Do International Students Pay Taxes in the US? Full Guide

International students must pay taxes on all taxable income, including wages, dividends, tips, and scholarships, exceeding tuition and required fees. They have to choose specific forms for filing taxes depending on whether they are resident or non-resident taxpayers.

Whether you are a foreign student or scholar, this article can help you learn about your tax liability and how to file taxes as an international student. We discuss taxable income, filer status, forms, exemptions, and refunds and share some tips on filing to make this process hassle-free.

Key Takeaways

• International students pay taxes on any taxable income (wages, dividends, awards, tips, or scholarships exceeding tuition) in the U.S.
• There are resident and non-resident tax filers who must file and report taxes using distinct forms.
• Students may use multiple forms for tax reporting, some of which they can easily generate on Paystub.org.
• When paying taxes, international students must know their resident status, use the right forms, and respect the deadlines.

Do International Students Have to Pay Taxes?

International students have to pay taxes on their income as long as it is taxable. In other words, the U.S. tax laws for international students state that F-1, J-1, and H-1B visa holders and other students and scholars must pay taxes on wages, tips, scholarships that exceed tuition, and dividends.

There are two types of international student tax filers: residents and non-residents. It’s important to note that individuals of both filer statuses must pay taxes if their income is taxable.

The key difference between the two is that individuals from each group must use different tax filing forms. The resident and non-resident statuses are only used for tax filing purposes and do not apply to immigration or other statuses.

If you are not a US citizen, you are considered a non-resident for tax purposes. However, you may meet the substantial presence test or green card test requirements and get a resident tax filer status.

You can override both of these tests by making one of the following selections:

• First-year choice to be treated as a resident
• Non-resident spouse treated as a resident
• Tax treaties
• Closer connection to a foreign country

Finally, you can have both a resident and non-resident tax filer status, typically during the year you arrive and depart from the US.

What Type of Income is Taxable for Students?

Wages, tips, dividends, and other income that come from on-campus jobs, optional practical and curricular training, as well as scholarships exceeding tuition and other fees, are taxable for students.

Let’s examine jobs with taxable income and scholarship taxes for international students in more depth:

#1. On-campus Jobs

International students can work up to 20 hours per week on campus, depending on their visa status and the university rules. They must file and report all sorts of income they have. Students should file taxes for the preceding year using the required forms and adhering to the set due date.

#2. Optional Practical Training (OPT) and Curricular Practical Training (CPT)

Optional Practical Training (OPT) and Curricular Practical Training (CPT) are great ways for international students to gain professional experience. Moreover, CPT is a nice option for students who are in the process of earning a degree, while OPT is suitable for students both before and after graduation.

Plus, OPT offers a STEM extension, which is an opportunity for students to work for an additional 24 months and further gain experience and income.

#3. Scholarships and Grants

Students with taxable income must file and pay taxes, but do international students pay taxes on scholarships and grants? The answer is yes, but only if the scholarships exceed tuition and other fees.

Qualified and non-qualified expenses are the primary factors for determining whether scholarships are taxable. Qualified expenses are course-related expenses like books, equipment, and supplies.

On the other hand, non-qualified expenses include education expenses that are not course-related, such as insurance, transportation, medical expenses, room and board, and other personal and family expenses.

It’s important to note that there are exemptions to nonresident alien tax requirements for scholars or students who only have income from these sources:

• Foreign sources
• Interest income from U.S. insurance companies, banks, credit unions, and savings & loan institutions
• Tax-free scholarships, fellowships grants, and tax benefits for education
• Investments that generate portfolio interest
• Other income sources not taxable by the IRS

Students and scholars are not obliged to file taxes for the aforementioned types of income except for tax treaty income exemption. Tax treaties are legal documents that the US government signs with many countries, which make some income non-taxable.

Regardless, students should always file taxes even if they are not taxable because of a treaty.

Specifically, if a treaty provides a student with a tax exemption, withholding for particular income items, or a reduced tax rate, a student should notify the withholding agent of their foreign status using Form W-8 BEN for income earned from non-personal services and Form 8233 for income earned from personal services.

