US-taxes-for-international-students (1)

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International students are exempt from counting days for ve years from the rst date they enter the U.S. When a nonresident comes to the U.S. they will begin counting the days they are present in the U.S. for the substantial presence test. International students can exclude the days they are present for any part of ve calendar years after the rst date they enter the U.S. as long as they are in school and meet the requirements of their F, J, M, or Q visa. This means that they won’t meet the substantial presence test as a student for ve calendar years and will le Form 1040NR. Example: Hans comes to the U.S. for the rst time as an international student from Germany on Jan. 24, 2019 on an F visa. He is exempt from counting days for the substantial presence test until Dec. 31, 2023, if he continues to study in the U.S. and meets the requirements of his visa. He will be exempt from counting days for part of 2019 and all of 2020, 2021, 2022, and 2023. He is a nonresident alien for those years, assuming he doesn’t meet the green card test during that time. He will begin counting days for the substantial presence test on Jan 1, 2024. It’s important to note that Hans cannot be exempt for any part of more than ve calendar years as a teacher, trainee, or student unless he establishes a closer connection to a foreign country. Other kinds of individuals on certain visas are exempt from counting days for the substantial presence test including teachers and trainees, diplomats, and professional athletes. J visa students and changing to a teacher or trainee designation One area of tax confusion for international students on J visas arises when a J visa holder is a university student and also a professor, assistant professor, or a trainee in a specic profession. A teacher or trainee is dened as anyone with a J or Q visa, other than a student, who substantially complies with the requirements of their visa. The distinction between the two is important because teachers and trainees are exempt from the substantial presence test for only two calendar years. They are not exempt if they have been exempt as a student, teacher, or trainee for any part of two of the last six calendar years. This determination is extremely important, especially for students who start graduate assistant programs that include student teaching or apprenticeships where their visa status changes from student to teacher or trainee. If they’re in the U.S. for more than two years, they might be a resident alien and will le Form 1040 instead of Form 1040NR, as described below. International students usually le a tax return reporting annual income If an international student is a resident alien for U.S. tax purposes, then they will le Form 1040 using the same rules for U.S. citizens and resident aliens. Nonresident alien students le Form 1040NR, with exceptions If the international student is a nonresident alien for U.S. tax purpose, they are required to le Form 1040NR if they have any taxable income during the year, with exceptions.
Nonresident alien students and scholars should be aware that they must le a return even if their only income is from a taxable scholarship, fellowship, or other education benet. Nonresident students must also le if they have income that is wholly or partially exempt under a tax treaty. Nonresident alien international students and scholars do not need to le a tax return if they have income only from foreign sources, interest income, tax-free scholarships, or any other income that is nontaxable. Sometimes F, J, M, or Q visa holders do not owe tax, but still have tax withheld from their income. If international students’ income is not high enough to create a tax liability, or if they can claim exemptions or credits, they may be able to get a refund of some or all of the withholding. Note that the 2017 Tax Cuts and Jobs Act (TCJA) suspended personal, spousal, and dependent exemptions for tax years 2018 through 2025. Exemptions will be allowed again in tax year 2026. Nonresident alien students might also have to le other forms, depending on their circumstances The forms nonresident alien students need to le may vary due to specic circumstances. • If a nonresident alien international student didn’t have any U.S. sourced income (other than bank interest): ◦ Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition • If a nonresident alien international student had U.S. sourced income (other than bank interest): ◦ Form 1040NR-EZ or Form 1040NR ◦ Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition ◦ A copy of Form W-2(s) (if applicable) ◦ A copy of Form 1042-S (if applicable) Certain international student income is taxable, unless a treaty applies Some international students are exempt from U.S. tax for certain kinds of income under a tax treaty with their home country. The U.S. has income tax treaties with many (not all) countries, each containing its own benets for residents of a foreign country who temporarily visit the U.S. for the purpose of education or training. It is vital to read each treaty’s specic article because each treaty is different. Example: Hans receives a $5,000 (USD) scholarship from an organization in Germany for his educational expenses while he is in the U.S. on an F visa. Under the U.S.-Germany Tax Treaty, Article 20(2), payments from outside for a student who is a resident of Germany are exempt from U.S. tax. And, because the savings clause (paragraph 1(b)(bb) of the 1989 Protocol) doesn’t apply to Article 20(2), as long as Hans isn’t a U.S. citizen or green card holder, he qualies for the exemption in Article 20(2). Some treaties only allow U.S. tax exemption for certain kinds of international student income. Whether an international student’s income is taxable for U.S. purposes depends on the treaty. For example, the U.S.- Austria treaty only exempts income paid to international students from outside the U.S. or payments to business trainees and apprentices from U.S. tax. On the other hand, under the U.S.-Belgium treaty,
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US-taxes-for-international-students (1)

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