Why all international students on F & J visas should file Form 8843

 

Most international students are here in the United States on an F or J visa. If that’s you, you might be wondering whether you need to do anything about U.S. taxes. Maybe you’ve even head about Form 8843 already. This article will help explain what Form 8843 is and why it’s so important to file!

What is Form 8843?

Basically it is your proof to the IRS that you were physically present in the U.S. for a specified number of days on a student visa.

Why does the IRS need this information?

There are two different types of taxpayers in the eyes of the IRS: “residents” and “non-resident aliens”. Determining which one you are requires counting up your days in the U.S. and applying them to the IRS’s Substantial Presence Test. You can learn more about that here, but the key takeaway for international students is that days on a student visa do not count toward this test, but only if you record those days to the IRS using Form 8843. In order to determine your tax residency status the IRS needs to know the number of days you were in the US.

Why does your tax residency matter?

There are different rules that apply to resident and non-resident taxpayers. You can learn about all the differences in our other blog here. Like all good questions the answer is, “it depends.”

If you are a tax resident you are You are eligible for tuition tax credits such as the lifetime learning credit. You can also take advantage of the married filing jointly tax status.

However, tFor many of our clients, filing as a non-resident is actually most optimal. That’s because there are three significant benefits from being taxed as a non-resident alien: very large drawbacks.

You don’t have to pay First you are subject to U.S. tax on any foreign income from your home country.

You are exempt from payroll taxes, saving you Second you are subject to an additional 7.65% tax on every dollar you earn.

You don’t have to disclose foreign bank accounts and other financial assets (FBAR) Finally you must report all of your bank/investment/trust accounts from your home country on a Foreign Bank Account Report (FBAR) or face a $10,000 penalty.

The fact that non-residents cannot claim the standard deduction only complicates things.

By filing Form 8843, you ensure that you too can be taxed as a non-resident alien for as many years as possible.

When do I file Form 8843?

Typically, the form will be completed and filed with your tax return, and thus submitted to the IRS by April every year.

The form asks for some general information about you and your visa. It also requires you to count up all the days that you were in the U.S. during that year. That requires keeping track of any international travel outside of the country, as those days won’t count as being present in the U.S.

I heard that if I didn’t make any money then I don’t need to file anything is this true?

No, it is not true. While you do not need to complete a tax return (Form 1040NR), we highly recommend that you still file Form 8843 to the IRS. Even if you did not make any money you should still send a Form 8843 to the IRS. Filing this form will allow you to potentially file as a non-resident for an additional year even if after graduating a.

The reason: filing the form might allow you to file as a non-resident for one additional year after graduating, even if you are on a new work visa such as H-1B. This could result in thousands in tax savings. For example if you made $120k as a tax resident you would be liable for for an additional $9,180 dollars in payroll taxes, whereas a non-resident would be exempt. Remember, non-residents are exempt from payroll taxes.

Should my spouse, who is on a F2 or J2 visa, also file Form 8843?

Absolutely! For all the same reasons that we want to record your days on an exempt visa, we want to record your spouse’s days as well. Regardless of whether he/she owes any taxes, make sure to file Form 8843!

Takeaways

We work with international students on F or J visas and far too often find that they missed filing Form 8843. Luckily, you have up to three years to file it. So reach out to us at Visor if you and/or your spouse need to get caught up! This is where a trusted Visor tax advisor can ensure you are not overpaying your taxes.

Visor is one of the leading tax providers for non-US citizens, particularly for international graduate students and other young professionals. Sign up and take comfort knowing all your tax needs are in expert hands.

 

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14 Comments

  1. Hi, I am filling 8843. My situation is that I was on F1 since 2016, graduated in May 2018, started working on F1-OPT from May 16th 2018 and got H1-B starting Oct 25th 2018 (cap exempt). So when filling 8843, my tax software (SprinTax for Internationals) calculates 365 days as the days to be excluded from SPT in 2018 (4.b), but isn’t it the 365-68 (H1b days)=297 days should be the answer for 4.b in 8843 as my H1b days should be counted for SPT ?

  2. Hey, it seems that the NR will pay more than RA according to the new policy. Is it legal to not file 8843 excluding the days from SPT test so that I can file the tax return as RA?

    1. Hi Hui, it is recommended that if you are a nonresident to file a nonresident return in accordance with your visa status. There is an election called “first-year choice” where you can choose to be treated as a resident if you meet the criteria such as days of presence as of 2019 and therefore elect to be treated as a resident for 2018 tax year based on your visa type. Please note that form 8843 is an informational filing and does not dictate your tax residency status but simply reports it based on your visa status. Additionally, tax resident reporting requires that you report worldwide income as it is subject to U.S. tax and there are additional foreign assets/foreign bank account reporting requirements.

  3. Thanks for the article. I have a question I was hoping you might be able to help with. What happens if you get in trouble with the IRS? It looks like I’m going to be owing the IRS more money than I have this year… Any help you could provide is greatly appreciated!

    1. This depends on what kind of trouble you are talking about and assistance we can provide. Visor is equipped with dealing with any IRS correspondence or setting up a payment plan for tax you owe when we file your return as needed. Perhaps, this discussion is suited best to be had with your CPA or tax adviser to review the detail. Please reach out at visor.com

    1. It is our understanding that you mean that 2018 tax year has been filed in 2019 already. Form 8843 is generally informational, therefore you can probably pass on amending your return to include the form with 2018 tax return and if there is a request for additional information from the IRS – provide additional information as requested at the time of the request.

  4. Hi, I am on a j-2 visa. I arrived to the US in 2017 (July), then I got my EAD and started working in March 2018. Could you please tell me if I am a resident or non resident for tax purposes?

    1. Hi Vadym, thanks for the question. Usually, individuals holding a J visa are not considered tax residents as they are considered to be exempt individuals. However, you will not be an exempt individual as a teacher or trainee in 2018 if you were exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years. Exempt individuals report income earned while in the U.S. on form 1040NR.

  5. Hi. I’m an international student. I arrived in the US this January, 11th and this is my first time here. So I haven’t spent a day in the US in 2018. Do I need to file form 8843 and apply this April?

    1. Hi Nhan, if you did not live in the U.S. in 2018, you have no reporting requirements. However, it sounds like you will most likely need to file form 8843 for 2019 tax year (which should be filed around April of 2020) and/or Form 1040NR if you earn any income in the U.S. during 2019.

  6. Hi Alina,

    This is a great article. Thanks for all the informations. So it sounds like every international student on F1 irrespective of the substantial presence test need to file 8843 and 1040NR. Am I right ? What is the procedure if 8843 and 1040NR was not filed for the last 2 years?

    1. Form 8843 or form 1040NR should be filed as soon as possible if missed in the prior year and mailed to the IRS in accordance with instructions for these forms. International students on F1 visa with earned income generally file form 1040NR (instead of a resident return, form 1040). Note, if F1 visa has been held for more than 5 years, form 1040 may be filed and substantial presence test is then considered.

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