Tax Issues for International Students
Filing taxes means to submit documentation, either via mail or electronically, to government agencies, such as the IRS, in order to report income and tax liability and to claim a refund or pay any tax owed.
The tax agencies use a taxpayer identification number to cross check what an individual has reported with documents received from reporting organizations such as Hamilton College. There are two kinds of taxpayer identification numbers:
1) Social Security Number (SSN): This is issued by the Social Security Administration (SSA) if employment documentation submitted. Once application approved, a SSN is generally issued in 7-10 business days. Information on how Hamilton students may receive assistance in applying for a SSN is available here.
2) Individual Taxpayer Identification Number (ITIN): This is issued by the IRS for individuals required to file a tax return, but not employed in the U.S. and so not eligible for a SSN. Students not working on campus who receive taxable scholarships (scholarship in excess of tuition is generally deemed taxable) will need an ITIN in order to file their tax returns.
In summary, all students employed by the College need to apply for a SSN if they do not have one. International students not employed by the college who may receive other forms of financial assistance should apply for an ITIN. The application for an ITIN may be submitted with the student’s tax first tax filing. The same ITIN will be used for subsequent filings unless a student becomes employed and receives a SSN in subsequent year.
Determining Status for Tax Purposes: Nonresident or Resident Alien?
International students in the U.S. are generally referred to as aliens for tax purposes and a distinguishing factor is made between resident and nonresident alien. A person’s status for tax purposes is different from immigration status.
Students are considered a resident alien for tax purposes if they have received a green card or are determined to have a substantial presence in the U.S. The determination of substantial presence is based on visa status and length of presence in the U.S. Time in the U.S. on a F-1 visa is generally deemed exempt from the calculation of substantial presence.
A nonresident alien is anyone who does not have a green card test or is not deemed to have had substantial presence in the U.S. Generally most international students on an F or J visa are considered nonresident aliens for tax purposes.
Resident aliens are taxed in the same manner as U.S. citizens and permanent residents and file the same tax forms as U.S. citizens and permanent residents. Nonresident aliens are taxed differently and tax filings applicable to nonresident aliens are described below under Year End Tax Reporting.
Year End Tax Reporting
All nonresident aliens are required to file Form 8843. This form documents the student’s visa information and days of presence in the U.S. for purposes of the Substantial Presence Test. Students may also need to prepare and file a Form 1040NR if they have received financial compensation or assistance in the U.S. during the tax year (Jan 1-Dec 31).
The College will report financial assistance and compensation provided to international students on either a Form W-2 or Form 1042-S.
Form W-2 Wages paid during the tax year which were not claimed as tax exempt are reported on a W-2.
Form 1042-S Wages paid during the tax year which were claimed as exempt by tax treaty are reported on 1042-S. Scholarship in excess of tuition costs are reported here as well as other forms of financial assistance such as prizes, fellowships, educational stipends.
The College must provide W-2 statements to all employees by January 31 and must provide 1042-S statements by March 15. Students receiving such documents should use them to prepare and file their tax return.
The tax filing deadline for anyone with U.S. source income is April 15. The Form 8843 should be submitted with the tax filings. If as student has no U.S. sourced income to report, the Form 8843 must be filed by June 15.
International students should use the Sprintax software provided by the College to prepare their tax returns. Sprintax offers online assistance for international students who would like additional assistance preparing their tax returns.