# Electronic Toolkit for Nonresident Alien VITA/TCE Sites 2025 RETURNS

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae8dfca8fc49c1396

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

4152

Electronic Toolkit for Nonresident Alien VITA/TCE Sites 2025 RETURNS
Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE)

Coming together to strengthen communities
For the most up-to-date products and information visit www.irs.gov

Publication 4152 (Rev. 9-2025) Catalog Number 35738R Department of the Treasury Internal Revenue Service www.irs.gov

4152 Table of Contents
Section 1 – Foreign Student and Scholar Power Point Presentation ������������������������������������������������������������������ 1-1
Foreign Student and Scholar Volunteer Tax Return Preparation ��������������������������������������������������������������������������������������� 1-1
e-learning Options ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 1-2
Fact-Gathering Process �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-3
Standards of Conduct �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-4
Privacy and Confidentiality Guide ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-5
Volunteer Testing and Certification �������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-6
Residency Status for Federal Tax Purposes ����������������������������������������������������������������������������������������������������������������������������������������������� 1-7
Determination of Residency Status ������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-8
Resident or Nonresident ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-9
Substantial Presence Test ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-10
Exempt Individuals �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-11
Exempt Student (F, J or M Visa) ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 1-12
Closer Connection Election for Students – OUT-OF-SCOPE ��������������������������������������������������������������������������������������������� 1-13
Establishing a Closer Connection – OUT-OF-SCOPE ����������������������������������������������������������������������������������������������������������������� 1-15
Exempt Teacher/Trainee ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-16
Green Card Test ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-17
Residency Starting Date ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-18
Residency through Marriage ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-19
Filing Requirements & What to File ��������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-20
Who Must File? ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-21
Resident Aliens ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-22
Dual Status Aliens ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-23
How Nonresident is Different ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-24
Nonresident Itemized Deductions �������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-26
Nonresident Alien (NRA) Filing Requirements ��������������������������������������������������������������������������������������������������������������������������������������� 1-27
Consequences of Failure to File ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 1-31
The Effect of Tax Treaties ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 1-32
Treaty Overview ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-33
Points to Consider ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-34

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Form 1042-S Common Income Codes ������������������������������������������������������������������������������������������������������������������������������������������������������������ 1-35
Unique Treaty Provisions �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-36
Family Issues ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-37
Filing Status & Marital Status �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-39
Filing Status & Dependents ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-40
Spouse, Children, and Other Accompanying Family Members ���������������������������������������������������������������������������������������� 1-41
Taxation of Nonresidents �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-42
Interest Income ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-44
Qualified Scholarships/Fellowships ��������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-45
Other Income ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-46
Form 8843 Filing Requirement ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-47
Form 8843 ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-48
Finishing the Return ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-50
Social Security Tax Matters �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-54
Social Security Tax ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-55
FICA Refunds ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-57
State Income Tax Issues ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 1-59
Section 2 – Tax Credits for Aliens �������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 2-1
Who is Eligible? ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 2-1
Form 1040-NR Credits – Quick Reference ��������������������������������������������������������������������������������������������������������������������������������������������������� 2-2
Foreign Tax Credit – OUT-OF-SCOPE ��������������������������������������������������������������������������������������������������������������������������������������������������������������� 2-3
Credit for Child and Dependent Care Expenses ������������������������������������������������������������������������������������������������������������������������������������ 2-4
Retirement Savings Contribution Credit ������������������������������������������������������������������������������������������������������������������������������������������������������������ 2-5
Child Tax Credit and Additional Child Tax Credit ������������������������������������������������������������������������������������������������������������������������������������ 2-6
Credit for Other Dependents ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 2-6
Other Credits ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 2-6

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Section 3 – Frequently Asked Questions ����������������������������������������������������������������������������������������������������������������������������������������������������� 3-1
Basic Rules of U.S. Taxation ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 3-2
Canadian Questions ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 3-3
Capital Gain Income – Nonresident Aliens ���������������������������������������������������������������������������������������������������������������������������������������������������� 3-4
Currency Issues ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 3-5
Determination of Residency Status for Federal Income Tax Purposes ���������������������������������������������������������������������� 3-6
Deductions – Nonresident Aliens ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 3-8
Educational Expenses – Nonresident Aliens ����������������������������������������������������������������������������������������������������������������������������������������������� 3-9
Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition ���������������� 3-10
Filing Status, Dependents and other Family Issues – Nonresident Aliens ���������������������������������������������������������� 3-11
Form 2555, Foreign Earned Income Exclusion ������������������������������������������������������������������������������������������������������������������������������������� 3-12
Form 1116, Foreign Tax Credit – OUT-OF-SCOPE ������������������������������������������������������������������������������������������������������������������������� 3-13
How, When and Where to File Form 1040-NR, U.S. Nonresident Alien Tax Return ������������������������������� 3-14
Pension Income ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 3-16
Scholarships, Fellowships, Grants and Awards for Nonresident Aliens ����������������������������������������������������������������� 3-17
Social Security, Medicare Taxes and the Nonresident Alien ������������������������������������������������������������������������������������������������� 3-18
Tax Credits – Nonresident Aliens ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 3-21
Treaties ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 3-22
Section 4 – Individual Taxpayer Identification Number (ITIN) ����������������������������������������������������������������������������������������� 4-1
Introduction ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-2
Objectives ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-3
What is ITIN? �������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-5
Purpose of ITINs ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-6
Who Needs an ITIN? ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-8
Allowable Tax Benefit ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 4-12
Substantial Presence Test ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-15
Rules For Dependents ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-16
Who is Not Eligible for an ITIN? ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-17
How to Apply for an ITIN? ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 4-18

iii

4152 Table of Contents
ITIN Documentation ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-20
When to Attach Federal Tax Return to Form W-7/W-7(en-sp) �������������������������������������������������������������������������������������������� 4-21
Acceptable Documentation for ITIN �������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-23
If Documents are in a Foreign Language ����������������������������������������������������������������������������������������������������������������������������������������������������� 4-29
Examples of Foreign Documents ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-30
How to Submit a NEW ITIN Application ��������������������������������������������������������������������������������������������������������������������������������������������������������� 4-33
Where to Submit a NEW ITIN Application ��������������������������������������������������������������������������������������������������������������������������������������������������� 4-34
Additional Information ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-37
Processing the NEW ITIN Application �������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-39
Acceptance Agents ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-41
How to Apply to Become a Certifying Acceptance Agent ���������������������������������������������������������������������������������������������������������� 4-43
How to Apply to Become a SPEC Certifying Acceptance Agent �������������������������������������������������������������������������������������� 4-46
Processing Time for the Acceptance Agent Application �������������������������������������������������������������������������������������������������������������� 4-47
ITIN/SSN Mismatch ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-48
Summary ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-49
IRS Reference Materials ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 4-52

iv

Section 1 – Foreign Student and Scholar Power Point Presentation
Foreign Student and Scholar Volunteer Tax Return Preparation

Foreign Student and
Scholar Volunteer Tax
Return Preparation

Publication 4756 (Rev. 6-2025) Catalog Number 53052M Department of the Treasury Internal Revenue Service www.irs.gov

The Foreign Student and Scholar module is part of Link & Learn Taxes (L&LT).
The traditional VITA/TCE and Foreign Student modules are available on the site. Thus, you should introduce the concept to your students now.

Share key components of L&LT:
Link & Learn Taxes, IRS-SPEC’s e-learning application available 24/7 on www.irs.gov/individuals/
link-and-learn-taxes is the key to the future of volunteer return preparation training. It can be used for
independent study and certification or as part of a pre or post-classroom training strategy.

1-1

e-learning Options

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

e-learning Options

VITA/TCE
Central
2
• Icebreaker (your choice)
• Teacher and student (general introductions)
• Welcome new and old students and instructors/partners, etc.
• Provide scope of program and objectives
• Introduce students to the products (Publication 4011, VITA/TCE Foreign Student and Scholar

Resource Guide and Link & Learn Taxes for Foreign Students) and purpose.

1-2

Fact-Gathering Process

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Fact-Gathering Process
Effective Interviewing
• Steps to Effective Interviews
• Interview Tips
• Form 13614-NR, Nonresident Alien Intake and Interview
Sheet
• Form 14446, Virtual VTA/TCE Taxpayer Consent (as
necessary according to virtual plan)

3
• Restate the importance of getting accurate and appropriate information from the taxpayer.
• Show the students Form 13614-NR, Nonresident Alien Intake and Interview Sheet and how it must be

used to assist in the interview process.

• Put up two big pieces of paper or use a chalkboard. Label one “Steps” and the other “Tips”. Let the class

spend some time brainstorming about what steps and tips they think they might need to assist the foreign
students and scholars. List their suggestions on the pieces of paper and be sure to share any relevant
issues with your RM and Coalition.

• Encourage the students to keep the interview process in mind as you work through the rest of this course.

They should make notes of what they think would be good interview questions to ask the taxpayer and
make notes on their F13614-NR & P4011.

Hand out copy of Form 13614-NR
• Note changes and problematic areas (i.e. Identity Theft, months dependents live in U.S., potentially

expiring ITINs, etc.)

• Review as necessary throughout the course.

1-3

Standards of Conduct

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Standards of Conduct
▪ Volunteers have a responsibility to provide quality service
and to uphold ethical standards
▪ The Standards of Conduct training and certification must
be completed by ALL volunteers
▪ A signed copy of Form 13615 will be required from all
volunteers

4
Form 13615, Volunteer Standards of Conduct Agreement – VITA/TCE Programs, can be found in the
Link & Learn Taxes for Foreign Student module. After successfully completing a test online, your electronic
version of this form will appear. Check the box in Link & Learn Taxes acknowledging you have read and
completed Form 13615. You can then sign and/or print this completed form to turn into your Site Coordinator.
• Discuss the standards of conduct by reading each standard,
◦ Explain the intent of the standards, and
◦ Seek comments and understanding from the class.
• The Standards of Conduct is part of the certification process.
• All volunteers must sign the Standards of Conduct (Form 13615) electronically or manually.
• The Site Coordinator, instructor, other authorized partner representative, or SPEC Relationship Manager

must review the Form 13615, verify volunteer ID, sign, and maintain a copy.

• The Standards of Conduct Test must be taken and passed in order for the Foreign Student Test to

register as complete.

1-4

Privacy and Confidentiality Guide

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Privacy and Confidentiality Guide
▪ Privacy Act of 1974
▪ IRC 7216 Disclosure or use of Taxpayer Information
▪ Taxpayers can report site/volunteer misconduct through
VolTax

5
Privacy Act of 1974
• A key principle of the Internal Revenue Service is to ensure that public trust is protected and

confidentiality is guaranteed.