7+ Key Tax Forms for International Students

As said, international students should use the right form when filing taxes. Otherwise, they may have to make amends or face penalties.

Here are the most common forms international students and scholars use for tax filing:

Form W-2

If you worked in the US and earned an income, your employer will likely send you Form W-2. This form encompasses all your earnings, benefits, and withheld taxes from the previous year, and you should receive it by February.

Once you get this form, you will probably need to file an additional one, depending on the state you are in. Every state has its own form. If you do not receive Form W-2 by February, you should notify your employer and request one.

It is your responsibility to perform the final form check before your employer can proceed with it. A great way to examine the numbers is to use reliable online software, such as our Form W-2 generator. You will need to prepare your information and use our automated tool, which can assist you in estimating or calculating tax information.

In case of a mismatch, you may request your employer to amend the W-2 form or give it the green light to take the following steps if everything is correct, as it is the employer’s duty to generate the official W-2 and meet the IRS requirements.

Form 1042-S

Form 1042-S is for non-residents who receive income exempt from tax withholding because of a treaty. Students who receive scholarships or fellowships also receive this form, which states the expenses and taxes paid (all except non-tuition expenses). The same form is used for students with a non-qualified taxable scholarship.

This form contains an income code, which indicates the type of income an alien citizen can earn. Students usually receive it via mail or electronically at the same time as Form W-2.

Form 8843

Filing taxes as a nonresident alien is not possible without Form 8843. Students should use it even if they have no income or are tax-exempt, as it is obligatory for every non-resident in the US. If students generate taxable income, they must use this form and any other form they need for tax filing and payment (e.g., Form W-2, Form 1099, etc.).

Form 1099

Form 1099 reports non-employment taxes, i.e., taxable income that a person or business, but not your employer, paid you.

For instance, the variations of this form, such as Form 1099-NEC, 1099-DIV, 1099-INT, and 1099-MISC, are used to report self-employment tax, dividends, investments, income earned on independent contractor jobs, or other miscellaneous payments such as awards or prizes.

Students should receive this form from individuals or businesses that pay them. However, if, for some reason, they need to create it themselves, they can use our Form 1099 generator.

Other Important Forms

Specific resident or employment status may oblige international students to pay taxes using multiple forms.

Aside from the main forms we discussed, students should know about other forms important for tax reporting:

• Form 1040-NR. This form is for non-resident individuals only. If you have taxable income, it is mandatory for you to file this form together with Form 8843. The suffix “NR” stands for non-residents and excludes residents from using this specific form (they should use standard Form 1040 instead).
• Form W-4. This form is obligatory for all students to fill out when they have been hired by an employer for the first time. The form determines how much taxes should be withheld from students’ pay.
• Form I-9 and W-7. As a non-resident, you need to fill out form I-9 to verify your identity and employment authorization. By filling out Form W-7, you will get an individual taxpayer identification number (ITIN) necessary for filing taxes.
• W-8 and Form 8233. These forms are for students with tax treaties. The first is usually filed and submitted when you are hired for the first time, and the latter is used for exemption from withholding for independent (and specific dependent) services by non-residents.

Filing international student tax forms is not difficult if you stick to the steps we are about to share.

How to File Taxes as an International Student in 4 Easy Steps

To file taxes as an international student, you must determine your residency status, gather required forms, use electronic tax software, or hire a tax professional to generate forms and file them via mail or electronically.

Check out our step-by-step international student tax guide for details:

#1. Determine Residency Status

Tax filing for F-1, J-1, or H-1B students strictly depends on their residency status. For instance, forms like 1040 are made solely for residents, and forms like 1040-NR are specifically intended for non-residents.

Some forms, like Form 1098-T for figuring out educational credit intended for residents and US citizens only, are often confused by non-residents. This is why it’s important to determine residency status and then see all the forms you need depending on it.

#2. Gather Required Forms

Once you know your status, you can prepare the forms you need based on whether your income is taxable or not, as well as on your employment status. For example, if you have no income, income exempt by a treaty, or a non-qualified scholarship, you should only file Form 8843. For tax-exempt cases due to a treaty, you must file Form W-8 BEN if you generated income from non-personal services and Form 8233 for income from personal services.

