Taxation of Non-Resident F and J Status Holders

In the United States, the U.S. Internal Revenue Service (IRS) oversees the collection of federal income taxes. Non-residents are taxed differently than residents. Students in F or J status are considered to be non-residents for tax purposes until they have been in the U.S. for five years.

Non-students in J status are considered to be non-residents for tax purposes until they have been in the U.S. for two years. Non-residents for tax purposes are taxed on U.S. source income.

Two U.S. government agencies, Department of Homeland Security (which oversees immigration) and the IRS use the term non-resident alien. After a student has been present in the U.S. for more than five years, for example, he/she will become a resident for tax purposes though still a non-resident for immigration purposes.

OISS cannot address individual tax return questions and does not assist with filing returns for those international students & scholars who qualify as residents for tax purposes.

Filing Requirements

Each year everyone in F-1, F-2, J-1, or J-2 status is required to file Form 8843, the Statement for Exempt Individuals and Individuals with a Medical Condition even if you have no U.S. source income. Form 8843 is not a tax return, but rather a tax information sheet that must be submitted to the federal government in part to verify the number of days a person is in the USA.

If you have U.S. source income, you are also required to file a federal income tax return annually using either Form 1040NR or 1040NREZ (usually in February, March, or April). This way, the government can determine whether you paid too much, too little, or the appropriate amount of taxes during the previous year. Some students will also be required to file a tax return with the State of Iowa.

Taxation on U.S. Source Income

Unfortunately, taxation is a rather complicated issue in the United States. You may come from a country where the government automatically withholds a given amount of your salary for taxes and no further action is required. The system in the U.S. operates quite differently, is often illogical, and can seem unfair.

If you are hired for employment, you will immediately complete a form called the W-4 form. This is also known as the "Employee's Withholding Allowance Certificate." You will first have taxes withheld from your salary and that is step one of a two-step system. The W-4 determines how much of your income should be paid to the government as taxes.

In January, the employer will mail you a W-2 form based on your earned income and taxes withheld. Individuals receiving other U.S. source income, from scholarships or earned interest on investments, for example, will receive other tax documents by mail beginning in January. Students and scholars will use these documents to file their federal and state income returns.

Tax Treaty Exemptions

The United States currently has tax treaties with more than 50 countries. These treaties are designed to decrease the likelihood that the non-resident will be taxed on the same income both in the U.S. and the country of tax residency.

Treaty benefits will not be honored unless appropriate treaty forms are completed and on file in Payroll, Room 120 University Services Building. Please contact Pat Meskimen at patricia-meskimen@uiowa.edu to determine if you are the beneficiary of a tax treaty. Even if you are the beneficiary of a tax treaty, you are still required to file a tax return each year.

Tax Assistance

The OISS offers tax-filing software to assist you with the filing of federal tax returns. Students and scholars affiliated with the University of Iowa may access the filing program from a personal computer. The deadline for filing federal income tax returns each year is April 15th and the program will become available by February of that year. Check the OISS Weekly Update newsletter and webpage for more details regarding assistance.

Workshops are scheduled each year to assist students and scholars in completing their federal and state tax forms. Please check the OISS Weekly Update and webpage for information on the current year’s schedule.

Additionally, some students may choose to complete the federal and state tax income tax returns on their own or by hiring a tax professional. Individuals pursuing professional assistance can locate tax professionals using the phonebook but should make sure that the professional is knowledgeable of the tax laws for non-resident aliens.

Failure to File Form 8843 and Form 1040NR

Non-residents who fail to file Form 8843 and Form 1040NR (EZ) (for those with U.S. source income) with the Internal Revenue Service each year could be subject to paying penalties and owe interest on late payments to the federal government. Equally important, students might be in violation of their immigration status if they do not file the proper forms with the IRS, thus jeopardizing their future immigration status (with the INS) in the United States.

Getting Prepared

Check with Payroll as soon as possible to determine if you are the beneficiary of a tax treaty.

Keep copies of financial documents including; paychecks, scholarship information, donations you make or charitable contributions, etc.

Keep all documents mailed to you with the notation “Important Tax Document”. You will begin receiving such documents (the W-2 form and the 1042-S form are examples) in January.

Check with the OISS in to learn about the tax filing software available to you.

Comply with the tax law by filing your income tax returns on time. The federal income tax return is due by April 15, the state income tax return is due by April 30th, and Form 8843 (if you have no U.S. source income) is due in June.

Additional Information

Internal Revenue Service
Iowa Department of Revenue & Finance