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An alien in the U.S. needs to first determine his or her alien status for U.S. federal income tax purposes as nonresident, resident or dual status alien. An alien is considered a resident alien for U.S. federal income tax purposes, if the he or she meets either the green card test or substantial presence test, else, the is alien is considered a nonresident alien for U.S. federal income tax purposes. If an alien is considered both a resident and nonresident alien in the same tax year, then the alien is considered a dual status alien. For additional information regarding alien status, please refer to Publication 519 - U.S. Tax Guide for Aliens.
Note: Allow us to alert you, that Immigration and Naturalization Service (INS) status and terminology may differ from that of U.S. Federal Tax Law and the Internal Revenue Service (IRS). For example, INS may issue you a green card for "lawful permanent resident status"; however, for U.S. Federal Income Tax Law and IRS purposes you may have already met resident status under the substantial presence test.
Foreign Students
Generally, the first five calendar years that an alien is in the U.S as a student on an F, J, M or Q visa, he or she is considered an exempt individual for the substantial presence test. The student does not count the days of presence that he or she was an exempt individual for the substantial presence test. Therefore, in general, during the time the student is an exempt individual, the student will not qualify as a resident alien under the substantial presence test and will be considered a nonresident alien for U.S. federal income tax purposes. Generally, after the first five years that an alien is in the U.S as a student on an F, J, M or Q visa, the student is considered a resident alien for U.S. federal income tax purposes.
For a general example, if an alien enters the U.S. on April 1, 1994 as a student on an F-1 visa, the alien would be considered an exempt individual under the substantial presence test and would not count the days of presence for the tax years 1994 through 1998. During this time, the student would be considered a nonresident alien for U.S. federal income tax purposes. As of January 1, 1999, the alien would not be considered an exempt individual for the substantial presence test and would start to count the days of presence in the U.S. from January 1 on. If the alien were present in the U.S. for all of 1999, then the alien would qualify under the substantial presence test as a resident alien for U.S federal income tax purposes. In general, a nonresident alien would file Form 104NR - U.S. Nonresident Alien Income Tax Return and report U.S. source income. A resident alien would file Form 1040 - U.S. Individual Income Tax Return, report worldwide income and is treated as an U.S. Citizen for U.S. federal income tax purposes.
General Filing Requirements
Nonresident aliens who are required to file an income tax return should use Form 1040NR (or Form 1040NR-EZ). An alien must file a return if he or she is a nonresident alien individual engaged, or considered to be engaged, in a trade or business in the U.S. during the tax year. The alien must file even if:
1. His or her income did not come from a trade or business conducted in the U.S. 2. He or she had no income from U.S. sources, or
3. His or her income is exempt from income tax.
If the alien was a nonresident alien student or trainee who was temporarily present in the United States under an "F,""J,""M," or "Q" visa, the alien is considered engaged in a trade or business in the United States. The alien must file Form 1040NR (or Form 1040NR-EZ) only if the alien had income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc. Generally for nonresident aliens, interest income from savings or investment accounts is exempt from U.S. federal income tax. For additional information, please refer to Publication 519.
Treaty-based Income Exemption
In general, a nonresident alien student from Thailand who met the qualifications to exclude $3,000 of income in accordance with the U.S.A.-Thailand Income Tax Treaty, should already have the wage amount reported in Box 1 of Form W-2 - Wage and Tax Statement reduce by his or her employer. In this case, the employer would issue the nonresident alien Form 1042-S - Foreign Person's U.S. Source Income Subject to Withholding which would account for and show the $3,000 exempt income. For additional information, please refer to Publication 901 (Thailand: page 11 and 38)
You should verify with your employer, how your wages were reported. If your employer, did not exempt any income and reported the full amount of your wages in Box 1 of Form W-2, then you would deduct $3,000 from the amount shown in Box 1 of Form W-2, and report the reduced wage amount on Line 8 of Form 1040NR. You would enter $3,000 on Line 22 of Form 1040NR and complete Item M on page 5 of Form 1040NR.