If you have any type of employment as a non-resident, you must first verify your identity (Form I-9) and get an ITIN and SSN (Form W-7). In cases of taxable income, you should use Form 8843 but also forms like 1040-NR and Forms 1099 or W-2, depending on the type of your employment.

#3. Use Tax Software or Hire a Professional

Generating forms manually can be tedious and lead to mistakes, whereas automated tools like Paystub.org can make this process quick and easy. Generators are simple yet effective when it comes to document creation.

Additionally, hiring a professional to help you with document preparation is also a good idea, as generating forms on your own may get tricky due to all the exemptions and rules. It is essential to mention that international students can use tools to generate forms only for their own purposes and that only employers and the IRS are eligible to generate official forms.

#4. File Electronically or by Mail

Finally, you must send the required forms to the Internal Revenue Service (IRS). You can file forms electronically or by mail. We recommend the first option because it is eco-friendly and less likely to result in a lost or missing file.

Do International Students Get Tax Refunds?

International students get tax refunds if they are eligible for this. Students have to file taxes before a specific date (the sooner, the better). Then, the report will show their tax liability, meaning that students should pay the balance by a specific date if they owe more taxes than were withheld.

As for the tax refund eligibility for non-U.S. citizens, if more taxes than you owe were withheld, you could file for a refund. You check this by comparing the taxes withheld with your official income tax shown in the form.

Electronic forms make filing for a refund easy. Typically, it takes around three weeks after filing to get a refund.

3 Common Mistakes to Avoid as an International Student Filing Taxes

Not only do international students need to pay taxes, but they must also stick to specific rules to avoid repercussions.

Let’s see the major causes of potential issues:

#1. Misunderstanding Residency Status

Misunderstanding residency status can lead to filing incorrect forms, which can cause various problems. That’s why it’s important to determine your residency status by checking the official U.S. government documents and performing the needed tests.

#2. Failing to Report Taxable Income

Some students may forget to report taxable income or think that their income is not taxable at all. Regardless of whether they can reduce their taxable income, all income from wages, tips, dividends, awards, prizes, or scholarships exceeding tuition must be reported.

#3. Missing Deadlines

Filing taxes late can result in penalties and require amendments to set your tax record in order. To prevent this, you must stay current with deadlines for a specific year. If you miss deadlines due to unforeseen events, you can file for a tax extension and pay taxes after the set due date.

Final Thoughts

International students must pay taxes in the U.S. on all taxable incomes, such as wages, tips, awards, dividends, etc. This applies to resident and non-resident aliens with taxable income gained through on-campus jobs, practical training, and scholarships that exceed tuition.

There are separate filing forms for resident and non-resident aliens. Students can use Paystub.org tools to generate unofficial, error-free forms for their own purposes or hire a professional to make tax paying easier. It’s important to strictly adhere to resident or non-resident forms, report taxes on all taxable incomes, and respect deadlines.

Do International Students Pay Taxes FAQ

#1. Do international students need to pay Social Security and Medicare taxes?

International students need to pay Social Security and Medicare taxes if they are resident tax filers. Non-resident tax filers are usually exempt from paying Social Security and Medicare taxes.

#2. Are international students eligible for tax credits?

International students (non-resident aliens) are eligible for tax credits if they qualify as resident aliens for tax purposes or meet other specific criteria (e.g., married to a U.S. citizen or resident alien and filing jointly). Also, resident dependents or those who obtained a resident status in the meantime may claim education tax credits.

#3. Do international students pay taxes on scholarships?

International students pay taxes on scholarships only if they exceed tuition, i.e., include non-qualified expenses such as medical expenses, room and board, etc.

#4. Do international students pay taxes on income from their home country in the USA?

International students may pay taxes on income from their home country in the USA, depending on whether the income is classified as U.S. source or foreign source income and whether a tax treaty applies. Foreign income generally remains untaxed unless it is connected to U.S. activities.