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How to Do F1 Visa Taxes for International Students in the U.S.
Being a student in a foreign country can be a very confusing and complicated experience at times. Foreign tax laws are definitely one of them! As an F1 student with a temporary job, you might be wondering whether you are required to pay F1 visa taxes.
Below we take a look at what types of income are subject to F1 visa taxes and what your tax responsibilities as an F1 student are.
What is an F1 Visa?
F1 visas are granted to international students studying in the U.S. on a full-time basis. An F1 visa grants the holder access to the U.S. strictly based on the fact that they will be in the U.S. to study and not for any other purpose. Generally, you are not allowed to work on an F1 visa, as the visa is intended for full-time studying.
You are, however, allowed to work up to 20 hours a week on campus while school is in session. Possibly you can also work full time while school is in recess, but you may need to get permission from the Department of Homeland Security and your school’s international office first.
An F1 visa can also be prolonged to include an authorized Optional Training Program (OPT). OPT is when you are authorized to work off-campus for a period of 12 months.
F1 visas usually have a grace period of 60 days after it has expired. This helps the visa holder to plan and arrange their departure from the U.S.
Do International Students Pay Taxes?
Many F1 visa holders find part-time employment on their campuses. This helps to cover the expenses that come with studying and to pay off your international student loan.
All international students who make money while in the United States are subject to taxation and U.S. tax laws. But, as an international student, you may be classified as an exempt individual and non-resident for tax purposes, which means you are not supposed to pay tax on your income earned.
How to Tell if You’re a Non-Resident for Tax Purposes
Visa holders in the following categories are classified as “exempt individuals:
Being an exempt individual means you are excused from the Substantial Presence Test for the first 5 years of being in the U.S. You will, therefore, not be regarded as being a resident for tax purposes for this period. After this period, you will be subject to the Substantial Presence Test. This test is used to determine if you’ve been in the U.S. long enough to be considered a resident for tax purposes.
What Forms Are Needed to File F1 Visa Taxes?
Even if you are not required to pay any taxes, you still have to file a tax return. This is a condition of your visa. Here is a short description of the forms you’ll need to file your tax return.
Individual Tax Identification Number (From W-7)
You will need to apply for an Individual Taxpayer Identification Number (ITIN) with your very first tax filing. This will be your reference number with which you file your tax returns in the future. ITIN numbers expire if they aren’t used. Keep an eye on the IRS website to see if you need to complete a W-7 form with your tax filings.
Form 8843 and Form 843
A Form 8843 must be filed by F1 visa holders, irrespective of whether any income is actually earned by them. This form is used to prove that you are an exempt individual. If you did earn income in the U.S. your employer may have deducted tax from your income and paid it to the Internal Revenue Service (IRS). You can then use your Form 843 to claim any refunds of these taxes that has wrongfully been taken from you.
Some nations have tax treaties with the U.S. These nations will receive certain tax exemptions when their nationals work here. You can research the list to see if you qualify for a tax treaty benefit if you are a resident of any of the countries. If you qualify for a tax treaty benefit, you can use the Form 8233 to claim your tax treaty-based exemption.
Form W8-BEN is a Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding. This form is used to:
- Show you are a foreign person
- Claim you are the beneficial owner of the income for which you are providing the form
- Claim a reduced rate or exemption from withholding tax as a resident of a foreign country with which the U.S. as an income tax treaty.
This form is used for income other than compensation for personal services.
Federal Tax Forms
Here is a list of forms that you need to fill and file with the IRS. Your unique situation will determine what combination of the forms you need to complete and file.
List of Federal Tax Forms:
- Form 8843 – This form proves you are a non-resident.
- Form 1040NR – Non-residents with dependents need to fill in this form.
- Form 1040NR-EZ – Non-residents with zero dependents need this form.
- Form W-7 – This is the ITIN application form.
- Form 8233 – Certain foreign nationals are eligible for tax treaty benefits.
- Form 8316 – Complete this form if you want a Social Security tax refund.
- Form 843 – Complete this form to request a FICA tax refund.
- Form W-8BEN – Eligible non-residents use this to reduce their withholding tax rate.
How to File F1 Visa Taxes
There is a step by step process you can follow to file your taxes.
Here are the basic steps for filing taxes:
- Determine your residency status
- Determine your income from U.S. sources (if any)
- Do you have an ITIN yet?
- Get your combination of tax forms printed
- Gather all income and tax-related documents received from your employers
- Complete the forms (get a professional tax practitioner to help if you don’t know how the forms work or need to be completed)
- Assess whether you owe any additional taxes (and find a suitable way to pay like a check, for instance)
- Mail your completed tax forms and copies of your W-2’s, 1099’s, and 1042-S’s to the appropriate addresses
Once again, if you aren’t sure how to do this you might want to ask the help of a tax practitioner. Even though their services will come at a cost, it could end up saving you lots of time and money by avoiding unnecessary errors.
Social Security, Medicare, and Self-Employment Tax Liability
F1 visa holders are allowed to work 20 hours per week on their campuses. During summer vacations, you will be allowed to work 40 hours. But, because you are a Non-Resident Alien (NRA) you are exempted from paying Social Security and Medicare tax.
F1 students aren’t allowed to be self-employed in the U.S. and therefore won’t be able to file Self-Employment taxes.
F1 Visa Taxes FAQ
Getting help with your taxes can almost be as crucial as getting a cosigner for an international loan. You perhaps know how a student loan refinance works but F1 visa taxes are still a mystery to you. Let’s take a look at some of the most frequently asked questions about F1 visa taxes.
When Do I Need to File F1 Visa Taxes?
Most tax forms need to be dated and filed (or postmarked) by April 15th of each year. You can find more in-depth information about the dates for your tax forms here.
What Do I Need to Prepare My Tax Return?
An F1 visa holder does not have a Social Security number. You, therefore, need an ITIN. You can apply for one by using a W-7 form when you file your first tax return. Also file the W-2’s, 1042-S’s, and 1099’s that your university and employer has given you. You can find more information regarding these documents here.
Do I Have to Pay Taxes on Income from my Home Country?
You are an NRA. This means any income you make outside of the U.S. is exempted from being taxed in the U.S.
Does it Cost Anything to File F1 Visa Taxes?
Most of the forms can be completed and filed by yourself. Filing these forms won’t cost you anything. But you can make use of services that will help you to file these taxes for example by consulting a tax practitioner.
General service costs for filing your tax form:
- Form 8843 – About $16
- Form 1040-NR – Around $36
- ITIN Application – An average of $16
- State Tax Forms – An estimated $26
Am I Eligible to Claim Tax Treaty Benefits?
You’re either a student or a scholar on an F1 visa. Both of these types of visas are eligible, but only if your country of residence is included in the list. You need to go through the list of tax treaty beneficiaries to confirm your eligibility.
- Why Was No Federal Income Tax Withheld From My Paycheck?
- Why Do I Owe Taxes?
- Why Do I Owe State Taxes?
- Are You Exempt from Federal Withholding?
- How to File Taxes With No Income
- Can You File Taxes Without a W2?
- H1B Taxes: Everything You Need to Know
Whether you received income from a U.S. source or you are just studying on an F1 visa. There are a couple of forms you need to file with the IRS for tax purposes as an F1 visa holder. Filing your F1 visa taxes should not be a scary ordeal. In fact, you have better chances of receiving a refund in the process.
Follow the steps we explained above to comply with U.S. tax laws and regulations. If you’re still unsure, contact a tax practitioner. It will help you enjoy your time in the U.S. without any surprise visits from the IRS.