Important Concepts
Tax Treaties: The United States has income tax treaties with many different countries. Residents of these countries may be taxed at a reduced rate or be exempt from U.S. income tax withholding on specific kinds of U.S.-source income. Treaties vary among countries. If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for Form 1040NR.
Taxable Income: Some kinds of income are taxed while others are not. For students and scholars who are considered nonresidents for tax purposes, interest income is not taxed if it comes from a U.S. bank, a U.S. savings and loan institution, a U.S. credit union, or a U.S. insurance company. Generally income from foreign sources is not taxed. Wages that appear on form W-2 are taxable. Scholarship or fellowship income that requires services (i.e. teaching assistant) will be treated as wages (like employment). Scholarships, fellowships, and grants may be partially taxed. For degree-seeking students, portions used for tuition, fees, books, supplies, and required equipment are not taxed; portions used for other expenses, like room, board, and travel, are taxable.
Social Security and Medicare: Nonresident students on F-1 visas, who are also considered nonresidents for tax purposes, should not have Social Security or Medicare taxes withheld from pay. If these taxes have been withheld, contact your employer for reimbursement. If you cannot get a refund from your employer, use Form 843, Claim for Refund and Request for Abatement, to request a refund from the IRS. Further instructions can be found online.
Resident for Tax Purposes: If you have determined, based on the substantial presence test or marriage to a U.S. citizen or resident alien, that you are considered a resident for tax purposes, then you will generally have the same federal income tax requirements as a U.S. citizen. Note that in this context, the term “resident” applies only to your tax requirements and is not related to your immigration status. See Publication 17: Your Federal Income Tax Guide.
- Filing Tips:
- Make photocopies of your documents for your records.
- Be careful to complete the correct form; it is easy to mix up 1040NR with the 1040, for instance.
- Sign and date all forms and be sure to mail them before the stated deadline.