Taxes 101 for international students on F1 and J1 visa

Image result for 1040nr form

If you earned any income as an F1 or J1 visa holder, you need to file taxes. It sure is confusing because either this is your first time or you are not aware of the tax laws. Let’s talk about some basics first.

Where to start?

You may have income from an on campus job or internship that you did in the summer. At the end of every year you will receive a W-2 form from your employer. This form will tell you the total income you earned and the taxes you owe. Typically your employer must mail or hand-deliver your W-2 to you no later than January 31st

Wait! You are not ready to file your taxes yet. Before you begin to file taxes, you need to figure out your residency status. You could either be a resident alien or a non resident alien depending on your visa status and the number of years you spent in the USA. Most F1 or J1 students [from India, China or any other country] are non resident aliens. You can determine the residency status using the substantial presence test. Read more

Non resident aliens need to file form 1040NR or 1040NR-EZ (short version of 1040NR). In the last few years IRS has made filing 1040NR electronically possible but most popular tax software doesn’t support that yet. The other option is to fill the form manually and physically mail to IRS.

In addition to filing federal taxes, you also need to file state taxes. In cases where you worked in a different state you need to file multiple state taxes. Note that The only states where you won’t have to file a tax return are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

What if you didn’t earn any income in the US?

If you did not earn any income, you do not have to file form 1040NR or 1040NR-EZ. However as a student on an F1 or J1 visa you would need to submit form 8843 which is required to account for the exempt days.

How are taxes calculated?

Taxes are calculated based on the total income you earned. Both federal and state allows you to take certain deductions which reduces the overall tax that you owe. You may have already realized that your employer withholds certain taxes in your paycheck. Taxes are then calculated based on the income minus the deductions.

As international students your country may have special tax treaty with USA that would allow you to take certain deductions. For example students from India can take the standard deductions while students from China are allowed benefits of $5000.

Image result for china us tax treaty f1 visa

How to file taxes?

There are many tax filing software out there which you can use to file taxes. But be sure that they file the form 1040NR as most students on F1 or J1 visa doing CPT / OPT will be treated as non resident aliens.

You can also try http://www.1040nra.com to self prepare your taxes. The software is free for students with income less than $10,000. Hundreds of student have successfully prepared their taxes using the software. However it is not an e-file tool, the software will generate 1040NR form for you and you will need to mail them to the IRS.

Note: This blog is informational and cannot be used for legal or financial purpose.

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