• Publication 4299, Privacy and Confidentiality,
Confidentiality addresses areas where diligence to detail is needed to

protect the information provided for tax return preparation.

• When the IRS collects information from volunteers, we must adhere to the Privacy Act of 1974. This

Act requires that when IRS asks volunteers for information, we tell them our legal right to ask for the
information, why we are asking for it, and how it will be used. This statement was added to applicable
Volunteer Return Preparation Program documents.

IRC 7216 Disclosure or Use of Taxpayer Information
All volunteer sites (paper and e-file) using or disclosing taxpayer data for purposes other than current, prior
or subsequent year tax return preparation must secure the taxpayer’s consent to use and disclose the data.

VolTax
The VolTax poster (Publication
Publication 4836, VITA/TCE Free Tax Programs)
Programs must also be posted at the first point
of entry for the taxpayers. This provides the contact procedures for the taxpayer to report conduct violations
to the IRS.

1-5

Volunteer Testing and Certification

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Volunteer Testing and Certification
Assist only with:
▪ Returns,
▪ Forms, and

▪ Supporting schedules
…for which you are trained and certified

6
• The Volunteer Protection Act protects the volunteer as long as they are preparing returns within their

scope.

• Check locally for any additional volunteer protection legislation.
• Explain to students that preparing returns beyond their training and certification may result in errors and

cause difficulties for those we wish to help - delayed returns, audit, etc. and is in violation of the Quality
Site Standards

• Encourage students to certify in additional VITA training levels to enhance their knowledge base.
• Encourage students to refer taxpayers with difficult returns or issues beyond their training and certification

to the Site Coordinator and/or a professional tax preparer.

• Explain – that “trained and certified” means they met the training requirements to be a volunteer return

preparer and passed the required test(s). Also, their sponsor/site coordinator has their required signed
certification and verified the volunteer’s identification by a current, government issued ID.

• See your Site Coordinator for the processing of requests for Continuing Education Credits available to

certain professionals who volunteer and/or instruct after passing their advanced certification. (14 to 18 CE
Credits may be available for those who volunteer or instruct 10+ hours)

1-6

Residency Status for Federal Tax Purposes

RESIDENCY STATUS FOR
FEDERAL TAX PURPOSES

7
The determination of residency status for federal income tax purposes is the first step in assisting foreign
students and scholars.

Reference Materials for this Lesson May Include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Volunteer Resource Guide
• Publication 501, Dependents, Standard Deduction, and Filing Information
• Publication 519, U.S. Tax Guide for Aliens
• Publication 5087-FS, VITA/TCE Foreign Student and Scholar Resource Guide
• Form 1040, U.S. Individual Income Tax Return
• Form 1040-NR, U.S. Nonresident Alien Income Tax Return
• Form 8840, Closer Connection Exception Statement for Aliens
• Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov, or you may order a copy by calling
1-800-829-3676.

1-7

Determination of Residency Status

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Determination of Residency Status
Do not confuse residency for federal tax purposes
with:
▪ immigration residency
▪ residency requirements for earning a degree, etc.
▪ residency requirements for state taxes

8

1-8

Resident or Nonresident

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Resident or Nonresident

▪ Substantial Presence Test (SPT)
▪ Green Card Test
▪ Residency through Marriage

9
Publication 519, U.S. Tax Guide for Aliens,
Aliens provides additional information about these topics.
There are exceptions to the Substantial Presence Test (SPT) for certain categories of aliens. The student
and scholar exceptions are covered later in this presentation.
In some cases, an alien may be both a resident and a nonresident in the same year. This is referred to as a
dual-status alien. These returns are OUT-OF-SCOPE.
See the following slides for additional information.

1-9

Substantial Presence Test

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Substantial Presence Test
▪ 31 days during the current tax year
AND

▪ At least 183 days* during the three-year period ending
with the current tax year.
* 183 days or more being calculated as follows:
• All days of (nonexempt) presence in the current tax year, plus
• One-third of the (nonexempt) days of presence in the first
preceding year, plus
• One-sixth of the (nonexempt) days of presence in the second
preceding year.

10
The 183 days are calculated as follows:
• All days of (nonexempt) presence in the current year, plus
• One-third of the (nonexempt) days of presence in the first preceding year, plus
• One-sixth of the (nonexempt) days of presence in the second preceding year.

Example: Jules was in H-1 immigration status from June 19, 2021, until April 30, 2024 (when he returned
to his home country). He is a resident alien for 2021, 2022, 2023 and 2024 because he meets or exceeds
183 days of presence using the formula as stated above.
As you will see on the subsequent slides, there are exceptions to this test.

1-10

Exempt Individuals

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Exempt Individuals
▪ Student on F, J or M Visa
▪ Teacher on J or Q Visa

▪ Trainee on J Visa
▪ Not exempt from taxation on U.S. income

11
The term “exempt” as used in this lesson means that the alien is exempt from counting their days of
presence for the substantial presence test.
Aliens often think their exempt status means that they are not required to pay taxes in the U.S. The exempt
status does not mean that the student is exempt from filing or paying federal income taxes.
The exempt status is covered in more depth later in this presentation.

1-11

Exempt Student (F, J or M Visa)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Exempt Student (F, J or M Visa)
▪ Arrived in the U.S. for primary purpose of studying
▪ 5 years
▪ Dependents are generally included
▪ All must file Form 8843

12
While most undergraduate international students are in F immigration status, it is possible for an alien with
J or M immigration status to be classified as a student. The determining factor, is what was the primary
purpose for the alien’s admission to the U.S. (The primary purpose for entering the U.S. must be for study, or
as a F-2 or J-2 Spouse/ Dependent of someone who is studying, not for research, teaching, or as a visitor.)
Students (and their dependents who derive their immigration status from the student) are generally exempt
from counting their days of presence for 5 years. The 5-year period is any part of any 5 different calendar
years at any time in their life.
Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition,
Condition must be filed
when a student or scholar (and their dependents) are excluding days of presence from the Substantial
Presence Test.

1-12

Closer Connection Election for Students – OUT-OF-SCOPE

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Closer Connection Election for Students
(OUT-OF-SCOPE)
If the student meets these four requirements:
1)

does not intend to reside permanently in the United States;

2)

has substantially complied with the immigration laws and
requirements relating to his student nonimmigrant status;

3)

has not taken any steps to change his nonimmigrant status
in the United States toward becoming a permanent resident
of the United States; and

4)

has a closer connection to a foreign country than to the
United States as evidenced by the factors listed in Treasury
Regulation 301.7701(b)-2(d)(1).

The student may elect to continue to be treated
as a Nonresident Alien (NRA).
13

1-13

Closer Connection Election for Students (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Closer Connection Election for Students
(cont.)
To claim this election, the student must also:
▪

File Form 8840 with a statement indicating that they
are making the election and meet the four conditions.

▪

Send Form 8840 and the statement with Form
1040-NR at the Austin IRS Campus.

This election is OUT-OF-SCOPE.

14
For information purposes only, this election is OUT-OF-SCOPE.
Refer taxpayer for additional information to see Publication 519, U.S. Tax Guide for Aliens

1-14

Establishing a Closer Connection – OUT-OF-SCOPE

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Establishing a Closer Connection
(OUT-OF-SCOPE)
▪ Present in the U.S. less than 183 days in the current year
▪ Have a tax home in a foreign country
▪ File Form 8840
▪ Can be used by ALL nonresident aliens

15
This option is used when the alien is trying to establish that even though the substantial presence test is
met, they should still be considered as a nonresident alien because of their ties to their home country.
To claim a closer connection to their home country, the alien must be present for less than 183 days in the
current (2024) year. The alien must also have a home in a foreign country for the entire year. Remember
this is still OUT-OF-SCOPE!
Note: If you are using this presentation to instruct volunteers, you may want to download a copy of Form
8840, Closer Connection Exception Statement for Aliens from www.irs.gov
www.irs.gov. to share with your class.

1-15

Exempt Teacher/Trainee

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Exempt Teacher/Trainee

Teachers and trainees can be exempt from counting their
days of presence for two out of six years. In their “lookback” calculation for the six years, they must consider any
time spent in an exempt status as a student.
▪ Any two years out of a six-year period
▪ Dependents are generally included
▪ All must file Form 8843

16
Teachers and trainees can be exempt from counting their days of presence for two out of six years. In their
“look-back” calculation for the six years, they must consider any time spent in a exempt status as a student.
Example: Hans is in J-1 immigration status and started teaching at the local university in March, 2024 He
had previously been in the U.S. in F-1 immigration status as a student in 2018–2020. For 2024, Hans is a
resident alien since he cannot exclude any of his days of presence from the substantial presence test.
For additional information see Publication 519, U.S. Tax Guide for Aliens.
Aliens

1-16

Green Card Test

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Green Card Test

▪ Date of adjustment to status--not the date “green” card
issued
▪ No option--if you are a Permanent Resident, you are a
resident for tax purposes

17
When aliens are granted Permanent Resident immigration status, they will receive an identification card
from the immigration authorities. Originally, the Permanent Resident cards were green and the term “green
card” continues to be used even though these cards are no longer strictly green. (Currently cards being
issued after May 1, 2017 will be green with the Statue of Liberty and various other security features.)
The official date of the status change is indicated on their letter from United States Citizenship and Immigration Services (USCIS). This date should be used when calculating resident alien status for tax purposes.

1-17

Residency Starting Date

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Residency Starting Date

▪ Passes Substantial Presence Test (SPT)
▪ Granted permanent residence status or green card test
▪ When both apply, use the earlier of the two dates

18
When the alien is determined to be a resident by application of the Substantial Presence Test (SPT), their
residency starting date for federal income tax purposes is the first day of the year that the SPT is passed.
If the alien is a resident for federal income tax purposes because they have gained Permanent Resident
(PR) immigration status, their residency starting date is the first day of their PR status.
For more information on this topic, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

1-18

Residency through Marriage

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Residency through Marriage
Nonresident alien spouse can be treated as a
resident if married to a resident alien or US citizen
▪

Required to file jointly

▪

Must report world-wide income

This election is OUT-OF-SCOPE for the Foreign Student and
Scholar certification.

