Income Tax Issues for International Students
#1 – What is subject to income tax?
Non-residents are subject to taxation on income earned in U.S., including compensation for services, scholarships, prizes and awards, honorarium payments, and reimbursement of expenses.
#2 – What do I have to do?
All international students MUST file either Form 1040NR or Form 8843. An international student is required to file Form 8843 if you meet all of the following conditions:
1) You do not have any income subject to tax (or income less than $12,000 for Indian students who are able to claim the standard deduction).
2) Your scholarships do not exceed the tuition and books expense; AND
3) You do not have any tax withholdings
#3 – Can I use free online software?
Free online software (ex. Turbo Tax) is NOT designed to handle the special rules for international students; therefore, using the software will give you the wrong tax liability, which could result in PENALTIES! Moreover, free online software offers free federal tax return but requires additional fees to file a state tax return. DO NOT USE THEM!
#4 – Where can I go for help? Volunteer Income Tax Assistance (VITA).
Every spring semester, Beta Alpha Psi (BAP) (an on-campus association of accounting students) offers FREE income tax preparation assistance through the Volunteer Income Tax Assistance (VITA) program. This is the single best resource international students have to fulfill the annual tax filing requirements. IRS-certified volunteers will be able to help you file either a federal return 1040NR or Form 8843 and state return MO-1040, claim your salary or scholarship exemptions, and get your FICA taxes back if employers mistakenly withhold them. You are strongly encouraged to utilize this free service every year.
VITA is a free tax service for Truman students, faculty, and the Kirksville community, sponsored by Beta Alpha Psi. IRS-certified volunteers will be able to help you file federal and state tax returns as well as Form 8843. You are strongly encouraged to use this FREE service every year. For more information, visit vita.truman.edu, call 660-785-6064, or email VITA@truman.edu.
*Please check with #2 (What do I have to do?) in order to decide which section you should go to.
Regular VITA sections (Form 1040NR) are held on the following dates at Violette Hall 1424:
- Saturday, February 8, 2020, 8:00 a.m. – 2:00 p.m.
- Saturday, February 15, 2020, 8:00 a.m. – 2:00 p.m.
- Saturday, February 22, 2020, 8:00 a.m. – 2:00 p.m.
- Saturday, March 28, 2020, 8:00 a.m. – 2:00 p.m.
Form 8843 Sections are offered on the following dates at Violette Hall 1424:
- Wednesday, February 5, 2020, 6:00 p.m. – 9:00 p.m.
- Wednesday, February 12, 2020, 6:00 p.m. – 9:00 p.m.
- Wednesday, February 19, 2020, 6:00 p.m. – 9:00 p.m.
- Wednesday, March 25, 2020, 6:00 p.m. – 9:00 p.m.
What to bring to VITA
- Photo ID (Truman ID is sufficient)
- Tax Forms (such as a W-2 for wages, 1099 for investment income, etc.)
- Bank routing number and account number for direct deposit
- A copy of last year’s federal and state tax returns, if available
- Passport (for latest date stamp)
#5 How will the new tax bill affect me?
Prior to 2018, international students were allowed to claim a personal exemption which reduced taxable income by $4,050. Congress recently passed the Tax Cuts and Jobs Act which eliminated the personal exemption. As a result, international students may see a smaller refund or a larger tax due than they have in prior years.
#6 Are scholarships taxable?
Scholarships are not taxable if all of the following conditions are met:
- The taxpayer is seeking a degree
- Scholarships are used for tuition, books, etc., but NOT for lodging and meals
- The taxpayer is not expected to provide any service in return
- Note: “Scholarship hours” worked by students at Truman ARE taxable and the taxable portion is reported on a W-2.
Scholarships in excess of tuition and books are taxable income. In other words:
- Scholarship > Tuition, books, etc. – The excess scholarship is taxable.
- Scholarship < Tuition, books, etc. – The scholarship is not taxable
By treaty, some scholarships are not taxable (see a list of treaties below).
# 7 What about FICA taxes?
Lawfully employed F-1 and J-1 visa holders with non-resident tax status are not subject to Social Security and Medicare (FICA) tax withholding. Certification of all exemptions from FICA taxes must be made with your employer. To prove to your employer that you are not subject to FICA – direct them to Publication 519. This exemption ends after five calendar years when an individual on a student visa meets the substantial presence test by being physically present in the United States for more than 182 days in the sixth calendar year.
Note: If Social Security tax has been withheld in error from your wages, you should first request a refund from your employer. If you are unable to get a refund from your employer, you will need to file Form 843 and Form 8316 to request a refund.
VITA volunteers will be happy to help you with this.
