F-1 student taxes

Students are not “tax free”

An F-1 visa does not exempt you from US income tax. For a limited time it gives you two narrower things: your days in the US do not count toward the test that would make you a resident for tax purposes, and the wages your status allows are exempt from Social Security and Medicare tax. Scholarships, assistantships, on-campus jobs, CPT and OPT wages can all still create income tax and a filing requirement. For a typical nonresident F-1 student, the yearly routine is:

• Form 8843 for every year you are in the US, income or not.
• Form 1040-NR for any year with taxable US-source income, with Form 8843 attached.
• A state return if you earned income in a state that taxes it.
• No FICA on on-campus, CPT or OPT wages while you remain a nonresident.

Why most F-1 students are nonresident aliens

Without a green card, whether a non-citizen is a resident or nonresident alien for tax purposes comes down to the substantial presence test: at least 31 days in the current year and 183 weighted days over three years. A student here for a full academic year would pass it easily — if the days counted.

For most students they do not. F-1 students are exempt individuals: not exempt from tax, but exempt from counting days, until they have been exempt as a student for any part of more than five calendar years. Any part means any part. A year in which you arrived on December 28 uses up a whole year, and earlier F, J, M or Q stays count toward the total. An F-1 who first arrived in August 2023 is exempt for 2023 through 2027; their days start counting on January 1, 2028.

After five years, a student can stay exempt only by establishing that they do not intend to live in the US permanently and have substantially complied with the terms of their visa, explained on a statement attached to Form 8843. The IRS weighs the facts case by case, including any steps toward a green card, so do not assume it applies. The resident vs nonresident guide covers dual-status years and the rest of the mechanics, and the substantial presence calculator checks your own dates.

Form 8843: every year, even with no income

Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition, is how you tell the IRS you are excluding your days. It is not a tax return and nothing is owed with it, but it is required for every calendar year you claim the exemption, including years with no income and the year you arrived.

• Every F-1 student files one, whether or not they worked.
• Each F-2 spouse and child files a separate one, because their days are excluded through your status.
• No SSN or ITIN is needed. The form asks for a US taxpayer identification number only if you have one.
• Attach it to Form 1040-NR if you file one. Otherwise mail it on its own to the IRS address in the form instructions by the 1040-NR due date, which is June 15 for someone with no wages subject to withholding.

Form 1040-NR: when you have US income

Nonresident aliens file Form 1040-NR, not the Form 1040 that citizens and residents use. A nonresident F-1 student generally files one for any year with taxable US-source income: wages, the taxable part of a scholarship or fellowship, or treaty-exempt income you need to claim. Very small wage amounts can fall below the filing requirement, but a return is the only way to get over-withheld tax back, so most students with a paycheck file anyway.

Your documents arrive in two waves. Employers must send Form W-2 by January 31. Schools and other payers send Form 1042-S — used for taxable scholarships, treaty-exempt wages and certain other payments to nonresidents — by March 15. Wait for both before filing. Form 1040-NR can be e-filed through software that supports it, or mailed. Keep copies of your I-20, EAD, I-94 travel history, and every W-2 and 1042-S.

What is taxable on F-1

As a nonresident you are taxed only on US-source income. Interest on a savings account back home, for example, is not taxed while you are a nonresident.

Wages from on-campus jobs, CPT and OPT

Pay for work done in the US is taxed at the same graduated federal rates everyone pays. There is no special OPT tax rate. What differs from a resident colleague is that you pay no Social Security or Medicare tax and, in most cases, get no standard deduction, both covered below. Assistantship stipends for teaching or research are wages too, whatever your school calls them. The F-1 OPT tax calculator shows the effect on your paycheck.

If authorized work is paid as contractor income on a Form 1099, nobody withholds tax, so you may need to make estimated payments; nonresident aliens are generally not subject to self-employment tax. Confirm with your designated school official that contract work fits your authorization, and see the OPT guide.

Scholarships, fellowships and grants

For a degree candidate, the part of a scholarship or fellowship used for tuition, required fees, books, supplies and equipment is generally not taxable. The part covering room, board, travel or a living allowance is. That is how a full scholarship can still leave taxable income. Withholding on the taxable part of a US-source scholarship paid to an F-1 student is generally 14% unless a treaty reduces it, and the school reports it on Form 1042-S.

The source generally follows the payer. A grant from a US university, company or government agency is US-source. One paid by a foreign government or foreign organization is generally foreign-source, and so not taxable to a nonresident, even if a US agent disburses it.

Bank interest and investments

Interest on ordinary US bank deposits is generally not taxable for a nonresident alien, which is why banks ask for Form W-8BEN to certify foreign status. Dividends from US shares are generally taxed at a flat 30%, or a lower treaty rate, withheld at source.

The FICA exemption on campus, CPT and OPT wages

FICA is Social Security tax (6.2%) plus Medicare tax (1.45%): 7.65% of gross pay. Nonresident alien F-1 students are exempt on wages for work their status permits: on-campus jobs, off-campus work authorized by USCIS, and practical training, which covers CPT, OPT and the STEM OPT extension.

Two conditions must hold together: you are in F-1 status doing permitted work, and you are a nonresident alien for tax purposes. The exemption does not end on a date printed on your EAD; it ends when you become a resident, typically in your sixth calendar year, often in the middle of OPT or STEM OPT. From then on FICA applies to OPT wages although your visa has not changed. A separate student exemption, open to anyone including US citizens, can still cover pay from the school where you are enrolled and regularly attending classes. H-1B wages are never covered by the F-1 exemption.