19
If the nonresident is married to a resident or citizen, the couple can make an election to file a joint return.
This means that the nonresident spouse will be considered a resident for federal income tax purposes from
that point forward.
Once the election is made, the spouse can file as a resident alien even when filing Married Filing
Separately in subsequent years.
Note: Nonresident aliens who are married to other nonresident aliens cannot file a joint tax return. This will
be discussed later in this presentation.
For more information on this topic, see Publication 519, U.S. Tax Guide for Aliens.
Aliens Chapter One

1-19

Filing Requirements & What to File

FILING REQUIREMENTS
& WHAT TO FILE

20
References for this lesson may include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Volunteer Resource Guide
• Publication 17, Your Federal Income Tax for Individuals
• Publication 501, Exemptions, Standard Deduction, and Filing Information
• Publication 519, U.S. Tax Guide for Aliens
• Publication 4152, Electronic Toolkit for Nonresident Alien VITA/TCE Sites
• Publication 5087-FS, VITA/TCE Foreign Student and Scholar Resource Guide
• Form W-2, Wage and Tax Statement
• Form 1040-NR, U.S. Nonresident Alien Income Tax Return
• Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
• Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov, or you may order a copy by calling
1-800-829-3676.

1-20

Who Must File?

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Who Must File?

In the United States,

it is the individual’s responsibility
to know what tax forms must be filed with the government.

21
Some students and scholars think that their tax liability has been satisfied because money was withheld
from their pay.
Some students and scholars come from a country where the government tells the taxpayers how much to
pay and when to pay it. Some countries have a per capita tax in place of an income tax.

1-21

Resident Aliens

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Resident Aliens

▪ File using U.S. citizen rules
▪ IRS Publication 17
▪ Extensive number of resources, public and private

22
Aliens who are determined to be residents for federal income tax purposes will file the same type of return
as a U.S. citizen.
Publication 17, Your Federal Income Tax for Individuals,
Individuals is a comprehensive reference book for the
rules that apply to U.S. citizens and resident aliens.
Since resident aliens are treated the same as citizens for tax purposes, they can receive tax assistance
from several sources including:
• www.irs.gov
• Volunteer Income Tax Assistance sites (the resident alien can find the closest site’s information at IRS.gov)
• Professional tax preparers
• Tax software (Free File software is available through the IRS.gov homepage for most taxpayers)

1-22

Dual Status Aliens

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Dual Status Aliens
▪ Taxpayer has two residency statuses during the
same tax year
▪ Must file two returns
▪ Allocate income
▪ Too complex for this training
▪ Publication 519
This is OUT-OF-SCOPE.

23
It is possible for a taxpayer to have more than one residency status for federal income tax purposes in the
same tax year. This creates a dual-status situation. Publication 519, U.S. Tax Guide for Aliens,
Aliens provides
a sample of a dual-status taxpayer. The taxpayer generally must file both a Form 1040, U.S. Individual
Income Tax Return and a Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Return The taxpayer
must allocate income and expenses based of the time spent in each status. This can be complex. The
preparation of dual-status returns is not covered in the VITA/TCE program. Suggest that the taxpayer seek
a professional tax preparer for assistance.
OUT-OF-SCOPE

1-23

How Nonresident is Different

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

How Nonresident is Different
▪ Most Credits may not be available (i.e. EITC, American
Opportunity Credit, etc.)
▪ Generally, pay tax only on US-source income
▪ Interest may be tax free
▪ Two married Nonresidents cannot file jointly

24
Nonresident aliens are not able to claim most of the tax credits. Since most nonresident aliens can’t claim
their children as dependents, the credits related to children often do not apply. Some credits, such as the
Earned Income Tax Credit, and American Opportunity Credit specifically state that they are not available for
nonresident aliens. Publication 4152, Electronic Tool-kit for Nonresident Alien VITA Sites,
Sites contains a
comprehensive segment on the availability of tax credits for nonresident aliens.
Alien status for federal income tax purposes determines which income the alien must include on the U.S.
tax return. The alien status will also affect filing status and the eligibility of tax credits.
Generally, nonresident aliens pay tax on their U.S. source income only. They are not required to report
earnings and profits from abroad.
In the case of nonresident aliens, some of their U.S. sourced interest income may not be taxable. See
Publication 519, U.S. Tax Guide for Aliens for additional information.
Nonresident aliens who are married to other nonresident aliens cannot file a joint tax return. However,
if one of the spouses is a citizen or resident alien, the nonresident spouse can elect to be treated as a
resident and file a joint return.

1-24

How Nonresident is Different (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

How Nonresident is Different (cont.)

▪ Standard deduction not allowed
(except as allowed by treaty for students from India)

25
Generally, a nonresident alien cannot claim an exemption for their spouse or dependents. This is explained
further in the lesson on Family Issues of this presentation. Currently, no exemption amounts are given for
personal exemptions through 2025.
The standard deduction is not available for nonresident aliens, except for students from India. Other
nonresident aliens must itemize their deductions. Additional information is on the following slide.
For more information, see Publication 519, U.S. Tax Guide for Aliens,
Aliens Chapter 5, Worksheet 5-1, for
instructions on both calculating the deduction and the verbiage required to be written next to the "itemized
deduction" line on the tax return.

1-25

Nonresident Itemized Deductions

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Nonresident Itemized Deductions

Itemized deductions limited to:
▪ State and local taxes withheld ($10,000 limit)

▪ Contributions to U.S. charities

26
Most nonresident aliens must itemize their deductions because they cannot claim the standard deduction
(except students from India). Publication 519, U.S. Tax Guide for Aliens explains what types of expenses
the nonresident can include in their itemized deductions.
Casualty and Theft Losses are OUT-OF-SCOPE for the VITA/TCE Foreign Student and Scholar program.

1-26

Nonresident Alien (NRA) Filing Requirements

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Nonresident Alien (NRA) Filing
Requirements

Who?
▪ All exempt F, J, M, and Q status holders must file:
• Form 8843 to substantiate non-residence, and
• Possibly a tax return

27
It is important to stress that all nonresident aliens who are excluding days of presence from the substantial
presence test must file a Form 8843, Statement for Exempt Individuals and Individuals with a Medical
Condition even if they had no income.
Even though there may not be a legal requirement to file, it might be in the taxpayer’s best interest to file in
order to get any refund that they might be entitled to receive.

1-27

With the elimination of the personal exemption, almost all nonresidents with U.S. income will have a filing
requirement.
STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Nonresident Alien (NRA) Filing Requirements (cont'd)

Nonresident Alien (NRA) Filing
Requirements (cont.)

What to File
▪ Form 8843, Statement for Exempt Individuals and
Individuals with a Medical Condition (mandatory for
all nonresidents), and possibly
▪ Form 1040-NR, U.S. Nonresident Alien Income Tax
Return

28
The filing requirement amount for nonresident aliens is generally the personal exemption amount for the tax
year (which is zero, through 2025). So currently, any amount of taxable income will trigger a filing requirement.

1-28

Nonresident Alien (NRA) Filing Requirements (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Nonresident Alien (NRA) Filing
Requirements (cont.)
When to File
▪ Tax returns by April 15th of the year following the
close of the tax year. (Form 1040-NR)
▪ Form 8843 only by June 15th of the year following the
close of the tax year.

29
The due date for the return is the 15th day of the fourth month following the end of the tax year.
The deadline for nonresidents who are filing only Form 8843, Statement for Exempt Individuals and
Individuals with a Medical Condition is the 15th day of the sixth month following the end of the tax year.
If submitting only a Form 8843, make sure that the nonresident signs page 2 of the form.
If the 15th falls on a Saturday, Sunday, or legal holiday, the return is due the next business day. (April 15th
& June 15th)
The income tax return must:
• Be signed

The return does not have to be:
• Notarized

• Be filed timely to avoid any penalties

• Mailed certified, registered or by a private mail service

• Have the reporting documents (W-2s, 1042-Ss,

• Mailed in any specific type of envelope

and 1099s) attached

• Be prepared using U.S. dollars as the currency

• Witnessed

denomination

The return should:
• Include payment or schedule a direct debit or
other payment plan before the due date, if there is
a balance due
• Many Forms 1040-NR and accompanying Form

8843 can now be e-filed

1-29

Nonresident Alien (NRA) Filing Requirements (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Nonresident Alien (NRA) Filing
Requirements (cont.)
Where to File
If you are not enclosing a payment:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
USA
If you are enclosing a payment:
Internal Revenue Service
P.O. Box 1303
Charlotte, N.C. 28201-1303
USA
30
A street address is not used by the IRS. (They have their own ZIP Code.)
A paper return must be signed and mailed in, if unable to efile.
No special mailing needed. Just put in an appropriate size envelope and add the required first-class
postage.

1-30

Consequences of Failure to File

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Consequences of Failure to File

▪ If no taxes are owed there is no late filing penalty from
the IRS

▪ However, nonimmigrant alien status requires that the
individual not violate any U.S. laws, including tax laws

31
VITA/TCE volunteers are not expected to know and should not attempt to communicate the immigration
laws as part of the VITA program.

1-31

The Effect of Tax Treaties

THE EFFECT OF
TAX TREATIES

32
References for this lesson may include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Resource Guide
• Publication 901, U.S. Tax Treaties
• Publication 597, Information on the U.S. – Canadian Income Tax Treaty
• Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
• Form 8233, Exemption from Withholding on Compensation for Independent Personal Services of a

Nonresident Alien Individual

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov.

1-32

Treaty Overview

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Treaty Overview

▪ IRS Publication 901, U.S. Tax Treaties
▪ www.irs.gov
• Search for “tax treaties”

33
Publication 4011 has the basic treaty information for those eligible for assistance through the VITA/TCE
Foreign Student and Scholar Program.
Publication 901 has further details pertaining to the treaty provisions. When using Publication 901, make
sure that you are in the correct section. (The treaty tables and article references needed to claim treaty
provisions are now available online at www.irs.gov/pub/irs-lbi/tax-treaty-table-2.pdf
www.irs.gov/pub/irs-lbi/tax-treaty-table-2.pdf,, the table is no
longer printed in the Publication 901.)
Be aware that some treaties may lose their benefit retroactively if the time or amount stated in the treaty is
exceeded. (See Publication 4011)
The full language of the treaties can also be found on www.irs.gov
www.irs.gov. However, it can be challenging to read
the actual treaty and apply it to the taxpayer you are assisting.
It is usually easier to use the Publication 901.
If the topic or treaty provision is unclear, refer the taxpayer to a professional tax preparer. (OUT-OF-SCOPE).

