What tax forms should international students file?

Practice Areas

By: Jiaguang Zhu

These days there are more and more international students studying in the United States. Foreigner’s tax return could be a lot different from United States citizen’s. In summary, there are three stages. F1 with OPT stage, F1 transferring to H1B stage, H1B stage. This article will explain how to file tax return for these three stages.

The first stage (F1 stage)

Generally speaking, if someone holding a F1 visa even with OPT, a 1040 NR form needs to be filed. 1040 NR is not friendly to tax payer. In most cases, you cannot claim any dependents, there is no standard deductions, deductible items on itemized deduction is very limited, lots of tax credits are not allowed (no EIC, no child tax credit, no education credit). In some cases, a tax treaty can be used to reduce taxable income (although this differs from county to county).

After graduation, F1 students will generally have 1or more years of OPT internship time, 1040 NR form still should be filed as long as the tax payer still holds F1 visa. But if someone stayed in United States more than 5 years, for example: competed both undergraduate and graduate degree here, 1040 form should be filed (some tax treaty still can be claimed at this time which could be a great tax benefits).

The second stage (F1 transferring to H1B)

First of all, congratulations!  You found someone to sponsor your H1B, and you were picked in the lottery. Usually H1B becomes effective on October 1st. So in this year, you will hold F1 visa before October and then H1B visa after October. How to report this year’s tax form? In fact, the IRS has not published a clear statement about it. But according to our experience in dealing with countless cases over the years, our suggestion is: when the two tax returns are applicable, choose one that is most favorable for you to file. In fact, the IRS also encourages taxpayers to choose their most favorable, with the lowest tax rate.

The third stage (H1B)

On the second year of H1B, you become a tax resident. In that case, you need to file tax similar to United States citizen which means 1040 should be filed. Finally, you can claim your spouse and children on your tax return. If your wife and children do not have social security numbers, you can help them to apply for an ITIN number.