{"id":35872,"date":"2008-03-26T16:35:41","date_gmt":"2008-03-26T21:35:41","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/tax-treaty-benefits-for-foreign-students-and-scholars.html"},"modified":"2008-03-26T16:35:41","modified_gmt":"2008-03-26T21:35:41","slug":"tax-treaty-benefits-for-foreign-students-and-scholars","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/law-library\/tax-treaty-benefits-for-foreign-students-and-scholars.html","title":{"rendered":"Tax Treaty Benefits for Foreign Students and Scholars"},"content":{"rendered":"
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This article was edited and reviewed by FindLaw Attorney Writers<\/a><\/em><\/p>\n\n | Last reviewed\n

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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n\n

I. J-1 and F-1 Students<\/p>

A. In the US in any F, J, M, or Q status 5 calendar years or less<\/p>

1. Nonresident Alien for federal tax purposes<\/p>

2. File tax return Form 1040NR or 1040NR-EZ by April 15; by June 15 if no income subject to wage withholding<\/p>

a. Taxed on US source income<\/p>

b. Married filing separately or single tax rates<\/p>

c. Not eligible for standard deduction<\/p><\/div>

3. Withholding on compensation<\/p>

a. Single rates and 1 or no exemption regardless of marital status<\/p>

b. An additional $4 per week required by IRS<\/p><\/div>

4. Can use Form W-4 to reduce withholding on scholarships and fellowships under Rev. Proc. 88-24.<\/p>

5. J-2 and F-2 family members same rules<\/p>

6. J-1 and F-1 Nonresident Alien exempt from US social security taxes<\/p><\/div>

B. In the US in any F, J, M, or Q status more than 5 calendar years and satisfies the 183-day substantial presence test<\/p>

1. Resident Alien for federal tax purposes unless satisfies IRS that he or she does not intend to reside permanently in the US<\/p>

2. File tax return Form 1040 by April 15<\/p>

a. Taxed on worldwide income<\/p>

b. Tax rates, deductions and exemptions the same as for US citizens<\/p><\/div>

3. Withholding on compensation<\/p>

a. Single or married filing jointly rates and regular exemptions<\/p>

b. Can use Form W-4 to reduce withholding<\/p>

c. Submit Form 1078, Certificate of Alien Claiming Resident Status to Payroll<\/p><\/div>

4. J-2 and F-2 family members same rules<\/p>

5. J-1 and F-1 Resident Alien subject to US social security taxes<\/p><\/div><\/div>

II. J-1 Non-Students (Teachers, Researchers, etc.)<\/p>

A. If the individual was not in the US in an F, J, M or Q status for 2 calendar years (4 years if all income is remuneration paid by a foreign employer) in the preceding 6 calendar years<\/p>

1. Nonresident Alien for federal tax purposes<\/p>

2. File tax return Form 1040NR or 1040NR-EZ by April 15; by June 15 if no income subject to wage withholding<\/p>

a. Taxed on US source income<\/p>

b. Married filing separately or single tax rates.<\/p>

c. Not eligible for standard deduction<\/p><\/div>

3. Withholding<\/p>

a. Single rates and 1 or no exemption regardless of marital status<\/p>

b. An additional $4 per week required by IRS<\/p><\/div>

4. Can use Form W-4 to reduce withholding on scholarships and fellowships under Rev. Proc. 88-24<\/p>

5. J-2 family members same rules<\/p>

6. J-1 Nonresident Alien exempt from US social security taxes<\/p><\/div>

B. In the US in any F, J, M, or Q status for 2 calendar years (4 years if all income is remuneration paid by a foreign employer) or more in the preceding 6 calendar years.<\/p>

1. Resident Alien for federal tax purposes<\/p>

2. File tax return Form 1040 by April 15<\/p>

a. Taxed on worldwide income<\/p>

b. Tax rates, deductions and exemptions the same as for US citizens<\/p><\/div>

3. Withholding on compensation<\/p>

a. Single or married filing jointly rates<\/p>

b. Can use Form W-4 to reduce withholding<\/p>

c. Submit Form 1078, Certificate of Alien Claiming Resident Status to Payroll<\/p><\/div>

4. J-2 family members same rules<\/p>

5. J-1 Resident Alien subject to US social security taxes<\/p><\/div><\/div>

III. H-1B Teachers and Researchers<\/p>

A. In the US 183 days or more in the calendar year<\/p>

1. Resident Alien for federal tax purposes from the first day of physical presence in the US<\/p>

a. If first day of physical presence is January 1 file as Resident Alien for full year<\/p>

b. If first day of physical presence is not January 1, file as Resident Alien for part-year<\/p>

c. If married on December 31 and one or both are Resident Aliens or one is a US citizen for federal tax purposes may elect to file as Resident Aliens for the full year<\/p><\/div>