1-33

Points to Consider

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Points to Consider

▪ Purpose of visit to the U.S.
▪ Current and past VISA status
▪ Tax residency immediately prior to coming to U.S.
▪ Type of Income

34
See Publication 901, U.S. Tax Treaties.
Treaties

1-34

Form 1042-S Common Income Codes

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Form 1042-S
Common Income Codes

▪ Scholarship or Fellowship grants - Code 16
▪ Compensation for teaching and research - Code 19
▪ Compensation during studying and training - Code 20

35
All income on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding,
Withholding will have
an income code. This slide lists only some of the most frequent codes for students and scholars.
Scholarship income that is qualified is no longer required to be listed on a Form 1042-S. The only scholarship that should be listed on the Form 1042-S is for nonqualified amounts that are subject to U.S. tax
(unless there is a treaty exemption).
If a W-2 is issued instead of a Form 1042-S, this does not prevent the student from claiming a tax treaty
benefit on the tax return.
For additional information, see Publication 901, U.S. Tax Treaties.
Treaties

1-35

Unique Treaty Provisions

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Unique Treaty Provisions

▪ India Students
▪ Canada
▪ People's Republic of China

36
Students from India can claim the standard deduction.
In general, Canadians can exclude their earned income if they earn not more than $10,000. If they earn
over $10,000, they can’t exclude any of the income.
The treaty for students who are residents of the People's Republic of China has no limit on the number of
years the treaty can be used. So, you may find People's Republic of China treaty benefits claimed on Form
1040-NR as a nonresident or the Form 1040 as a resident alien (OUT-OF-SCOPE).
For additional information, see Publication 901, U.S. Tax Treaties.
Treaties

1-36

Family Issues

FAMILY ISSUES

37
References for this lesson may include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Resource Guide
• Publication 501, Exemptions, Standard Deduction and Filing Information
• Publication 519, U.S. Tax Guide for Aliens
• Form W-7 or W-7 (sp), Application for IRS Individual Taxpayer Identification Number
• Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov.

1-37

Family Issues (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Family Issues

▪ Generally Nonresident Aliens do not have qualifying
dependents

▪ Exceptions for nonresidents from Canada, India,
Republic of Korea (S. Korea) and Mexico

38
In general, nonresident aliens do not have qualifying dependents . There are exceptions for residents of
Canada, Mexico, Republic of Korea (S. Korea), and India. For additional information, see Publication 519,
U.S. Tax Guide for Aliens and Publication 501, Exemptions, Standard Deduction and Filing Information.
tion
Any dependents that the nonresident can claim must have a Taxpayer Identification Number (TIN). If the
dependent is not eligible for a Social Security Number, they (the dependent) must apply for an Individual
Tax Identification Number (ITIN). The Tax Identification Number, must be obtained before the due date of
the return, including extensions.
Form W-7 or W-7 (sp),
(sp) Application for IRS Individual Taxpayer Identification Number is used to apply
for an ITIN. You may download a copy of the most current version of the form from www.irs.gov
www.irs.gov.
More information on ITINs can be found in Publication 1915, Understanding Your Individual Taxpayer
Identification Number (ITIN).
(ITIN)
Note: Individual Taxpayer Identification Numbers (ITINs) will be deactivated if not used on a federal income
tax return for any year during a period of three consecutive tax years. If deactivated, the taxpayer will need
to renew using Form W-7.
W-7

1-38

Filing Status & Marital Status

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Filing Status & Marital Status

▪ Single
▪ Married Filing Separately
▪ Exceptions for nonresidents from Canada, Mexico, India
and Republic of Korea (S. Korea)
▪ Qualifying Surviving Spouse

39
Unmarried nonresident aliens generally use the Single filing status.
Some aliens may question if they can use the head of household status since they are the head of their
household.
Nonresident aliens cannot file as head of household.
(Resident aliens can use the head of household filing status if all requirements are met.)
Nonresident aliens who are married to other nonresident aliens cannot file a joint return.
Exceptions apply for nonresidents from Canada, Mexico, Republic of Korea (S. Korea) and India.
If a nonresident alien was previously electing to file jointly with a U.S. spouse, and that spouse died during
the year, the nonresident alien is still considered married for the whole year for filing status purposes. In the
year the spouse dies, the taxpayer may still elect to file jointly (estate permitting). If the taxpayer has qualifying dependents, they may qualify to file as a Qualifying Surviving Spouse for the next 2 years.
See Publication 519, U.S. Tax Guide for Aliens for additional inform

1-39

Filing Status & Dependents

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Filing Status & Dependents
▪ Even though the nonresident alien may have family
members in the U.S., they generally will not qualify as
dependents for tax credits.

40
Even though the alien may have family members in the U.S., they generally can’t take a tax deduction or
tax credit for them as long as they are considered nonresidents for federal income tax purposes.
Some exceptions apply for nonresidents from Canada, Mexico, Republic of Korea (S. Korea) and India.
For additional information see Publication 519, U.S. Tax Guide for Aliens.
Aliens

1-40

Spouse, Children, and Other Accompanying Family Members

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Spouse, Children, and Other
Accompanying Family Members
▪ Each file their own Form 8843
▪ All U.S. source income must be reported

41
Individuals in F-2 and J-2 immigration status, who are excluding days of presence from the Substantial
Presence test must file Form 8843, Statement for Exempt Individuals and Individuals with a Medical
Condition every year.
All U.S. source income must be reported on Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Return
Note: This includes income that was earned in violation of immigration or other laws.

1-41

Taxation of Nonresidents

TAXATION OF
NONRESIDENTS

42
References for this lesson may include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Volunteer Resource Guide
• Publication 519, U.S. Tax Guide for Aliens
• Publication 901, U.S. Tax Treaties
• Publication 970, Tax Benefits for Education
• Form 1040-NR, U.S. Nonresident Alien Income Tax Return
• Form 1099-INT, Interest Income

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov.

1-42

Taxation of Nonresidents

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Taxation of Nonresidents

▪ Source of Income
▪ Type of Income

43
In general, nonresidents are taxed only on their U.S. sourced income.
Publication 519, U.S. Tax Guide for Aliens contains information on how to determine the source and
taxability of income. There is also some good information about source of income on www.irs.gov
www.irs.gov.

1-43

Interest Income

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Interest Income

▪ Is usually excluded from income

44
Interest Income
Interest earned on deposits in U.S. accounts that are not connected to a U.S. trade or business may be
excluded from U.S. taxation. It is considered taxable income from the taxpayer’s country of residence and
not U.S. Source income. See Publication 519, U.S. Tax Guide for Aliens,
Aliens for additional information.
Some U.S. banks and other financial institutions still issue a Form 1099-INT, Interest Income,
Income to nonresident aliens. If the nonresident alien meets the conditions for the interest to be nontaxable in the U.S., they
do not need to include the amount from the Form 1099-INT in their income calculation.

1-44

Qualified Scholarships/Fellowships

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Qualified Scholarships/Fellowships
▪ Candidate for a Degree
▪ Qualified Expenses
• tuition and mandatory fees
• required fees, books, supplies & equipment

45
Qualified scholarships and fellowships are usually not taxable. If the recipient has to perform personal
services to receive the scholarship or fellowship, the amount that represents compensation should be
counted as earned income.
Publication 970, Tax Benefits for Education for additional information on qualified scholarships.
Note: Scholarships and fellowships that cover room and board are not qualified and must be included in
income unless a treaty provision applies.

1-45

Other Income

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Other Income

▪ Income Not Effectively Connected
• 30% (or reduced treaty rate, if applicable)

46
Income that is not connected to the nonresident’s purpose for entering the U.S. is usually taxed at a flat
rate of 30%. Some countries have treaty provisions that prescribe a lower tax rate on capital gains from
U.S. stock sales.
If the taxpayer has no treaty-provided reduced rates for dividends (reduce rates are OUT-OF-SCOPE) or if
the taxpayer was not a large shareholder and had sales of $10,000 or less, a Foreign Student and Scholar
VITA/TCE site may prepare the return if the volunteer and quality reviewers have also passed the advanced
module on Link & Learn Training. You should reference the appropriate tax treaty and Publication 4011 to
ensure preparation is within scope.)
Example: A student from South Africa earned $100 in dividends from an investment she made in a U.S.
brokerage account. The dividends will be reported on Form 1040-NR, U.S. Nonresident Alien Income Tax
Return. She does not have a treaty benefit for this type of income. The student will pay $30 of U.S. income
tax on this investment income.

1-46

Form 8843 Filing Requirement

FORM 8843 FILING
REQUIREMENT

47
References for this lesson may include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Resource Guide
• Publication 519, U.S. Tax Guide for Aliens
• Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov.

1-47

Form 8843

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Form 8843

▪ Name & TIN—must match the identification documents of
the taxpayer
▪ U.S. address only if not filing with 1040-NR

48
Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition can be filed
without a Taxpayer Identification Number, if it is not being filed with a Form 1040-NR. However, if the
nonresident has a number, it must be used.
Note: A TIN can be either an Individual Tax Identification Number (ITIN) or a Social Security Number
(SSN). If the taxpayer has both, use the SSN.

1-48

Form 8843 (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Form 8843 (cont.)
▪ Part II, Scholars
▪ Part III, Students
▪ Signature required only if not filed with 1040-NR

49
It is up to the students and scholars to know what to include in Part II or Part III. However, you may want to
put the name and phone number of the Foreign Student Advisor of your institution in your reference materials.
Note: Encourage the students and scholars to make a copy of this form for their records before sending it in.

1-49

Finishing the Return

FINISHING THE RETURN

50
References for this lesson may include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Resource Guide
• Publication 970, Tax Benefits for Education
• Form W-2, Wage and Tax Statement
• Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
• Form 9465, Installment Agreement Request
• Form 8888, Allocation of Refund

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov.

1-50

Finishing the Return

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Finishing the Return
FIRST, Cover with the taxpayer,
▪ Direct Deposit
▪ Split refund
▪ Method of Payment (if balance due)
▪ QUALITY REVIEW the return
▪ THEN,
▪ Taxpayer signs the form(s)

51
100% of returns prepared must be Quality Reviewed using Form 13614-NR and Publication 4011 to
ensure the return is within scope and is correct and complete.
Note: VITA/TCE volunteers do not sign the form but ensure that the SIDN and site name are properly
listed. Make sure the taxpayer reads and understands the perjury statement on the return before signing.
Form 8879 should be signed by the taxpayer for e-filed returns.
Paper returns that are not signed by the taxpayer will be returned to the taxpayer. This can result in a delay
in processing the paper return.
Encourage nonresidents to consider using direct deposit. Some students and scholars move frequently but
maintain the same bank account. Direct deposit is an easy and secure way to receive the refund, if any. If
they choose direct deposit of their refund, they may be able to split the refund into more than one account
8888
by checking the appropriate box and attaching Form 8888.
Payments in full can be made by the due date for the return, by direct pay, card or digital wallet, or an IRS
Online Account.