# 8 Can you provide examples?
Se-In is from South Korea and has a salary of $7,000 from a summer internship, a scholarship of $11,000, and pays tuition of $8,000. She is unmarried with no dependents.
Se-in’s income is roughly $10,000 ($7,000 salary and a scholarship in excess of tuition of $3,000). Referring to the table at the end of this document, we see that under the South Korean/US tax treaty, $2,000 of her salary is tax-exempt and all of her taxable scholarship ($3,000) is exempt. Thus, she will have to pay tax on only $5,000 ($8,000 minus her salary exclusions of $2,000).
|Income Broadly Conceived||10,000|
|Less: Salary Exclusion (Tax Treaty)||(2,000)|
|Less: Scholarship Exclusion (Tax Treaty)||(3,000)|
Trang is from Vietnam and has the same income as Se-In. However, referring to the treaty table at the end of this document, the US does not have a tax treaty with Vietnam. Therefore, she will be taxed on her full salary of $7,000 plus her taxable scholarship of $3,000.
|Income broadly conceived||10,000|
|Less: Exclusion (no Tax Treaty)||(0)|
#9 How can I tell if my country has a tax treaty with the US?
- Use the table below to check. If your country is not listed, there is no treaty in place.
Tax Treatment of International Students (Pub 901 and 4011)
|Bangladesh||2 years||$8,000||No limit||21|
|China, People’s Republic of China||No limit||$5,000||No Limit||Does not apply to Hong Kong||20|
|Commonwealth of Independent States||5 years||N/A||Limited||Personal services income is exempt if taxpayer stays more than 183 days in US||6|
|Cyprus||5 years||$2,000||No Limit||21|
|Czech Republic||5 years||$5,000||No Limit||21|
|Egypt||5 years||$3,000||No Limit||23|
|Estonia||5 years||$5,000||No Limit||20|
|France||5 years||$5,000||No Limit||21|
No limit – scholarship
|Iceland||5 years||$9,000||No Limit||19|
|Indonesia||5 years||$2,000||No Limit||19|
|Israel||5 years||$3,000||No Limit||24|
|Kazakhstan||5 years||N/A||No Limit||19|
|Korea, South||5 years||$2,000||No Limit||21|
|Latvia||5 years||$5,000||No Limit||20|
|Lithuania||5 years||$5,000||No Limit||20|
|Morocco||5 years||$2,000||No Limit||18|
|Netherlands||No Limit- Salary|
3 years – Scholarship
|Norway||5 years||$2,000||No Limit||16|
|Pakistan||No limit||$5,000||No Limit||13|
|Philippines||5 years||$3,000||No Limit||22|
|Poland||5 years||$2,000||No Limit||18|
|Portugal||5 years||$5,000||No Limit||23|
|Romania||5 years||$2,000||No Limit||20|
|Russia||5 years||N/A||No Limit||18|
|Slovak Republic||5 years||$5,000||No Limit||21|
|Slovenia||5 years||$5,000||No Limit||Can apply to graduate school||20|
|Spain||5 years||$5,000||No Limit||22|
|Thailand||5 years||$3,000||No Limit||22|
|Trinidad & Tobago||5 years||$2,000||No Limit||19|
|Tunisia||5 years||$4,000||No Limit||20|
|Ukraine||5 years||N/A||No Limit||20|
|Venezuela||5 years||$5,000||No Limit||Can apply to graduate school||21|
#10 The CIS staff cannot assist with tax preparation!
The CIS staff does not assist in the completion of personal income tax forms for international students or staff. We urge each one of you to utilize the Volunteer Income Tax Assistance (VITA) service provided by Beta Alpha Psi in the spring semester. We especially urge you to contact a competent tax consultant before responding to the IRS if you receive an IRS letter declaring that you have a tax liability. The IRS publishes information booklets which are available through the IRS public service system.
#11 I’m leaving the US this year. Do I still need to file a tax return?
Yes, you still must file a tax return. While free tax preparation software such a Turbo Tax does not prepare tax returns for nonresidents correctly, we recommend using http://www.sprintax.com/. Additionally, you can go to any American embassy or consulate for FREE tax preparation assistance.
- 519 U.S. Tax Guide for Aliens
- 901 U.S. Tax Treaties
- 8843 Statement for Exempt Individuals (with instructions)
- 1040NR Non-Resident Alien Income Tax Return (with instructions)
- 1040NREZ U.S. Non-Resident Alien Income Tax Return (with instructions)
Forms for State of Missouri Tax Returns can be found at http://dor.mo.gov.
Please check the Beta Alpha Psi website (http://bap.truman.edu/vita/) for information or dates of free income tax preparation.