2. Resident Alien for full calendar year, file tax return Form 1040 by April 15<\/p>

a. Taxed on worldwide income<\/p>

b. Tax rates, deductions and exemptions the same as for US citizens<\/p><\/div>

3. Resident Alien for part-year, see IRS Pub. 519, US Tax Guide for Aliens, for special rules on part-year returns<\/p>

a. Taxed on worldwide income during residency period only. Taxed as a Nonresident Alien on US source income during pre-residency period.<\/p>

b. Single or married filing separately tax rates and 1 exemption<\/p>

c. Not eligible for standard deduction<\/p><\/div>

4. Withholding on compensation<\/p>

a. Nonresident Period<\/p>

1) Single rates and 1 or no exemption regardless of marital status<\/p>

2) An additional $4 per week required by IRS<\/p><\/div>

b. Resident Period<\/p>

1) Single or married filing jointly rates<\/p>

2) Can use Form W-4 to reduce withholding<\/p>

3) Submit Form 1078, Certificate of Alien Claiming Resident Status to Payroll<\/p><\/div><\/div>

5. H-4 family members same rules<\/p>

6. Resident Alien subject to US social security taxes; may be entitled to totalization treaty benefits if paying social security taxes to home country<\/p><\/div>

B. In the US less than 183 days in the calendar year and not a Resident Alien for federal tax purposes in the prior year or prior two years<\/p>

1. Nonresident Alien for federal tax purposes<\/p>

2. File tax return Form 1040NR or 1040NREZ by April 15; by June 15 if no income subject to wage withholding<\/p>

a. Married filing separately or single tax rates and 1 exemption<\/p>

b. Not eligible for standard deduction<\/p><\/div>

3. Withholding on compensation<\/p>

a. Single rates and 1 or no exemption regardless of marital status<\/p>

b. An additional $4 per week required by IRS<\/p><\/div>

4. Can use Form W-4 to reduce withholding on scholarships and fellowships under Rev. Proc. 88-24<\/p>

5. H-4 family members same rules<\/p>

6. H-1B Nonresident Alien subject to US social security taxes; may be entitled to totalization treaty benefits if paying social security taxes in home country<\/p>

7. If in the US at least 31 consecutive days, may elect to file as part-year resident provided<\/p>

a. The individual is a resident in the subsequent year and<\/p>

b. The individual was present 75 percent of the days from the beginning of the 31 days through the end of the calendar year<\/p><\/div><\/div>

C. In the US less than 183 days in the calendar year but a Resident Alien under the cumulative 183 days test<\/p>

1. Nonresident Alien for tax purposes if individual had a closer connection to a tax home in a foreign country and has not taken steps in calendar year to obtain US permanent resident status or applied to adjust to US permanent resident – follow rules in Section B above and include a completed Form 8840, Closer connection Statement, with the return<\/p>

2. Otherwise Resident Alien for taxes purposes-follow rules in Section A above<\/p><\/div><\/div>

IV. J or F Visa Holders Who Adjust to H-1B Visa<\/p>

A. If a Nonresident Alien for the first part of year under the rules in Section I or II above<\/p>

1. If number of days of physical presence in the US in the H-1B status equals or exceeds 183 days in the calendar year Resident Alien for federal tax purposes from first day in the US – follow the rules in Section III A above<\/p>

2. If number of days of physical presence in the US does not equal or exceed 183 days in the calendar year Nonresident Alien for federal tax purposes – follow the rules in Section III B above<\/p>

3. Section III C exceptions above would not apply since individuals who accept employment in the US have a tax home in the US temporarily away from home deductions for travel, food, and lodging which the individual may have been claiming as a student, teacher or researcher while temporarily away from a foreign tax home would not longer be allowed<\/p><\/div>

B. If a Resident Alien under the rules in Section I or II above, follow the rules for a Resident Alien for federal tax purposes.<\/p><\/div>

V. Nonimmigrant Who is a Resident Under Above Rules<\/p>

A. May claim to be a treaty Nonresident if facts and circumstances support US nonresidency under the treaty residency tie-breaker rule. Submit completed Form 8833, Treaty Based Disclosure, explaining the facts and circumstances with Form 1040NR<\/p>

B. A Resident Alien if facts and circumstances do not support treaty nonresidency or the treaty has no tie-breaker rule.<\/p><\/div>

________________________________________________________________________ NOTE: Individuals with new visa types (H-1, H-1A, O, P and R) follow the same rules in determining their tax status as individuals on the H-1B visa. Individuals with Q-1 visas follow the same rules as J-1 Students and Non-Students. Individuals with M-1 visas follow the same rules as F-1 Students.<\/i><\/p><\/div><\/div>","protected":false},"excerpt":{"rendered":"

I. J-1 and F-1 Students A. In the US in any F, J, M, or Q status 5 calendar years or less 1. Nonresident Alien for federal tax purposes 2. File tax return Form 1040NR or 1040NR-EZ by April 15; by June 15 if no income subject to wage withholding a …<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_categories":[6510,6497],"class_list":["post-35872","corporate","type-corporate","status-publish","hentry","corporate_categories-law-library__immigration-law","corporate_categories-law-library"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate\/35872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=35872"}],"wp:term":[{"taxonomy":"corporate_categories","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_categories?post=35872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}