1-51

Finishing the Return (cont'd)
If taxpayers have a balance due and cannot pay in full there are options available to assist them in paying
their taxes. If taxpayers can pay within 30-120 days, recommend that they contact the IRS upon receipt of
their first bill before requesting any installment agreement. An IRS installment agreement can be requested
by completing Form 9465, Installment Agreement Request,
Request or visting IRS.gov
IRS.gov. While an installment
agreement allows taxpayers to pay the balance due over a period of time, it does not stop the accumulation of interest and any applicable penalties. There are fees that may apply of up to $225. See Form 9465
instructions for the various fees. Credit card, check, money order, direct debit, and payroll deduction are all
optional payment methods. A reduced fee may be applicable for some taxpayers, please see Form 13844,
13844
Application for Reduce User Fee For Installment Agreements.

1-52

Finishing the Return (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Finishing the Return (cont.)

▪ Attach W-2s and 1042-S’s
▪ Advise the taxpayer to keep copies
▪ Mail 8843 and tax return together

52
Forms W-2, Wage and Tax Statement and Forms 1042-S, Foreign Person's U.S. Source Income
Subject to Withholding should be attached to the left-hand side of the first page of the paper return. The
best way to attach the forms is with staples. Do not use paper clips.
Note: The student or scholar should keep a copy of all items that are sent in, for at least 3 years.
E-filed returns – a copy of the return including all attachments and Forms W-2 should be maintained by the
taxpayer.

1-53

Social Security Tax Matters

SOCIAL SECURITY
TAX MATTERS

53
References for this lesson may include:
• Publication 4011, VITA/TCE Foreign Student and Scholar Resource Guide
• Publication 519, U.S. Tax Guide for Aliens
• Form 843, Claim for Refund and Request for Abatement.

All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and at www.irs.gov
www.irs.gov.

1-54

Social Security Tax

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Social Security Tax

▪ Exemption from FICA (Social Security and Medicare
taxes)

▪ If resident for tax purposes, usually subject to FICA taxes

54
Generally, services performed by a nonresident alien temporarily in the United States as a nonimmigrant in
(F), (J), (M), or (Q) immigration status are not covered under the Social Security program if the services are
performed to carry out the purpose for which you were admitted to the United States. This means that there
will be no withholding of Social Security or Medicare taxes from the pay you receive for these services. For
additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens
Any student (regardless of residency or citizenship status) who is enrolled and is regularly attending
classes at a school may be exempt from Social Security and Medicare taxes on pay for services
performed for that school.

1-55

Social Security Tax (cont'd)

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Social Security Tax (cont.)

▪ Individuals in F-2 or J-2 immigration status are never
exempt from FICA (Social Security and Medicare Taxes)

55
The FICA exemption does not extend to family members or others who derive their immigration status from
a nonresident student or scholar.
In general, immigration laws do not allow an individual in F-2 immigration status to work while in this
country.
An individual in J-2 immigration status may receive permission from the immigration authorities to work
while in this country. Even though they may be a nonresident for tax purposes, they are still subject to the
FICA tax.

1-56

FICA Refunds

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

FICA Refunds
When withheld in error:
▪ FIRST, ask the employer to refund

▪ If not refunded by the employer, use IRS Form 843 to
request a refund

56
If Social Security tax and Medicare were withheld in error, the student or scholar must first contact the
employer, who withheld the taxes, for reimbursement. If the employer cannot or will not refund the FICA
withholdings, request a letter from them stating why. (An attempt should be made, if possible.) If you are
unable to get a refund from the employer, file a claim for refund with the Internal Revenue Service on Form
843, Claim for Refund and Request for Abatement along with the attachments outlined in Publication
519 and addressed on Form 8316, Information Regarding Request for Refund of Social Security Tax
Erroneously Withheld on Wages Received by a Nonresident Alien on an F, J, M, or Q Type Visa.
Publication 519, U.S. Tax Guide for Aliens contains information on what should be attached to the claim form.
Also refer to the lesson on Social Security Taxes for Foreign Students and Scholars in the updated Link &
Learn training.

1-57

FICA Refunds (cont'd)
File the Form 843 claim, with attachments, including:
• Form W-2 for the year in question
• Form 8316 or signed statement addressing all the items listed on Form 8316
• Employer’s letter (if acquired) – keeping a copy for your records.
• Copy of Visa
• Copy of USCIS Form I-94, Arrival/Departure Record
• Copy of the current Form 1040-NR filed with the IRS

Send all the above to:
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
OGDEN, UT 84201-0038
U.S.A.
Note: Completion of the Form 843 is OUT-OF-SCOPE for the VITA/TCE program. However, volunteers
may provide the form and basic information regarding the process to the taxpayer.

1-58

State Income Tax Issues

STATE INCOME
TAX ISSUES

57
Income tax treaties do not cover state income taxes. However, many states define income based on federal
taxable income or federal adjusted gross income.
Please check with the state income tax authorities for further information.

1-59

State Income Tax Issues

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

State Income Tax Issues

▪ Although many states base their state returns on the
federal adjusted gross income, some states DO NOT
honor federal income tax treaty provisions.
▪ Contact your state’s tax department for guidance

58
Most states have a website that provides information about the state income tax system. You may visit
www.irs.gov/businesses/small-businesses-self-employed/state-government-websites for links to the
state income tax web pages. Some states also provide e-filing methods for the state return online.
You can contact the state’s income tax authorities to learn more about completing the required state
income tax return.

1-60

Questions?

STAKEHOLDER PARTNERSHIPS, EDUCATION & COMMUNICATION

Questions?

▪ Refer to the publications and forms that have been
mentioned in this presentation.
▪ www.irs.gov

59
All forms and publications cited in this presentation are available in Publication 5087-FS, VITA/TCE
Foreign Student and Scholar Resource Guide,
Guide and on the Internal Revenue Service’s website at: www.
irs.gov.
irs.gov

1-61

Thank You

THANK YOU

FOR AGREEING TO HELP OTHERS
WITH THEIR TAX RETURNS.

60
Stress again confidentiality, privacy, and security, as well as all of the Quality Site Requirements.

1-62

Dept. of the Treasury

DEPARTMENT OF THE TREASURY
Internal Revenue Service
www.irs.gov

1-63

Section 2 – Tax Credits for Aliens
Who is Eligible?
To claim a tax credit, the nonresident alien must have effectively connected income. The credits do not offset
“Other Taxes”. The information in this document contains information about Tax Credits for Aliens as follows:
Quick Reference for Common Credits ��������������������������������������������������������������������������� 2-2
Foreign Tax Credit ����������������������������������������������������������������������������������������������������������� 2-3
Credit for Child and Dependent Care Expenses ����������������������������������������������������������� 2-4
Retirement Savings Contributions Credit ��������������������������������������������������������������������� 2-5
Child Tax Credit ���������������������������������������������������������������������������������������������������������������� 2-6
Credit for Other Dependents ������������������������������������������������������������������������������������������� 2-6
Other Credits – Mortgage Interest Credit,
Credit for Prior Year Minimum Tax, Qualified
Electric Vehicle Credit, General Business Credit,
Empowerment Zone Employment Credit,
Nonconventional Source Fuel Credit ��������������������������������������������������������������������������������� 2-6
Other credits are available to nonresidents aliens only if they are eligible and choose to file a joint
return, and elect to be treated as a resident alien with their spouse who is a U.S. citizen or resident.
Remember, a single nonresident alien generally cannot elect to file as a resident alien. The most common
credits available to resident aliens include:
1. Education Credits – If the taxpayer, spouse or dependents had qualifying tuition and related

expenses they may be eligible for an education credit on a 1040. See Publication 970, Tax Benefits
for Education,
Education for more information.

2. Earned Income Tax Credit – Low income working people, especially families with children, may be

eligible for the Earned Income Tax Credit if filing on a 1040.. Both spouses and any qualifying children
must have a Social Security Number that allows them to work in the United States. See Publication
596, Earned Income Credit,
Credit for more details or log onto www.irs.gov
www.irs.gov.

2-1

Form 1040-NR Credits – Quick Reference
Credit
Foreign Tax Credit

Income
Requirements for
Nonresident Alien
Effectively ConnectedForeign Source Income

Child and Dependent Care Effectively Connected
Credit
Income

Retirement Savings Contri- Effectively Connected
bution Credit
Income

Country of
Residence

Other Requirements
that may Eliminate
Nonresident Aliens

Filing Status

Any

Any

None

Canada, Mexico, South
Korea, Students and
Apprentices from India

Single or Qualifying
Surviving Spouse

Taxpayer must maintain a
home w/ dependent

Any

Any

South Korea, Indian
dependents must be child
Must be working and
saving for retirement in
the U.S.
May not be a full-time
student

Child Tax Credit and
Additional Child Tax Credit

Effectively Connected
Income

Canada, Mexico, South
Korea, Students and
Apprentices from India

Any

Child must be U.S.
resident and a dependent

Credit for Other Dependents

Effectively Connected
Income

Any

Any

Must have ITIN for
Qualifying dependent by
due date of the return and
not qualified for Child Tax
Credit.

Generally, a married person filing a separate return may not claim these credits.
Note: Residents of Canada, Mexico or the Republic of Korea (S. Korea) who meet the tests for “Married
Persons Living Apart” may be able to use the Single filing status.
For additional information on credits, see Publication 519, U.S. Tax Guide for Aliens.
Aliens
Reminder: Additional VITA certification is required to address many of these credits.

2-2

Foreign Tax Credit – OUT-OF-SCOPE
Nonresident aliens may qualify for the Foreign Tax Credit if the income being taxed is from foreign
sources that is effectively connected with a trade or business in the U.S. and will be included on the
Form 1040-NR.
Since non-resident aliens are not taxed on foreign income that is not effectively connected, foreign taxes
paid on that income is not eligible for the credit.
For more information on the Foreign Tax Credit, see Publication 514, Foreign Tax Credit for Individuals.
Individuals
This is OUT-OF-SCOPE for the Foreign Student and Scholar VITA/TCE program.

2-3

Credit for Child and Dependent Care Expenses
The credit is a percentage of the amount paid to care for a qualifying person while the taxpayer worked or
looked for work.
Nonresident aliens are generally not eligible for this credit. To be eligible, all the following conditions must
be met:
• The nonresident alien must have an eligible dependent as a qualifying person (Canada, Mexico, Republic

of Korea (S. Korea), and India)

• Filing status is Single or Qualifying Surviving Spouse
• The nonresident alien has effectively connected earned income.
• The taxpayer kept up a home where he/she lived with the qualifying person for more than half of the year.

