How to File Tax Returns as an international student | Tax Refund 2022

WeDesified
16 Mar 202213:03
EducationalLearning
32 Likes 10 Comments

TLDRThe video script provides a comprehensive guide for international students in the U.S. on understanding the tax filing process. It emphasizes the importance of filing taxes regardless of income status to maintain visa compliance and avoid issues with the IRS. The video clarifies the distinction between resident and non-resident alien tax statuses, with non-residents filing Form 1040 NR and residents filing Form 1040. It outlines the types of income that are taxable, including stipends for living expenses, on-campus jobs, and income from investments within the U.S. The script also discusses common mistakes, such as using apps like TurboTax for non-resident aliens, which can lead to incorrect filings and future problems. It recommends Sprint Tax as a popular tool for international students and offers tips on deductions, tax credits, and the process for claiming refunds. The video concludes with advice on seeking professional help for complex tax situations and encourages viewers to engage with the content and subscribe to the channel for more informative videos.

Takeaways
  • 📚 International students in the U.S., including those on F, J, M, or Q visas, are required to file tax returns regardless of their income status.
  • 📅 U.S. tax season typically runs from January to mid-April, with the deadline for filing being April 18, 2022, for the tax year 2021.
  • 🔍 Non-resident aliens (typically those in the U.S. for less than five years) file Form 1040NR, while residents file Form 1040.
  • 💰 Income from outside the U.S. is generally not taxed for international students due to tax treaties, such as the one between India and the U.S.
  • 🏦 Scholarships covering tuition fees are not taxable, but those covering living expenses are considered taxable income.
  • 💼 Income from on-campus jobs, assistantships, CPT, or OPT is taxable, as is any investment or passive income earned within the U.S.
  • 📊 Taxpayers may be eligible for deductions, which can result in a refund if more taxes were withheld than owed.
  • 🏷️ Form 8843 is used by individuals with no taxable income to report their non-resident status and the days present in the U.S.
  • ❌ Common mistake: Using apps like TurboTax or Credit Karma, which are not designed for non-resident aliens and do not support Form 1040NR.
  • 🚫 Non-resident aliens who mistakenly received stimulus checks should return them to the IRS and correct their tax filings using Form 1040X.
  • 📝 Sprintax is recommended for international students as it supports Form 1040NR and is often discounted for students through university codes.
  • 🇺🇸 International students are exempt from paying Social Security, Medicare, or Medicaid taxes, even when working under CPT, OPT, or STEM extensions.
Q & A

  • What is the general attitude towards earning money and paying taxes according to the video?

    -The video acknowledges that while everyone likes to earn money, it's also a hard truth that taxes must be paid. This is true even for international students in a foreign country.

  • Why is it important for international students to file tax returns in the U.S.?

    -Filing tax returns is important for international students because it is a visa requirement, they may be eligible for a refund, and failure to file could lead to issues with the IRS, which is not advisable.

  • What is the U.S. tax season timeline?

    -The U.S. tax season starts in January and ends in mid-April each year, with the deadline to file being April 18, 2022, for the tax year 2021.

  • Who is required to file tax returns in the U.S.?

    -International students or dependents on F, J, M, or Q visas who are present in the U.S. during the year must file tax returns, regardless of whether they had any income or not.

  • What is the difference between a non-resident alien and a resident for tax purposes?

    -A non-resident alien is someone who has been in the U.S. for less than five calendar years on a student or dependent visa. After five calendar years, they attain resident status for tax purposes, which may make them eligible for certain tax credits or benefits.

  • Which tax forms do non-residents and residents file?

    -Residents file Form 1040, while non-residents file Form 1040 NR.

  • What types of income are taxable for international students?

    -Taxable income includes any income generated in the U.S. or from U.S. sources, such as scholarships for living expenses, on-campus jobs, assistantships, income from CPT or OPT, and passive income from investments within the U.S.

  • Why should international students not use popular tax filing apps like TurboTax or Credit Karma?