Miscellaneous Deductions
Travel and Living Expenses
In general, although foreign students in the U.S. are considered engaged in a trade or business, they are not considered temporarily on assignment in the U.S., because they are enrolled in a program of study that is realistically expected and actually in fact last for more than one year. Therefore, foreign students are not allowed to deduct temporary travel and living expenses such as airfare, auto expenses, rent or lodging, meals or food, visa costs, etc. These expenses are considered nondeductible personal expenses. For additional information, please refer to Publication 529 - Miscellaneous Deductions.
Educational Expenses
In general, because foreign students are enrolled in a program of study that
1. CAN qualify them for a new trade or business, or
2. is needed to meet the minimum educational requirements of their present trade or business,
they cannot deduct educational costs such as tuition, books, lab or course fees, transportation or travel costs, etc. as qualifying educational expenses. These expenses are considered nondeductible personal expenses. For additional information, please refer to Publication 508 - Tax Benefits for Work-Related Education.
Social Security Numbers and Individual Taxpayer Identification Numbers
If you do not have and are not eligible for a Social Security Number (SSN), the Internal Revenue Service (IRS) will issue you an Individual Taxpayer Identification Number (ITIN). To apply for an ITIN, file Form W-7 - Application for IRS Individual Taxpayer Identification Number, with the IRS. It usually takes about 30 days to get an ITIN. Enter this number on your tax return wherever your SSN is requested. An incorrect or missing taxpayer identification number may increase your tax or reduce your refund.
Please refer to Publication 1915 - Understanding Your IRS Individual Taxpayer Identification Number (ITIN) general information section, "How do I apply for an ITIN?", for information regarding how to apply for an ITIN. An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law.
Social Security and Medicare Taxes
According to Publication 519 (page 39-40), lawfully employed nonresident F-1, J-1, M-1, and Q visaholders are not subject to social security and medicare withholding or reporting requirements. Therefore, wages received by nonresident F-1, J-1, or M-1 visaholders working on the campus they are authorized by INS to attend, performing off-campus work with INS permission, or undergoing approved practical or academic training are not subject to social security requirements. This exemption also applies to Q visaholders working for their authorized employer. To claim an exemption from social security tax, a nonresident alien must provide verification of visa status and proof of work permission to his/her employer.
If you are an F, J, M or Q visaholders who is considered a resident alien for tax purposes, your wages are subject to social security (FICA) and unemployment (FUTA) taxes on the same terms which apply to U.S. citizens. J-2 and H visaholders, whether resident or nonresident, must pay social security tax. Social security tax and benefits apply to U.S. permanent residents on the same basis as U.S. citizens.
Regardless of immigration or tax residency status, income from the following is NOT subject to social security tax:
1. Services performed by an enrolled student for the school he/she regularly attends.
2. Services performed for state or local government, unless an agreement with the federal government is involved.
3. Services performed for a foreign government.
4. Services performed for an international organization.
Occasionally social security tax is withheld in error. You may not request a refund on your annual income tax return (Form 1040NR or 1040NR-EZ). Instead, you must contact the employer who withheld the tax for assistance. If the employer is unable to provide a refund, you may complete IRS Form 843, 'Claim for Refund and Request for Abatement', and submit it with copies of your Form W-2 for the year(s) in question, Form I-94, and proof of permission to work to the Internal Revenue Service Center where your employer files tax reports. If you do not know the location of this service center, submit your request to:
Internal Revenue Service Center
Philadelphia, PA 19255
Include a statement from your employer showing the amount of the refund your requested and the amount (if any) reimbursed by your employer. If you cannot obtain such a statement, you must verify that you have contacted your employer and that the employer was unable to assist you with the refund. F and J visaholders must also submit Form 8316 signed by you that you have asked your employer for reimbursement of FICA but have not been able to obtain a refund.
Obtaining Publications and Forms
The publications, and the forms and their related instructions shown above can be down loaded from our Internet web site at http://www.irs.ustreas.gov/prod/forms_pubs/formpub.html. For privacy and security purposes, your incoming e-mail text has been deleted in this response because it either asked a tax account question, which we do not answer (we answer tax law issues only), or it contained personal identification information. IRS forms and publications may be accessed on our web site at the following address: http://www.irs.gov/forms_pubs/index.html or ordered through our toll-free forms line at 1(800) 829-3676 which is available 24 hours a day, 7 days a week, with 7-10 days delivery time.