Married nonresident aliens will be able to claim the credit only if they choose to file a joint return,
and elect to be treated as a resident alien, with a U.S. Citizen or resident. A married person filing a
separate return may not claim the credit. However, U.S. residents married to nonresident aliens may meet
the tests for “Married Persons Living Apart” and other requirements may be able to use the head of household filing status.
Disabled Spouse – Only a married nonresident alien electing to be treated as a resident alien on a joint
return with a U.S. citizen or resident would be able to claim the credit based on expenses for a disabled
spouse. Form 1040-NR does not allow for a joint return, and a married person filing a separate return
cannot claim the credit. As the taxpayer must keep up a home where they lived with the qualifying person,
the exceptions for “Married Persons Living Apart” would not apply.
For additional requirements for the Child and Dependent Care Credit including qualifying expenses, see
Publication 503, Child and Dependent Care Expenses.
Expenses

2-4

Retirement Savings Contribution Credit
The Retirement Savings Contribution Credit allows a credit based on a percentage of the taxpayer’s contributions to an IRA Individual Retirement Arrangement (IRA) or other qualified retirement plan defined under
the U.S. Tax Code. The percentage allowed as a credit depends on the taxpayer’s Adjusted Gross Income.
Nonresident aliens may qualify for this credit if they are working and saving for retirement in the U.S.
However, full-time students are not eligible, so many F-1/ J-1 VITA/TCE clients will not qualify for the credit.
In order to claim the Retirement Savings Contribution Credit on Form 1040-NR, the nonresident alien must
meet all the following conditions:
• Contributed to an IRA or qualified retirement plan
• Must have effectively connected income
• Not a full-time student
• At least 18 years of age
• Not able to be claimed as a dependent on another person’s tax return
• Adjusted Gross Income must not be over the threshold amount

For more information on the Retirement Savings Contribution Credit, see Form 8880, Credit for Qualified
Retirement Savings Contributions.
Contributions

2-5

Child Tax Credit and Additional Child Tax Credit
The Child Tax Credit is a nonrefundable credit for people who have a qualifying child. Certain lower-income
taxpayers may also qualify for the refundable Additional Child Tax Credit, which is calculated on Schedule
8812.
To claim the Child Tax Credit on a Form 1040-NR, the child must be a U.S. citizen or resident.
A qualifying child for the Child Tax Credit must be:
• The taxpayer's dependent [Canada, Mexico, Republic of Korea (S. Korea), or India]
• Under age 17
• The taxpayer's child, adopted child, stepchild, grandchild, or eligible foster child, brother, sister,

stepbrother, stepsister, or a descendant of any of them (i.e. grandchild).

• A U.S. citizen or resident with a valid SSN (must be obtained by the due date of the return, including

extensions)

For more information on the Child Tax Credit and Additional Child Tax Credit, see Schedule 8812.

Credit for Other Dependents
This allows a new $500 non refundable credit (per dependent) for any of your dependents who are not qualifying children for the Child Tax Credit. There is no age limit for the $500 credit, but the tax tests for dependency must be met [Canada, Mexico, Republic of Korea (S. Korea), and India only may claim dependents].

Other Credits
Taxpayers that may qualify for these credits are OUT-OF-SCOPE and should be referred to a professional
tax preparer:
• Mortgage Interest Credit (Form 8396)
• Credit for Prior Year Minimum Tax - Individuals, Estates, and Trust (Form 8801)
• Qualified Electric Vehicle Credit (Form 8834)
• General Business Credit (Form 3800)
• Empowerment Zone Employment Credit (Form 8844)

2-6

Section 3 – Frequently Asked Questions
Basic Rules of U.S. Taxation ������������������������������������������������������������������������������������������� 3-2
Canadian Questions �������������������������������������������������������������������������������������������������������� 3-3
Capital Gain Income (Nonresident Aliens) �������������������������������������������������������������������� 3-4
Currency Issues ��������������������������������������������������������������������������������������������������������������� 3-5
Determination of Residency Status for Federal Income Tax Purposes ���������������������� 3-6
Deductions (Nonresident Aliens) ����������������������������������������������������������������������������������� 3-8
Educational Expenses (Nonresident Aliens) ����������������������������������������������������������������� 3-9
Form 8843, Statement for Exempt Individuals and
Individuals with a Medical Condition ��������������������������������������������������������������������������� 3-10
Filing Status and Dependents and
other Family Issues (Nonresident Aliens) ��������������������������������������������������������������������3-11
3-11
Form 2555, Foreign Earned Income Exclusion ����������������������������������������������������������� 3-12
Form 1116, Foreign Tax Credit – OUT-OF-SCOPE ������������������������������������������������������ 3-13
How, When and Where to File
Form 1040-NR U.S. Nonresident Alien Tax Return ����������������������������������������������������� 3-14
Pension Income ������������������������������������������������������������������������������������������������������������� 3-16
Scholarships, Fellowships, Grants and Awards for Nonresident Aliens ����������������� 3-17
Social Security and Medicare Taxes and the Nonresident Alien ������������������������������� 3-18
Tax Credits (Nonresident Aliens) ���������������������������������������������������������������������������������� 3-21
Treaties ��������������������������������������������������������������������������������������������������������������������������� 3-22

3-1

Basic Rules of U.S. Taxation
What determines the U.S. taxation of income?
The general rule of income taxation is that income is taxable where the activity or transaction occurs. All
compensation for services performed in the U.S. is subject to U.S. taxes unless an exception applies. For
additional information see Publication 17, Your Federal Income Tax For Individuals and Publication
519, U.S. Tax Guide for Aliens.
Aliens

How do I calculate the taxes on my U.S. income?
Your U.S. source income will be taxed based on your residency status for federal income tax purposes
and any applicable Treaties between the U.S. and the country of residency. For additional information, see
Publication 519, U.S. Tax Guide for Aliens.
Aliens

How do I determine my residency status?
Your residency status for federal income tax purposes will depend on your immigration status. In general,
a nonimmigrant is considered a resident alien for federal tax purposes if he or she is present in the U.S. for
183 days or more, unless an exception applies. Most students and scholars will meet one of the exceptions
for at least part of their stay. For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

Since I already had taxes withheld from my pay, do I need to file a tax return?
Yes. The U.S. tax system is considered a “pay as you go” plan. Therefore, taxes are withheld from your
pay as you earn it (based on withholding documents you give to your employer). You file a federal income
tax return after the end of the calendar year to reconcile your withholdings with your actual tax liability. For
additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

3-2

Canadian Questions
I am a Canadian citizen living and working in the U.S. for a U.S. employer on a visa. Do I need
to file both a U.S. tax return and a Canadian tax return?
You must comply with both U.S. and Canadian filing requirements. In the United States, you generally are
required to file a return if you have income from the performance of personal services within the United
States. However, under certain circumstances, that income may be exempt from payment of U.S. tax
pursuant to the U.S.-Canada Income Tax Treaty. You need to determine what type of visa you have, and
how that impacts your residency status in the United States. If, based on the tax code and your immigration status you are treated as a U.S. resident, then your entitlement to treaty benefits will be impacted. For
additional information, see Publication 519, U.S. Tax Guide for Aliens and Publication 597, Information
on the United States-Canada Income Tax Treaty.
Treaty

I am a Canadian citizen who worked in the U.S. for 4 months. Do I have to file a U.S. income
tax return as well as my income tax return in Canada?
In the United States, you generally are required to file a return if you have income from the performance of
personal services within the U.S. The type of return to file would depend upon whether you are a resident
of the U.S. for purposes of U.S. tax law. There are several tests to determine residency, including the
substantial presence test, which is based on how many days you are present in the U.S. over a look back
period of three years. For additional information, see Publication 519, U.S. Tax Guide for Aliens and
Publication 597, Information on the United States-Canada Income Tax Treaty.
Treaty

I am a U.S. citizen. If I move to Canada to live and work there as a Canadian permanent
resident, do I pay both U.S. and Canadian Taxes?
United States citizens living abroad are required to file annual U.S. income tax returns and report their
worldwide income if they meet the minimum income filing requirements for their filing status and age. You
must contact the Canadian Government to determine whether you must file a Canadian tax return and
pay Canadian taxes. For the United States income tax return, you will have several options available to
you regarding claiming a foreign tax credit or excluding some or all of your foreign earned income. For
additional information, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
Abroad

3-3

Capital Gain Income – Nonresident Aliens
Are international students required to pay income tax on their U.S. capital gains?
Nonresident alien students and scholars, and alien employees of foreign governments and international
organizations who, at the time of their arrival in the United States, intend to reside in the United States
for longer than one year, are subject to the 30% taxation on their U.S. source capital gains during any tax
year, if during such tax year (usually calendar year), they are present in the United States for 183 days or
more, unless a tax treaty provides for a lesser rate of taxation. This assumes that such capital gains are not
effectively connected with the conduct of a United States trade or business. These capital gains would be
reported on 1040-NR, Schedule NEC,
NEC and would not be reported on a Form 1040, Schedule D, because
they are being taxed at a flat rate of 30%, under I.R.C.§871(a), or at a reduced flat rate under a tax treaty.
For additional information, go to www.irs.gov
www.irs.gov.

I am a nonresident alien and invested money in U.S. stock market through a U.S. brokerage
company. Are the dividends and the capital gains taxable? If yes, how are they taxed?
Generally, capital gains received by a nonresident alien present in the United States for 183 days or more
are taxable in the United States. Certain gains, however, are subject to the 30% withholding rate or if
applicable, a reduced tax treaty rate. Dividends are withheld upon at the 30% or lower tax treaty rate. If at
a lower tax treaty rate the return is OUT-OF-SCOPE for the VITA/TCE Program. For additional information,
see Publication 519, U.S. Tax Guide for Aliens.
Aliens

3-4

Currency Issues
How much money can a nonresident alien bring in to the U.S.?
There is no limit on the total amount of monetary instruments which may be brought into or taken out of the
United States, nor is it illegal to do so. However, if the person transports more than $10,000 in monetary
instruments on any occasion into or out of the United States, FinCEN Form 105 (formerly Customs Form
4790, Report of International Transportation of Currency or Monetary Instruments with U.S. Customs) must
be filed with U.S. Customs. For additional information, go to www.irs.gov or www.fincen.gov.

What is a “monetary instrument”?
Monetary instruments include U.S. or foreign coin in current circulation, currency, travelers’ checks (in any
form), money orders, and negotiable instruments or investment securities in bearer form.

How does the foreign currency exchange rate work?
Foreign currency needs to be converted into U.S. dollars to determine the amount of income (such as
income from the sale of goods or services, dividends or interest) to report on a taxpayer’s U.S. return and
to determine gain or loss when foreign currency is disposed of. The proper conversion rate depends on the
item of income. You can generally get the exchange rates from banks and U.S. Embassies. If there is more
than one exchange rate, use the one that most properly reflects your income. For additional information, go
to foreign currency exchange rates.
rates

3-5

Determination of Residency Status for Federal Income Tax Purposes
Why is my residency status for federal income tax purposes important?
Since resident and nonresident aliens are taxed differently, it is important for you to determine your status.
You are considered a nonresident alien for any period that you are neither a United States citizen nor a
United States resident alien.

