Tax Filing Obligations for F-1 Students
The F-1 visa is a non-immigrant visa for those wishing to be educated in the U.S. This is a very popular visa option for foreign students in the United States. International students are required to file a tax return at any time they are in the territory, regardless of whether or not they have earned any income. F-1 international students are required to file a Form 1040-NR (Federal Tax Return) to assess your federal income and taxes. Even if you do not earn any money while in the U.S., you still need to file Form 8843 by the tax season deadline each year.
In the U.S., federal, state, and even local governments can impose income taxes. International students will be taxed in the same manner as non-resident aliens, i.e., only on U.S.-sourced income. Generally, international students on F-1 visas will be taxed as non-resident aliens for the first five years of their tax filing status. The amount of tax an international student is required to pay will depend on how much income is earned, the tax rates in each state, and the tax treaty benefits available to international students.
Types of income subject to tax filing
- Wages/compensation
- Tips
- Interest
- Dividends
- Scholarships/grants
- Prizes/awards
The amount of tax an international student is required to pay depends largely on individual circumstances.
International students are required to file federal and state taxes. The amount of taxes and rules for international students to file are determined by each state, except for the following states, which do not require taxes.
- Alaska
- Florida
- Nevada
- New Hampshire (taxes only investment income, not earn income)
- South Dakota
- Tennessee (taxes only investment income, not earn income)
- Texas
- Washington
- Wyoming
OPT is a program that allows international students to stay in the U.S. after graduation to work and gain practical experience. Students with F-1 visas can apply for 12 months of OPT after completing their education. Income earned by F-1 students on OPT (Optional Practical Training) is taxable. And the student must also complete a W-4 tax form with your employer when employment begins. If the student participates in CPT (Curricular Practical Training) taxes are also due.
Types of Tax Exemptions
Social Security and Medicare (FICA) Taxes: This is exempt from FICA taxes on wages for a period of five years from the date of arrival in the United States. FICA tax exemption cannot be claimed beyond five years.
Consequences of Failure to File
If you fail to file your taxes by the deadline, you may automatically get a six-month extension. If more additional time is needed, you will need to file Form 4868. It is important to note that Form 4868 only extend your taxes filing deadline, but not an extension to make your tax payments. Failure to file a tax return will result in unnecessary payments.
Tax Refunds
International students may also be eligible for a tax refund
Deductions available on your tax return
The State and Local Tax (SALT) deduction reduces taxable income by the amount paid to state and local governments during the tax year. The SALT deduction is capped at $10,000. However, it is not applicable to any international student.