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Tax Season as an International Student

There are over a million international students and counting in the United States. If you are an international student and receive income from U.S. sources, you could be required to file an income tax return. This process can be more complicated than the average return for an American citizen or green card holder. Here are several areas of the Internal Revenue Code that many international students find the most difficult. In these cases, it may be beneficial to seek assistance from a professional tax preparer.

Residency Status

International students can be classified into one of two categories, either a resident or nonresident alien. A resident alien is subject to the same tax system as every ordinary American citizen, with more taxable income. However, most international students are considered nonresident aliens. This means they follow a different set of rules and only certain types of income will be taxed.

As an international student, you would have to pass a “substantial presence” test, which would properly categorize you as a resident or nonresident alien. Since most students fail the test they are considered nonresident aliens. However, some may qualify. For international students who do qualify, it would be up to them to decide whether to file regular taxes or be exempt from resident status. A student can be exempt from the substantial presence test if they meet the following criteria:

  1. present in the U.S. on a student visa
  2. a full-time student
  3. in compliance with visa
  4. present in the U.S. for less than six years

ID Requirements

Filing taxes requires an identification number issued by the government. Full residence citizens are given a social security number (SSN) that meets the requirement. However, those who…

  1. are not a U.S. citizen
  2. are not admitted as a permanent resident
  3. own a visa that does not allow employment

… will not be given a social security number. To file taxes as an international student, you must apply for an individual taxpayer identification number (ITIN). This requires an application process done with the help of a Taxpayer Assistance Center (TAC) or an IRS Certified Acceptance Agent (CAA). A CPA or tax professional would be able to assist during this process, making it easy for international students who are filing their taxes for the first time.

Difference Between Filing Statuses

Choosing whether or not to file as a resident alien or nonresident alien brings different pros and cons to the table. The benefits and disadvantages of filing taxes as a resident alien are similar to those of U.S. citizens. Although nonresident aliens are tax exempt on certain forms of income, they do not qualify for other exemptions and deduction. These differences, advantages, and disadvantages can be discussed further with a qualified tax professional.

To discuss your options for tax preparation as an international student, schedule a free consultation with 212 Tax & Accounting Services today.

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