How do I know if I am considered a resident alien for federal income tax purposes?
You are considered a resident alien if you met one of two tests for the calendar year. The first test is the
“green card test.” If at any time during the calendar year you were a lawful permanent resident of the
United States according to the immigration laws, and this status has not been rescinded or administratively
or judicially determined to have been abandoned, you are considered to have met the green card test.
The second test is the “substantial presence test.” To meet this test, you must have been physically present
in the United States on at least 31 days during the current year, and 183 days during the 3 year period that
includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count
all of the days you were present in the current year, and one–third of the days you were present in the
first year before the current year, and one–sixth of the days you were present in the second year before
the current year. Do not count any day you were present in the United States as an “exempt individual” or
commute from Canada or Mexico to work in the United States on more than 75% of the workdays during
your working period. An exempt individual may be anyone in the following categories:
• A foreign government–related individual,
• A teacher in J or Q Visa, or Trainee on J Visa status who substantially complies with the requirements of

the visa,

• A student in F, J or M Visa status who substantially complies with the requirements of the visa; or
• A professional athlete temporarily present to compete in a charitable sports event.

For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

I am a foreign national and came to this country on June 30th of last year. I have an H-1 visa.
What is my tax status regarding residency; nonresident alien or resident alien?
You were a dual-status alien last year. In H-1 immigration status in the U.S. for 183 days or more, you likely
became a resident, for tax purposes, as of June 30th. For the part of the year you are a resident alien, you
are taxed on income from all sources. For the part of the year that you are not a resident alien, you are not
taxed on income from sources outside the United States, unless the income is effectively connected with a
trade or business in the United States. For additional information, see Publication 519, U.S. Tax Guide for
Aliens.
Aliens

I have an H-1 visa and my husband has an F-1 visa. We both lived in the United States all last
year and had income. What kind of form should we file? Do we file our taxes separately or
jointly?
You will have met the substantial presence test and will be taxed as a resident alien for last year, while your
husband is likely to be a nonresident alien. You may file a joint tax return if your husband makes the choice
to be treated as a resident for the entire year. For additional information, see Publication 519, U.S. Tax
Guide for Aliens.
Aliens

3-6

Determination of Residency Status for Federal Income Tax Purposes (cont'd)
I was an international student (F-1 visa) until October 1, and then my immigration status was
changed to H-1. Should I file my income tax return as a dual-status or nonresident alien?
Assuming you were not in the U.S. in F-1 student immigration status for over 5 years, you may file as a
nonresident for the entire year or, if you qualify under the first year choice, you may file as a dual-status
alien. For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

Last year I changed my immigration status from an F-1 student to an H-1 worker. Does my
status change how I file my tax return or what forms I use?
It depends on whether or not you qualify as a resident alien. As a foreign national temporarily in the U.S.
and now under H-1 immigration status, you must file Form 1040-NR, U.S. Nonresident Alien Income
Tax Return.
Return You must also file Form 8843, Statement for Exempt Individuals and Individuals With a
Medical Condition if you do not meet the substantial presence test. In order to file a Form 1040, Individual
Tax Return, you must meet the substantial presence test. Based on the date your immigration status
changed, you could be a dual-status alien for last year. For additional information, see Publication 519,
U.S. Tax Guide for Aliens.
Aliens

I entered the U.S. in August and I have a J-2 visa with an Employment Authorization (work
permit). Can I be considered as a U.S. resident for tax purposes under the substantial
presence test?
You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the
calendar year. As an exempt individual, a person in J-2 immigration status will not initially meet this test.
For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

If someone in F or J immigration status was previously an F or J visa holder under a different
stay, perhaps 10 years ago, do they need to include the previous stay in calculating the 2 or 5
year limit for exemption from the physical presence test?
Teachers and trainees (and their dependents) will not be exempt from counting their days of presence if
he/she was exempt as a teacher, trainee or student for any part of 2 of the preceding 6 years. The student
five-tax-year limit includes any time spent in exempt individual status after January 1, 1985. Therefore, any
time in the U.S. in F, J, or M immigration status (including dependents) may effect the calculation of the
five-year period. For additional information, See Publication 519, U.S. Tax Guide for Aliens.
Aliens

Are all J-1s subject to the 6 year look-back 2 year physical presence rule?
Only J non-students are subject to this rule. J students and their dependents follow the same five-year rule
as F students and their dependents. For additional information, see Publication 519, U.S. Tax Guide for
Aliens.
Aliens

Is there a look-back rule for the 5 year rule for F-1s?
The rule for F and J students is a five-year lifetime limit. You must look back to January 1, 1985 to see if
there have been any years as an exempt individual to determine current year substantial presence test
results. For additional information, see Publication 519, U.S. Tax Guide for Aliens.

Sometimes it would be better for a student to be considered a resident alien for tax purposes.
Can they choose to be treated this way if it benefits them?
Nonresident aliens who are married to U.S. citizens or residents can elect to file a joint return and be
treated as a resident alien. Students and trainees from Barbados and Jamaica, regardless of marital status
may elect to be treated as a resident alien. All other nonresident students and scholars must follow the
prescribed rules for counting or exempting their days of presence. For additional information, See
Publication 519, U.S. Tax Guide for Aliens.
Aliens
3-7

Deductions – Nonresident Aliens
Can nonresident aliens claim the standard deduction?
Nonresident aliens cannot claim the standard deduction. However, a special rule applies to students and
business apprentices who are eligible for the U.S.-India treaty benefits. For additional information, see
Publication 519, U.S. Tax Guide for Aliens.
Aliens

Does a nonresident alien get a deduction for state or local income taxes?
Yes, the nonresident alien can take a deduction for state and local income taxes that have been withheld by
the payer. The deduction can be taken on Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Return
For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

What charitable contributions can the nonresident alien include on the tax return?
Charitable contributions or gifts to qualified U.S. organizations can be deducted on Form 1040-NR, U.S.
Nonresident Alien Income Tax Return,
Return subject to certain limitations. Qualified U.S. organizations include
organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to
prevent cruelty to children or animals. Contributions made directly to a foreign organization are not deductible. For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

Can a nonresident alien deduct a loss from a theft of property?
Casualty and theft losses are deductible, if related to a federally declared disaster area, on Schedule
A – Itemized Deductions, Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Return Several limitations apply. For additional information, see Publication 519, U.S. Tax Guide for Aliens and Form 4684,
Casualties and Thefts.
Thefts
Note: Any claim for a Casualty and Theft Loss is OUT-OF-SCOPE for the VITA/TCE Program.

3-8

Educational Expenses – Nonresident Aliens
Can nonresident aliens claim a credit for tuition paid to go to school?
If you are a nonresident alien for any part of the year, you generally cannot claim the education credits.
However, if you are married and choose to file a joint return, and elect to be treated as a resident alien
with a U.S. citizen or resident spouse, you may be eligible for the American Opportunity Credit or Lifetime
Learning Credit. For additional information, see Publication 970, Tax Benefits for Education and Publication 519, U.S. Tax Guide for Aliens.
Aliens

Can a nonresident alien take a deduction for student loan interest?
If you paid interest on a qualified student loan from a U.S. financial institution, you may be able to deduct
the interest if you meet all of the following requirements:
1. Your filing status is any filing status except married filing separately
2. Your MAGI is less than $95,000
3. No one else can claim you as a dependent on a U.S. tax return
4. The loan was taken out to pay tuition at a qualified U.S. educational institution and other qualified

expenses

5. The educational expenses were paid or incurred within a reasonable period of time before or after the

loan was taken out

6. The person for whom the expenses were paid was an eligible student

For additional information, see Publication 970, Tax Benefits for Education and Publication 519, U.S.
Tax Guide for Aliens.
Aliens

3-9

Form 8843, Statement for Exempt Individuals and Individuals with a Medical
Condition
What happens if the student doesn’t file the form 8843?
If Form 8843 is not filed, the alien may not be able to exclude their days of presence from the Substantial
Presence Test (SPT). This could mean that they may be viewed as a resident alien for tax purposes. They
would have to report all of their worldwide income on the U.S. tax return and they may not be able to claim
their treaty benefits.

I’m a first-year F-1 student and I had no U.S. earned income or scholarships. Do I need to file
any federal income tax papers?
Yes. You must file Form 8843, Statement for Exempt Individuals and Individuals With a Medical
Condition. If any family members are here with you (F-2 status) they must also file a Form 8843.
Condition
8843 For
additional information see the instructions included in Form 8843.
8843

I arrived in the U.S. in December of last year. Do I still have to file a Form 8843?
Yes. If you were present in the U.S. for even 1 day, you must file Form 8843 if you are excluding days of
presence from the substantial presence test.

3-10

Filing Status, Dependents and other Family Issues – Nonresident Aliens
Can you please review which nonresidents can claim dependents?
Nonresidents (for income tax purposes) from the following countries may be able to claim their dependents
and/or spouse on their return.
Canada, Mexico, Republic of Korea (S. Korea), and Students and Business Apprentices from India Refer
to Publication 519, U.S. Tax Guide for Aliens,
Aliens for additional information. For additional information, see
Publication 501, Dependents, Standard Deduction, and Filing Information.
Information
The current amount that can be claimed for a dependent is 0 (zero). However, they may qualify you for
some allowable credits.
For additional information, see Publication 501, Dependents, Standard Deduction and Filing Information.
Information

I thought that children from the 4 countries you mentioned can only be claimed if they were
U.S. citizens or permanent residents. Is that true?
To meet the citizen or resident test, a person must be a U.S. citizen or resident, or a resident of Canada or
Mexico, for some part of the year. For additional information, see Publication 501, Dependents, Standard
Deduction and Filing Information.
Information

I have a child who was born in the U.S. Can I claim an exemption for my wife and child?
If you are a nonresident alien for federal income tax purposes you generally can’t claim exemptions for your
family members. There are exceptions for students and scholars from Canada, Mexico, Republic of Korea
(S. Korea), and India. For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

I am a married nonresident alien. My wife is here with me in J-2 immigration status. Can we
file a joint return?
Generally, you cannot file as married filing jointly if either spouse was a nonresident alien at any time during
the tax year. However, nonresident aliens married to U.S. citizens or residents can choose to be treated as
U.S. residents and file joint returns. For additional information, see Publication 519, U.S. Tax Guide for
Aliens. Married nonresident aliens who are not married to U.S. citizens or residents generally must use
Aliens
the Tax Table column or the Tax Rate Schedule for married filing separate returns when determining the
tax on income effectively connected with a U.S. trade or business. They normally cannot use the Tax Table
column or the Tax Rate Schedule for single individuals. For additional information, see Publication 519,
U.S. Tax Guide for Aliens.
Aliens

