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General Information regarding Foreign Students

The content contained herein is intended for general discussion only. Please understand that many fine prints and exceptions to the rules are not articulated here. Please consult a tax professional for a detail evaluation of your individual situations.

Are you an Exempted Individual?

Generally, if you were physically present in the USA for at least 31 days in the current year and 183 days during the 3-year period that includes the current year and the 2 years immediately before that, you will be considered as Resident for tax purpose because you would have passed the Substantial Presence Test.

However, as a foreign student with F-visa, you are an Exempted Individual -- the Substantial Presence Test does not count your stay until you have stayed in the USA cumulatively for 5 years. In order for you to enjoy this exemption, you need to file Form 8843 annually even if you have no income to report. Please note that you can only be an Exempted Individual once in your lifetime. Once you have stayed cumulatively more than 5 years, you cannot be an Exmepted Individual again.

Exception: You can continue to be an Exempted Individual even after you stayed in the USA cumulatively for more than 5 years if you meet all of the following conditions. You need to file Form 8843 along with your Form 1040NR.

  • You do not intend to reside permanently in the United States
  • You have not taken any steps to change your U.S. immigration status toward permanent residency
  • You have substantially complied with the United States immigration laws for your student nonimmigrant status during your stay in the United States
  • During your stay in the United States, you have maintained a closer connection with a foreign country than with the United States

Social Security Number (SSN)

SSNs are generally assigned to people who are authorized to work in the United States. SSNs are used to report your wages to the government and to determine eligibility for Social Security benefits.

Social Security will not assign you a number just to enroll in a college or school. Some colleges and schools use Social Security numbers as student identification numbers. If you do not have a Social Security number, the college or school should be able to give you another identification number.

SSN for Employment

If you get a job and need a SSN, the Social Security will require the following documentations:

  • A letter from your designated school official that identifies you, confirms your current school status, and identifies your employer and the type of work you are, or will be, doing.
  • A signed and dated employment letter from your supervisor that provides the job description, employment start date, the number of hours you are, or will be, working, and your supervisorís name and telephone number
Therefore, it is strongly suggested that you consult the international student advisor and follow your school's procedure.

SSN for Other Reasons

If you are not eligible for SSN but you have a valid tax reason, you may apply for an Individual Tax Identification Number (ITIN). An ITIN is a tax processing number issued by the IRS to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs). An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit.

Tax

There are 3 primary kinds of tax in the US: Federal income tax, Social Security & Medicare taxes and state income tax. Some localities, such as New York, also impose city income tax.

Federal Income Tax

All your income from US source is subject to Federal income tax. Whether you will owe any tax depends on many factors, including but not limited to, your citizenship, possible treaties between your government and the US government, and income level.

Social Security and Medicare Taxes

Foreign students in F visa are exempted from Social Security and Medicare on wages performed within the United States as long as such services are allowed by USCIS for these nonimmigrant statuses. Exempted employments are:

  • On-campus student employment up to 20 hours a week (40 hrs during summer vacations).
  • Off-campus student employment allowed by USCIS.
  • Practical Training student employment on or off campus.
Please note that exemptions are not extended to
  • Spouses and children in F-2 nonimmigrant status.
  • Employment not allowed by USCIS or to employment not closely connected to the purpose for which the visa was issued.
  • F-1 student who change to an immigration status which is not exempt or to a special protected status.
  • F-1 student who become resident aliens.

If Social Security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843 "Claim for Refund and Request for Abatement".

State Income Tax

In addition to Federal income tax, most US states impose income tax on its residents as well. To find out which states do not impose state income tax, you can visit >>>Wikipedia<<<.

The terms, "resident" and "residency", have a totally different meaning from state income tax perspective than the federal income tax perspective.

While the federal government looks at the number of days you are present in the US, type of visa and others to determine your residency, states look at the place where you have the closest connection to. If your closest connection is the state where you live, then you are resident of the state. Unfortunately, there is no one fast and quick rule to determine your closest connection. Instead, many factors must be considered to determine your overall nature of your presence. With exceptions, most foreign students are considered as non-residents if they maintain a closer ties to their own countries.

To make things more complicated, many tax treaties do not apply to state income tax because almost all tax treaties are entered between the foreign governments and the federal government, not state governments.

When You Get A Job or Scholarship...

This section discusses topics that you need to know when you get a job or scholarship.

Social Security Number

When you get a job, you should apply for a Social Security Number. Please see earlier discussion on what you need to do.

Tax Withholding

The US tax is a "pay-as-you-go" system - it means you should pay tax as you earne the income. It is different than you wait till tax time to pay a year worth of tax. For most people, they pay their tax through employers' payroll deduction. The employers will withhold a portion of their income from every paycheck to pay the federal and state governments on behalf of the employees.

At the beginning of your employment, your employers will ask you to fill out a Form W4 "Withholding Allowance Certificate", Form W8BEN "Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding", or Form 8233 "Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual". Which one should you use?

Use Form 8233 if
  • you receive compensation for independent (i.e. independent contractor), dependent personal service (i.e. employees), or non-compensatory scholarship, AND
  • you want to claim a treaty withholding exemption on part or all of the compensation
Click >>>here<<< to find out whether 1)the USA maintains a tax treaty with your country, and 2) what kinds of income is/ are exempted from US (federal) income tax.

Use Form W4 if
  • you receive compensation for independent or dependent personal service and you are not claiming tax treaty withholding exemption.

Use Form W8-BEN if
  • you receive non-compensatory scholarship income, AND
  • you are not receving personal service income from the same withholding agent
Note: Your withholding agent may elect to use W4 for non-compensatory scholarship income.

Departure Permits

Generally, all Non-Residents must obtain a certificate of compliance certifying that their US tax obligations have been satisfied according to available information before leaving the United States. However, foreign students in F visa are exempted from obtaining Departure Permits if you have not received any income from sources in the United States other than:

  • Allowances covering expenses incident to your study or training in the United States (including expenses for travel, maintenance, and tuition).
  • The value of any services or accommodations furnished incident to such study or training.
  • Income from employment authorized under U.S. immigration laws.
  • Interest on deposits, but only if that interest is not effectively connected with a U.S. trade or business.
If you have received other income from sources in the United States, such as gambling, capital gain (e.g. stocks) from US brokerage firms, you will need to first obtain Departure Permit before you leave the United States.



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