If you are an international student studying in the US, or you are considering becoming one, it is helpful to know how tax laws work for foreign students in the United States.
For a full list of rules and requirements regarding US tax laws affecting international students, further reading on the IRS website can be found, here. However, we’ll summarize the main points for you here to save you some time.
Tax Requirements for International Students
The Internal Revenue Service (IRS) defines international students as both nonresident aliens and resident aliens.
Depending on your visa type, you may fall into either category at the time of filing your taxes. The IRS outlines a separate set of rules for resident and nonresident aliens. However, the IRS also views international students through a different lens than other types of nonresident aliens. Therefore, some unique conditions apply to international students.
As such, to understand which income sources to report, as well as what can be deducted, you must first be sure about your tax filing and visa status.
Income Reporting Requirements
One of the first things international students should know about reporting requirements is that all international students and scholars should file. Even if they have made very little US-sourced income.
International students should file and pay their taxes if:
- they have received a grant or scholarship that is considered taxable,
- or if they received any income from work or any other source.
An important note about capital gains tax for international students:
International students in the United States for longer than one year should file and pay taxes if they have made money in the stock market, or by selling any other physical property (such as a boat, house, or car). The IRS enforces a 30% capital gains tax.
Many international students do not have to file taxes if:
- their income is from another country,
- they earn interest from a bank or investment account,
- or if they received a grant or scholarship that is tax free.
It is important to note that there is no minimum income trigger that the IRS uses for international students. That means all earning count towards the filing requirement, even those that are very small.
Treaties and Special Circumstances
Apart from the general set of rules outlined by the IRS for how international students should be taxed, there are also many treaties and special circumstances that can be considered.
Most notably, the United States maintains several treaties with countries around the world. Each of those treaties outlines separate set of rules for taxation of nationals of those countries.
It is always a clever idea to check the list of treaties before seeking tax advice. Most sources of information that you will find will give generalized information that may not pertain to your situation.
Start with page 19 of the Treaties document from the IRS and look for ‘Students and Apprentices’.
Specific Taxation Rules Depending on Visa Type
Depending on your field of study, level of education, and time spent in the United States, you may have one of several student visa types that exist.
The three most common student visas are F1, J1, and M1, though many students also have H-1B visas and Green Cards. Tax rules for each are different and knowing the differences can save you a lot of time, money, and energy.
Here are some general rules for each of the listed visa types:
- F-1 – This visa is meant for academic studies. Most international students have an F-1 Visa, and these students are allowed to do limited, part-time work. The visa is a nonimmigrant visa and the applicable tax rules apply.
- J-1 – This visa is meant to provide international students with an opportunity to complete paid training in their field of study. It is a nonimmigrant visa and shares tax rules with F-1 status visas.
- M-1 – This visa type is for international nonimmigrants who wish to attend training programs or vocational schools in the US. M-1 holders are not allowed to work in the US, and therefore do not pay taxes.
- H-1B & Green Card – International students with immigrant visas, whether they hold an H-1B Visa, a Green Card, or are transitioning from an H-1B to a Green Card, must follow the same tax rules as US citizens. Students with these types of visas include but are not limited to graduate students and professionals continuing their education. Resident aliens must report all earned income.
The US tax system is certainly complex, but it does not have to be difficult to understand. The first step is to learn how international students with your particular visa type are taxed. Then, check to see if you are exempt from any of the rules associated with that visa type by checking the treaties document on the IRS website. Once you are sure about your tax situation, it is time to decide how you would like to file your taxes.
When should I file my taxes in the US as an international student?
International students should file taxes before the annual tax deadline. Usually, students should send their tax returns by May 17th. Sometimes, there are extensions that can push the date back.
Can international students file their taxes for free?
Yes. International students can file their taxes for free. There are a number of resources available. International students can download and fill forms directly from the IRS website, or use a tax preparation service that offers free services.
Do international students need a Social Security Number to file taxes?
International students must have their Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) when filing taxes.