I am a scholar from Canada. My wife died in the prior tax year and I have two dependent
children. What filing status should I use on my U.S. income tax return?
You may be eligible to file as a Qualifying Surviving Spouse and use the joint return tax rates if you meet
certain requirements. For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

I am the head of my household. As a nonresident alien, how do I claim the head of household
filing status?
You cannot file as head of household if you are a nonresident alien at any time during the tax year. For
additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

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Form 2555, Foreign Earned Income Exclusion
I am a nonresident alien. Can I take the foreign earned income exclusion if I meet the bona
fide residence test or physical presence test? If yes, what is the tax form used for nonresident
taxpayer?
No, nonresident aliens do not qualify for the foreign earned income exclusion. Only if you are a U.S. citizen
or a resident alien of the United States and live abroad, you may qualify to exclude part of your foreign
earned income. But, if you are the nonresident alien spouse of a U.S. citizen or resident alien, you can
elect to be treated as a U.S. resident in order to file a joint return. In this case, you can take the foreign
earned income exclusion if otherwise qualified. For additional information, see Publication 519, U.S. Tax
Guide for Aliens.
Aliens
For additional information see Publication 54, Tax guide for U.S. Citizens and Resident Aliens Abroad.
Abroad

3-12

Form 1116, Foreign Tax Credit – OUT-OF-SCOPE
I am a nonresident alien attending college and working in the U.S. Can I take the Foreign Tax
Credit?
If you are a nonresident alien, you generally cannot take the credit. See Publication 514, Foreign Tax
Credit for Individuals and Publication 519, U.S. Tax Guide for Aliens.
Aliens

3-13

How, When and Where to File Form 1040-NR, U.S. Nonresident Alien Tax Return
Can Form 1040-NR be filed electronically?
Yes. Various companies have developed software which allows the Form 1040-NR and accompanying
Form 8843 to be filed electronically. Currently, there may continue to be limitations on which forms may be
filed electronically. See your software provider for details on the most recent forms available.

Where can I find the mailing address? Can the tax forms be folded? What size envelope is
needed? What needs to be attached to the form?
The mailing address for the return is listed in the instructions to the form. You may fold the tax return before
sending it. There is no specified envelope size for your return. Attach one copy of each W-2 or 1042-S form
that you received. For additional information see the Instructions to Form 1040-NR, U.S. Nonresident
Alien Income Tax Return.
Return

What is the due date for the Form 1040-NR?
If the alien received any wages subject to withholding, such as a nonresident alien student working on
campus, the return is due on the 15th day of the fourth month following the end of the year. This generally
means that the return will be due on April 15 (If the 15th falls on a weekend, federal holiday, or District of
Columbia holiday, it will be due on the next business day.). For additional information see the Instructions to
Form 1040-NR, U.S. Nonresident Alien Tax Return.
Return

What private delivery services can I use to file my forms?
Certain private delivery services are designated by IRS to meet the “timely mailing as timely filing/paying”
rule. These delivery services can’t deliver to a P.O. Box. For additional information see the Instructions to
Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Return

Who signs the form?
Form 1040-NR is not considered a valid return unless the nonresident alien signs it. Under certain conditions, an agent may sign for the nonresident alien. For additional information see the Instructions to Form
1040-NR, U.S. Nonresident Alien Income Tax Return.
Return

3-14

How, When and Where to File Form 1040-NR, U.S. Nonresident Alien Tax
Return (cont'd)
Should I keep a copy of my tax return?
Yes. You should make a copy of your completed return and keep it in your files.

Will the IRS send me anything to let me know that they got my return?
No. You can however, take the return to the local IRS office to turn it in. They can stamp your copy of the
return with a receipt stamp. Contact your local IRS Taxpayer Assistance Center (TAC) for an appointment first. (See www.irs.gov for more information of services available at the local offices.)

What happens if I fail to file my taxes?
If you owe taxes and don’t file, you may be assessed penalties and interest. There may also be immigration
consequences for failing to file taxes. For additional information, see Publication 519, U.S. Tax Guide for
Aliens.
Aliens

I’m a first-year F-1 student and I had no U.S. earned income or scholarships. Do I need to file
any federal income tax papers?
Yes. You must file Form 8843, Statement for Exempt Individuals and Individuals With a Medical
Condition. If any family members are here with you (F-2 immigration status) they must also file a Form
Condition
8843. For additional information see the instructions included in Form 8843.

If I owe tax, to whom do I make the check payable?
The check should be made payable to United States Treasury. You should include your Social Security
Number or Individual Taxpayer Identification Number, tax year and tax form on the check.

3-15

Pension Income
Does a nonresident alien (including international students and scholars) need to include
pension income on the U.S. tax return?
A nonresident alien usually is subject to U.S. income tax only on U.S. source income. The source of
pension income is usually determined based on where the services were performed that earned the
pension. A nonresident alien would report pension income that is determined based on services performed
in the U.S.
For additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

3-16

Scholarships, Fellowships, Grants and Awards for Nonresident Aliens
As a condition of their employment, resident assistants are required to live in the dorm. The
room is provided for free, is this taxable income?
Since their employment required them to live in the dorm for the convenience of the employer, the value of
the lodging is not taxable. For additional information, see Publication 970, Tax Benefits for Education.
Education

Are graduate assistantships taxable?
Yes, the cash stipend (salary portion) of an assistantship, whether a research assistantship or a teaching
assistantship, is considered compensation for services rendered and is fully taxable (unless excluded by
treaty). The portion of the assistantship which serves as tuition remission (tuition waiver) is considered a
scholarship and is exempt from taxation. For additional information, see Publication 970, Tax Benefits for
Education.
Education

Are athletic scholarships considered earned income since services must be performed? Is
this taxable income?
Athletic scholarships are not considered earned income even though they require the recipient to perform
services (play sports). An analogy can be made to academic scholarships that require the recipient to
maintain a certain GPA. It takes “work” to maintain the GPA, but the scholarship is not considered earned
income. However, any scholarship that covers room and board is taxable unless excludable by treaty. For
additional information, see Publication 970, Tax Benefits for Education.
Education

3-17

Social Security, Medicare Taxes and the Nonresident Alien
Are international students and scholars subject to Social Security tax?
Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act
are not covered under the Social Security program if the services are performed to carry out the purpose
for which you were admitted to the United States. This means that there will be no withholding of Social
Security or Medicare taxes from the pay you receive for these services. For additional information, see
Publication 519, U.S. Tax Guide for Aliens.
Aliens

Under my visa as a temporary nonresident alien, I’m not subject to Social Security and
Medicare withholding. My employer withheld the taxes from my pay. What should I do to get a
refund of my Social Security and Medicare?
If Social Security tax and Medicare were withheld in error from pay received which was not subject to the
taxes, you must first contact the employer who withheld the taxes for reimbursement. If you are unable
to get a refund from the employer, file a claim for refund with the Internal Revenue Service on Form 843,
Claim for Refund and Request for Abatement.
Abatement
You must attach the following to your claim:
• A copy of your Form W-2 to prove the amount of Social Security and Medicare taxes withheld.
• A copy of your valid entry visa;
• Form I-94 (or other documentation showing your dates of arrival or departure).
• If you have an F-1 visa, documentation showing permission to work in the U.S.
• If you have a J-1 visa, documentation showing permission to work in the U.S.
• If you are engaged in optional practical training or employment due to severe economic necessity,

documentation showing permission to work in the U.S.

• A statement from your employer indicating the amount of the reimbursement your employer provided

and the amount of the credit or refund your employer claimed or you authorized your employer to claim.
If you cannot obtain this statement from your employer, you must provide this information on your own
statement and explain why you are not attaching a statement from your employer or on Form 8316
claiming your employer will not issue the refund.

• If you were exempt from Social Security and Medicare tax for only part of the year, pay statements

showing the tax paid during the period you were exempt.

In addition to the documentation listed above foreign student visa holders should also attach the following:
a copy of Form I-20, Certificate of Eligibility for Nonimmigrant (F-1) Student Status, endorsed by your
student advisor and stamped by the U.S. Citizenship and Immigration Services and a copy of the Employment Authorization Document of your Optional Practical Training (e.g., Form I-766 or I-688B). If you are
an exchange visitor, attach a copy of Form DS-2019, Certificate of Eligibility for Exchange Visitor (J-1)
Status, to your claim. Submit the claim, (with attachments) to the Department of Treasury, Internal Revenue
Service Center, Ogden, UT 84201-0038.
Reminder: Nonresident aliens in J-2/F-2 immigration status are not exempt from Social Security and
Medicare tax withholding.

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Social Security, Medicare Taxes and the Nonresident Alien (cont'd)
I am a graduate student and serve as a teaching assistant. I would like to know whether FICA
taxes need to be withheld from my pay.
Students who perform services for the school, college, or university where they are enrolled and regularly
attend classes are usually not subject to Social Security and Medicare taxes.

As I understand the law, student stipends are exempt from FICA and Medicare taxes. If my
university takes these taxes out of my stipend income, can these taxes be recovered in some
way?
If you are not performing a service for the university, your stipend would be subject to income tax only if it
does not meet the qualified scholarship rules. If you are performing a service for the university, your income
is taxable for income tax purposes, but would generally be exempt from Social Security and Medicare taxes
if you are enrolled and regularly attending classes. For additional information, see Publication 970, Tax
Benefits for Education.
Education

I am an F-1 student status who was employed during my school studies and directly
afterwards I completed practical training. Do I have to pay FICA taxes? Which taxes should be
taken out of my pay?
Generally, services performed by you as a nonresident alien temporarily in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act
are not covered under the Social Security and Medicare programs if the services are performed to carry
out the purpose for which you were admitted to the United States. This means that there should be no
withholding of Social Security or Medicare taxes from the pay you receive for these services. These types
of services are very limited, and generally include only on-campus work, practical training, and economic
hardship employment. However, you are covered under the Social Security and Medicare programs for
these services if you are considered a resident alien, even though your nonimmigrant classification (“F,”
“J,” “M,” or “Q”) remains the same. Social Security and Medicare taxes will be withheld from your pay. For
additional information, see Publication 519, U.S. Tax Guide for Aliens.
Aliens

I entered the U.S. in August and I have a J-2 visa with an Employment Authorization (work
permit). Can I be considered as a U.S. resident for tax purposes under the substantial
presence test? Since my visa does not allow me to stay in this country am I subjected to
Social Security tax and Medicare tax?
You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the
calendar year. As an exempt individual, a J-2 visa holder will not initially meet this test. In general, U.S.
Social Security and Medicar

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae8dfca8fc49c1396. Public record. Not legal advice.
