tax info

TEDS International Students and Scholars Office
Tax Information

For assistance with tax questions and to request tax forms, please call the following Internal Revenue Service toll free numbers:

Tax Forms : 1 (800) 829-3676

Tax Questions : 1 (800) 829-1040

Paying Your Taxes

Federal income-tax obligations of students of F, J, of M status

The following information will give you a basic understanding of your responsibilities and tell you how to get more information. Do not construe the information presented here as individual tax advice.

Everyone in the United States, regardless of immigration status, is responsible each year for submitting a complete and accurate income-tax statement to the International Revenue Service (IRS), an agency of the U.S. Treasury Department. Americans call the process "filing a tax return". Foreign students, regardless of whether they work or earn income while in the United States, must file an appropriate return each year.

In many countries, the government assesses and collects from individuals the tax they owe. In the United States, however, it is each individual's personal responsibility to meet his or her tax obligation; the government will not do it for you, but it will penalize you if you do not do it yourself. You are responsible first of all for helping your employer estimate how much your income would be "withheld" (or deducted) from your wages. In your annual tax return, you must reconcile your account with the government to verify that you paid the right amount over the course of the year. If you paid too much, you may claim a refund, which will be paid promptly unless the government disagrees with your calculations. You must file a tax return even if you did not have income from a U.S. source, just to keep the government records straight.

U.S. Federal Income Tax Guide for International Students and Scholars is NAFSA's tax guide for foreign students. Published annually in January, the guide offers step-by-step filing instructions, accompanied by a generous selection of sample forms, all correctly completed for hypothetical students and employees whose circumstances match those found on most U.S. campuses. Call 1 800 836-4994 for cost and ordering information.

Several Kinds of Tax, Collected at Several Levels

The U.S. tax system encompasses at least six different types of taxes (e.g., income tax, Social Security tax, sales tax, personal property tax) and three layers of taxation (local, state, and federal). You have obligations at several levels.

To learn about your state and local income-tax responsibilities, consult local tax authorities after you have arrived in the United States. Check the blue or white pages of the local telephone book for the appropriate government listings. Alternately, your foreign-student adviser or university payroll office may be able to provide you with this information.

"Sales tax" is similar to the value-added tax collected in many countries, except that in the United States the amount of the tax is not included in the advertised process of goods. Sales-tax rates vary from state to state. The State of Delaware, for example, charges none at all, whereas other states assess a "personal property tax" on automobiles and other valuable property.

U.S. tax laws are difficult to understand, so some students may want to ignore this obligation. Be aware, however, that the amount of information shared by the IRS and INS is increasing each year. It is in your interest to meet you tax obligations.

Definitions and Dates

Government agencies create endless confusion by using a single word to mean several things. The most common example is the term "resident" is an individual who, though not a citizen of the United States, has the right to reside here indefinately. When used by the IRS, a "resident" is an individual who has spent enough time in the United States to be taxed as a U.S. citizen or permanent resident, even though he may be a nonimmigrant, such as a foreign F, J, or M status. These classifications (resident and nonresident) determine how much income is taxed.

Some definitions, important dates, and sources of further information appear at the end of this page. Refer to this information as you prepare to file your income-tax return. The normal tax deadline in the United States is April 15.

All F-1, J-1, and M-1 students, even those with no U.S. income, are expected to file a tax return every year. Sources of U.S. income may include on-campus employment, scholarships, fellowships, graduate assistantships, practical or academic training, and any compensation received for labor. Foreign students do not have to pay taxes on interest paid to them by U.S. banks.

Note that "income" is not limited to wages paid to you by cash, but also includes that portion of your scholarship, fellowship, or assistantship that is applied to your housing and meal expenses. The portion applied to your tuition fees, books, and supplies is not included as income. The payroll office on your campus will help you make these distinctions. Be sure to inquire about the applicability of any tax treaty that might exist between you country and the United States.

Reporting Requirements for Dependents

F-2, M-2, and J-2 dependents, regardless of age, are expected to file tax returns annually in the United States, even if they have no income from a U.S. source. In the case of F-2s and M-2s (who cannot work in the United States), the completion of a tax form is simple. A J-2 dependent, who may get permission to work in the United States, is taxed on his or her earnings.

Social Security Tax

Students often have questions about payment of a U.S. tax called "Social Security tax" or "FICA". FICA is a taxation system that provides benefits to retired workers. Most F, M, and J students are not subject to this tax, but J-2 dependents with work permission are. You can get more information about this tax from your campus payroll office.

