in india in rupees as google sends money in dollars and banks convert them to rupees. Now iam in USA on f1 status. I would like to know where should i pay the taxes, in India or usa? My Bank account in india receives the earnings.

        • Raghu on January 28, 2017 at 12:19 AM

          Talk to an attorney 🙂

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