If FICA was withheld by mistake

Check your first pay stub for Social Security (sometimes labeled OASDI) and Medicare lines; off-campus employers who rarely hire F-1 students often withhold by default. If it was taken wrongly:

1. Ask your employer to refund it. Show your I-20, EAD and I-94 record and point payroll to the IRS page on foreign student liability for Social Security and Medicare taxes. Payroll can usually correct the current year and repay you directly.
2. If they will not, claim it from the IRS on Form 843 with Form 8316 and the documents the Form 843 instructions list — typically your W-2, copies of your visa, I-94, I-20 and EAD, and your 1040-NR.
3. Do not claim it on your 1040-NR. It is a separate claim, and refund claims have time limits, so do not leave it for years.

No standard deduction, unless you are a student from India

Nonresident aliens generally cannot take the standard deduction, so federal tax applies from the first dollar of wages. The exception is the US–India tax treaty: students and business apprentices from India can claim it on Form 1040-NR. Nonresidents can itemize a short list of deductions instead, most usefully state and local income tax withheld from pay. They also generally cannot claim the education credits, so the Form 1098-T your school sends does not produce a credit on a 1040-NR.

Withholding reflects this. Nonresident aliens fill in Form W-4 under the special instructions in IRS Notice 1392, and employers add an extra amount to wages when calculating withholding to make up for the missing standard deduction — usually why your withholding looks higher than a resident friend’s on the same salary.

Tax treaty benefits for students

Many US income tax treaties include an article for students and trainees, and what it covers varies by country: some exempt scholarship income, some a set amount of earnings each year, some money sent from home for support, and most limit the number of years. There is no universal F-1 treaty benefit, so read your own country’s article in the treaty text the IRS publishes. You can claim it two ways:

• Through your employer, with Form 8233, so the exempt wages are not withheld on during the year. A new form is needed each tax year. For scholarships that are not pay for services, the school may ask for Form W-8BEN instead.
• On your return, by claiming the exemption on Form 1040-NR with the country and treaty article. Tax withheld on the exempt amount then comes back in your refund.

Treaty claims need an SSN or, if you are not authorized to work, an ITIN; the ITIN guide covers how students apply. Once you become a resident, the treaty’s saving clause usually switches student benefits off, though a few treaties let some continue.

State tax returns

States run their own income taxes with their own residency rules, usually based on domicile and time spent in the state rather than the federal alien tests, so your federal and state status can differ.

• If you worked in a state with an income tax, you usually file there. A few states do not tax wages at all.
• A summer internship in another state can mean returns in both the state where you worked and the state where you study, often with a credit in one for tax paid to the other.
• Not every state honors federal tax treaties, so treaty-exempt wages can still be taxed by the state.
• Form 8843 and the FICA exemption are federal. A student with no income usually has nothing to file with the state.

When you become a resident, and what changes

The exempt years run on a fixed calendar, not on when your studies end. Two common triggers end them:

• Your sixth calendar year begins. Students on OPT or STEM OPT often reach it while still working on their EAD. Day-counting starts January 1, and you usually become a resident for that year.
• You change to H-1B or another work visa. H-1B days count from the change date, so a change on October 1 usually leaves you a nonresident for that year and a resident from the next.

Once you are a resident for tax purposes:

• You file Form 1040. Form 8843 is needed only for years in which you exclude days, so in the year you switch to H-1B you still file one for your F-1 days.
• You report worldwide income, usually with a foreign tax credit for tax paid abroad.
• FICA applies, OPT wages included. Tell payroll promptly; employers often keep the exemption running by mistake, which becomes a bill later.
• You get the standard deduction and credits nonresidents cannot claim.
• Foreign account reporting starts. If your accounts outside the US together exceeded $10,000 at any point in the year, you file an FBAR, and larger balances can bring Form 8938 under FATCA.
• Most treaty student benefits end.

A year that starts nonresident and ends resident is a dual-status year with its own rules. Once you are on H-1B, the H-1B tax guide and H-1B tax calculator pick up from here.

Tax software, deadlines and getting help

Most mainstream consumer tax software is built around Form 1040 and does not support Form 1040-NR, so a nonresident using it usually ends up filing as a resident, with deductions and credits they are not entitled to. Many universities give international students free access to nonresident tax software through the international student office. Start there before paying anyone.

• April 15: Form 1040-NR if you had wages subject to US income tax withholding, which covers almost anyone with a W-2.
• June 15: Form 1040-NR if you had no wages subject to withholding, and Form 8843 filed on its own.
• Extensions: Form 4868 extends the time to file, not the time to pay.

A deadline that falls on a weekend or legal holiday moves to the next business day. State deadlines are set by each state.

Common mistakes

• Filing Form 1040 as a nonresident, usually through software built for residents. The fix is Form 1040-X with a corrected 1040-NR attached.
• Claiming the standard deduction when you are not a student from India.
• Skipping Form 8843 in years with no income, or for F-2 family members.
• Filing before the 1042-S arrives.
• Treating a whole scholarship as tax-free when part of it paid for housing and meals.
• Not checking pay stubs for FICA, either withheld while you are exempt or missing after you become a resident.
• Assuming the FICA exemption lasts as long as OPT. It lasts as long as you are a nonresident.
• Forgetting the state return after an out-of-state internship.

Tools and related guides

• F-1 OPT tax calculator — estimate take-home pay with and without the FICA exemption.
• Substantial presence test calculator — count weighted days and see where you stand.
• F-1 visa requirements and process — the visa itself, rather than the tax side.
• F-1 financial guide — banking, budgeting, and sending money home as a student.