Taxing Terms: A Glossary

Alien: A term used by the Internal Revenue Service to denote an individual who is not a U.S. citizen.

Exempt Individual: A person not subject to the Substantial Presence Test (see below), which determines whether and individual files as a resident or nonresident. Many students incorrectly construe the term to mean that are not required to file a tax return and/or pay taxes.

Internal Revenue Service: Also known as the IRS, this is the federal agency responsible for collecting federal income taxes and enforcing tax reporting and collection laws. It is an agency of the U.S. Treasury Department.

Nonimmigrant: An individual with a permanent residence abroad and in the United States temporarily, as in the case of a foreign student.

Nonresident: An individual in the United States temporarily (usually less than six years). Although required to file an annual federal income tax return, nonresident aliens pay tax only on income from U.S sources.

Resident: An individual who is a U.S. citizen, a U.S. permanent resident, or a nonimmigrant who has been in the United States sufficiently long to be considered a resident. Residency is determined by the Substantial Presence Test (see below).

Social Security: A term used to describe an agency, a card, and two types of tax. The Social Security Administration (SSA) is an agency of the U.S. Department of Health and Human Services. The card bears a unique nine-digit identification number and is issued to qualified individuals primarily to determine eligibility for social benefits earned through various forms of employment. The number on the card is also used by the IRS for data collection and record keeping. The taxes, known as FICA (Federal Insurance Contribution Act) and Medicare, are withheld by employers from workers' wages and paid to federal government for redistribution to workers after retirement. The FICA amount withheld from wages is 7.65 percent of total earnings up to a certain salary level.

Substantial Presence Test: A formula devised by the Internal Revenue Service to determine whether an alien is a resident or nonresident for tax purposes. F, J, and M students do not use the test during their first five calendar years in the United States. After that time, individuals who spend 183 days a year or more in the United States become "residents for tax purposes" for the year.

Tax Treaty: An agreement between the United States and another country to determine how the country's nationals will be taxed when temporarily in the United States. A treaty can confer certain tax benefits. A note of caution, however. Tax treaties are very specific. Not all residents of a tax-treaty will qualify for tax benefits.

Taxpayer Identification Number (TIN): Individuals who are not eligible for a social Security number (routinely issued only to U.S. citizens, U.S. permanent residents, and non-immigrants authorized to work) receive from the IRS a unique nine-digit number for tax purposes.

Withholding: Deduction of a given amount of an individual's salary for purposes of meeting that individual's income-tax obligation. Amounts are deducted by the employer and paid directly to the U.S. Treasury on the individual's behalf.

Important Dates

April 15: The last day on which residents and nonresidents who have earned wages from U.S. sources may file their U.S. federal income-tax returns.

June 15: The last day on which nonresidents and their dependents who have no wage income from U.S. sources may file their 1040NR-EZ or 1040NR returns.

Documents

519: "U.S. Tax Guide for Aliens," an IRS publication. Helpful when preparing a nonresident tax return (1040NR or 1040NR-EZ).

901: "U.S. Tax Treaties," another IRS publication. Essential for individuals from nations having tax treaties with the United States.

8843: "Statement for Exempt Individuals and Individuals with a Medical Condition." This one-page document must be completed and returned with the 1040NR and 1040NR-EZ. It verifies nonresident alien tax status.

1040NR: "U.S. Nonresident Alien Income Tax Return." The longer version of the return completed by many nonresidents. This form is distinct from the 1040, 1040A, or 1040EZ filed by residents for tax purposes. It is not interchangeable with those forms. The IRS publishes an instruction booklet to accompany the form.

1040NR-EZ: "U.S. Income Tax Return for the Certain Nonresident Aliens with No Dependents." A simplified version of the 1040NR. Most F-1, J-1, and M-1 students who are nonresidents may file the 1040NR-EZ. The IRS publishes an instruction booklet for this form.

W-2: "Wage and Tax Statement". A form issued annually by employers (normally during the month of January). Copies of the W-2 must be filed with federal, state, and local tax returns.

W-4: "Employee's Withholding Allowance Certificate." A form completed by employees at the time of hire to indicate how much tax is to be withheld from the paycheck.

The IRS provides information through free publications and a telephone information line. The phone number for general tax information is 1 800 829-1040 (ask for the Technical Division). To order any of the federal publications or forms mentioned here contact the IRS Tax Forms and Publications division at 1 800 829-3676. The IRS has a World Wide site on the Internet from which it is possible to obtain forms: http://www.irs.ustreas.gov/prod/forms_pubs/index.html .

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Updated 07/25/2002.