Tax Information for International Students and Employees

The IRS is the United States (“U.S.”) taxing authority that is required to collect taxes from all U.S.-sourced income for international student and employee income.

 

If you fall under either of the following criteria, you must file a return:

  1. A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during the year.

  2. A nonresident alien individual who is not engaged in a trade or business in the United States and has U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.

 

If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of two tests: the green card test or the substantial presence test for the calendar year (January 1 – December 31).

 

If you were a nonresident student or researcher who was temporarily present in the United States on an F-1 or J-1 visa who has earned income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc., you must file Form 1040-NR, U.S. Nonresident Alien Income Tax Return.

 

All international students, researchers and any applicable dependents are required to fill out Form 8843 each year they are in the U.S., regardless of if they had income or not.

 

F-1 and J-1 students maintaining status are exempt from the substantial presence test for 5 years. J-1 scholars are exempt from the substantial presence test only if they have been in the U.S. no more than 2 out of the last 6 years.

Tax Documents

Tax reporting documents are a record of payments received and taxes paid in the prior calendar year.

[EXAMPLE]

All income received by resident alien employees and income received by nonresident alien employees, on which tax treaty benefits have not been claimed, will be reported, along with the taxes withheld, on Form W-2 Wage and Tax Statement.

Form W-7 is used to apply for an IRS individual taxpayer identification number (ITIN). This form can also be used to renew an existing ITIN that is expiring or that has already expired.

 

An ITIN is a 9-digit number issued by the IRS to individuals who are required for U.S. federal tax purposes to have a U.S. taxpayer identification number but who do not have and are not eligible to get a Social Security number (SSN).

A 1042-S is a year-end federal tax document given to a non-resident alien who:

  1. Received wages exempted from federal and state tax withholding by a tax treaty; and/or

  2. Received a non-qualified taxable scholarship (Any amounts received for incidental expenses or by a non-degree candidate are taxable scholarships. Incidental expenses include room and board, travel, and expenses for equipment and other items that are not required for either enrollment or for attendance, or in a course of instruction).

 

The 1042-S has an income code, which describes the type of income being reported. In certain cases, you may receive a W-2 in addition to a 1042-S.

You will need to file Form 1040-NR if you:

  • Were a nonresident alien engaged in a trade or business in the United States.

  • Represented a deceased person who would have had to file Form 1040-NR.

  • Represented an estate or trust that had to file Form 1040-NR.

Nonresident foreign nationals with USCIS work authorized documents may be exempt from FICA taxes on their wages for their USCIS authorized services performed when the employment directly correlates to the purpose of their nonimmigrant work status. For the purposes of Meharry, two specific classes of nonimmigrants/nonresidents may be exempt: F-1—work study, EAD OPT–and J-1 Research Scholars.

Classification Exemption Formulate/Determination
F-1 Student Exempt for up to five calendar years* for employment including:

  • On-campus employment – limited to up to 20 hours a week OR 40 hours during the summer;
  • Off-campus employment – only with USCIS work authorization; or
  • Practical Training student employment – either on or off campus, must be approved (i.e., OPT or CPT)
J-1 Researcher Exempt for up to two calendar years* for employment including:

  • On-campus employment as professor, teacher, or researcher
H-1B Specialty Employees NOT EXEMPT – For FICA taxes, an H-1B employee is treated the same as a U.S. citizen when providing services to a U.S. employer within the United States (IRS).
Dependents/Spouses of F-1 or J-1 visa holders (i.e., F-2, J-2) NOT EXEMPT – The FICA tax exemption does not apply to spouses and children in F-2 or J-2 nonimmigrant statuses (IRS).

*Please note that for the purpose of measuring a foreign national’s date of entry for determining the calendar year(s) of the visa holder, the actual date of entry is not determinative. The specific calendar year is the only consideration. For example, a foreign student who enters the U.S. on December 31, 1998, would count 1998 as the first of their five years as an “exempt individual.

 

FICA Rules for Nonresident Aliens in the U.S. Under F-1 and J-1 Nonimmigrant Category

 

FICA is comprised of the following taxes: (1) 6.2 percent Social Security tax, (2) 1.45 percent Medicare tax — the “regular” Medicare tax — and (3) a 0.9 percent Medicare surtax when the employee earns over $200,000. Employers must withhold these amounts from an employee’s wages — the “employee portion”.

 

There is also an employer portion of two of these taxes: (1) 6.2 percent Social Security tax and (2) 1.45 percent Medicare tax.

Contact General Counsel

Office of General Counsel
Hulda Lyttle Hall, 3rd Floor, Suite 314
1005 Dr. D. B. Todd, Jr., Blvd.
Nashville, Tennessee 37208
Telephone: 615.327.6102