Guide to OPT Visa Taxes

People from all over the world visit, work and stay in the U.S. They have different reasons for coming here but as the old saying goes: two things happen to everyone – death and taxes. Tax matters for foreigners living in the U.S. can be very confusing, especially if you are still a student.

That is why we’ll help you to better understand OPT visa taxes. Do all students need to pay tax? What types of taxes are required by the IRS (Internal Revenue Service)? This and more you can find out here.

Do OPT Students Need to Pay U.S. Taxes?

The most common student visa in the U.S. is called an F visa. People from abroad on an F visa may live and study here and under certain circumstances, they are also allowed to work. One of those instances where you can work is with OPT (Optional Practical Training).

Students on an OPT program use this time to gain valuable training and experience in their field of studies. These opportunities also serve as a way to earn extra income and help to cover tuition and living expenses. But earning an income is a sure way to catch the attention of the IRS (Internal Revenue Service). This raises an interesting question. Do students need to pay OPT visa taxes? Some would quickly argue that they aren’t citizens and are therefore exempt from paying U.S. taxes. But it’s not that simple.

Students earning and income from an OPT program are required to pay taxes by U.S. law. Your tax status determines the type of taxes you have to pay, so let’s take a look at how you can determine yours.

How to Determine Tax Status

There are two types of people we need to distinguish between. These are a resident and a Non-Resident Alien (NRA). Students and graduates on an F-1 visa who have been in the U.S. for less than 5 years are an NRA for tax purposes. Those who have been here for more than 5 years are considered residents when it comes to tax.

Please note though, a resident tax status does not mean you are a permanent resident when it relates to your immigration status. Your tax status depends on the amount of time you’ve spent in the U.S., but your immigration status is dependent on the type of visa you hold.

NRA Taxes and FICA

There are two types of taxes that very often confuse people – especially when it needs to be applied to NRA OPT students. Medicare and Social Security tax are collectively called the FICA tax. All U.S. tax residents must pay FICA tax on their salaries. This includes F-1 students who have been in the U.S. for over 5 years. The IRS has, however, decided that an NRA F-1 student (someone who has spent less than 5 years in the U.S.) does not have to pay FICA tax.

Required Forms for OPT Visa Taxes

Paying taxes in the U.S. requires you to fill in forms. So as a student filing your OPT visa taxes you need a Form 8843 and most probably a Form 1040NR-EZ as well. Please note these forms aren’t only for students, but for the purpose of this article, we’ll discuss it as such.

Form 8843

All NRAs under an F-1, F-2, J-1, or J-2 status must file a Form 8843. You must file this form at the appropriate window period even if you haven’t earned any income. The U.S. government requires it for informational purposes and you are also required to file this form in terms of the conditions of your visa.

Form 1040NR-EZ

This form helps you file a tax return. Form 1040NR-EZ is for students without any dependents and Form 1040NR are for those who have dependents.

How to File OPT Visa Taxes

You are responsible to file your OPT visa taxes. We’ll explain the process shortly, but you can always contact a tax specialist if you need advice or have specific questions. Remember, your situation is unique and you may be required to file different types of forms not covered in this piece. For now, we’ll cover the two forms mentioned above.

You can either file your forms yourself or you can use the help of professionals (at a fee, of course). Complete the forms and assemble your documents. You can send the package to the applicable IRS address. Just note, the mailing address depends on where you live and whether you are including payment with your documents.

It’s not possible to tell you how to file your taxes without knowing the context of your situation. However, as a student working on OPT, you’ll need to file a Form 8843 and either a Form 1040NR(or Form 1040NR-EZ if you earned an income in the current tax year.

Stilt Loans to Pay L1 Visa Tax Penalties

Paying your taxes is non-negotiable. You also have to make sure you pay on time, otherwise, you can receive all sorts of penalties. If you’ve already received L1 visa tax penalties you better pay it soon before it starts adding up beyond what you can manage. But how can you pay for penalties if you didn’t have the cash to pay the tax in the first case?

Have you thought of using a personal loan to pay your OPT visa taxes? It’s a convenient way to settle your taxes and penalties immediately if you are short on cash. Even a foreign national like yourself can qualify for the right personal loan.

Personal loans are usually unsecured which means you don’t have to secure it with an asset or type of deposit. You also don’t even have to declare what your personal loan is for, so you can use it for whatever you want.

Stilt offers a great personal loan to foreign nationals which starts at an APR of 7.99%. You can apply for an amount of up to $25,000 and repay it in monthly installments. You can also repay larger amounts without any prepayment penalties.

This is how it works.

1. Submit an Application

Apply online for the loan amount you need. Make sure you comply with the simple eligibility criteria and submit your personal loan request.

2. Receive an Offer

You will receive feedback within 24 hours of your application. Please supply any additional information requested. Soon you will get a loan offer and promissory note. Sign and return that note if you decide to accept the loan.

3. Start Making Payments

The loan will be disbursed into your U.S. bank account within 2-3 business days of accepting the offer. Select your repayment option online. An autopay method helps you pay automatically on time every month.

It’s that simple!

Conclusion

People living and working in the U.S. must file their applicable tax forms. Even Non-Resident Aliens (NRA) who don’t earn an income must file a Form 8843. It’s your responsibility to make sure your taxes are paid and all filings are up to date. Certain visas even require you to file a Form 8843 every tax year.

If you can’t afford your taxes or you have penalties lined up, you can also consider a personal loan to help pay your OPT visa taxes. You rather want to pay your taxes on time with a loan than run the risk of tax penalties building up and the resulting additional fees.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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