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!
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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