    -These apps are designed for U.S. citizens and residents and do not support forms like 1040 NR for non-residents. Using them could lead to incorrect filings and future problems with visa status changes or IRS issues.

  • What should international students do if they mistakenly received a stimulus check?

    -If an international student received a stimulus check in error, they should not use the funds and return the check to the IRS immediately. They should also file Form 1040X to correct the mistake in their tax return filings.

  • What is the recommended tax filing solution for non-resident international students?

    -Sprintax is recommended as it is popular among international students and offers resources and support for non-resident tax forms. It is not free, but many universities provide coupon codes for discounts.

  • What is the standard tax deduction and how does it apply to international students?

    -The standard tax deduction is a minimum amount of income that is not taxed by the IRS. For the year 2021, it is $12,550 for single individuals or married individuals filing separately. International students may also be eligible for this deduction due to tax treaties, like the one between India and the U.S.

  • How can international students claim a refund if they overpaid their taxes?

    -International students can claim a refund for overpaid taxes by filing the appropriate tax return forms, such as Form 1040 or 1040 NR, and the refund will be processed if they have indeed paid more than what they owe.

Outlines
00:00
📚 Understanding Taxes for International Students

Apurva introduces the topic of taxes for international students in the U.S., emphasizing the importance of filing tax returns regardless of income status. The video aims to guide international students on how to file taxes, what forms to use, and the potential for refunds. It also provides information on the U.S. tax season timeline and the necessity of filing taxes for visa compliance, potential refunds, and avoiding issues with the IRS.

05:04
🔍 Filing Tax Returns: Common Mistakes and Solutions

The paragraph discusses the requirement for international students, including those on F, J, M, or Q visas, to file tax returns even without income. It highlights the importance of filing taxes for maintaining visa status and financial integrity with the IRS. The video clarifies misconceptions about filing taxes without income by introducing Form 8843 as a simpler alternative for those without taxable income. It also warns against using apps like TurboTax or Credit Karma for non-resident aliens and suggests Sprint Tax as a suitable alternative, noting that many universities provide discount codes for it.

10:05
💼 Taxable Income, Deductions, and Filing for Residents

This section delves into what constitutes taxable income for international students, referencing the U.S.-India tax treaty and explaining the tax-exempt status of certain scholarships and income sources. It outlines the process of filing taxes, including deductions and credits, and the difference between filing Form 1040 for residents and Form 1040 NR for non-residents. The paragraph also covers state and county tax requirements, the use of tax tables to determine federal taxes, and the process of claiming refunds or paying additional taxes due.

Mindmap
Keywords
💡Tax Returns
Tax returns are documents that individuals and businesses file with the tax authorities to report income earned and taxes owed for a specific period. In the video, it is emphasized that international students, regardless of their income status, are required to file tax returns as part of their visa requirements and to avoid penalties or issues with the IRS.
💡International Student
An international student is a person who is enrolled in a study program outside their country of origin. The video discusses the tax obligations of international students in the U.S., highlighting that they must file tax returns even if they have no income, which is a common requirement for maintaining visa status.
💡Tax Season
Tax season refers to the period during which individuals and businesses are required to file their tax returns. In the U.S., as mentioned in the video, the tax season typically begins in January and ends in mid-April, with the deadline for filing being April 18, 2022, for the tax year 2021.
💡Tax Treaties
Tax treaties are agreements between countries to avoid double taxation and to determine which country has the right to tax different types of income. The video explains that due to the tax treaty between India and the U.S., income earned outside the U.S. by Indian students is not taxable in the U.S.
💡Standard Deduction
The standard deduction is a fixed amount that reduces an individual's taxable income. It is a tax deduction that taxpayers can claim without providing any proof of expenses. In the video, it is used as a method to estimate whether an individual owes taxes or is eligible for a refund, with different amounts applicable for single and married filing jointly status.
💡Non-Resident Alien
A non-resident alien, for tax purposes, is an individual who does not pass the substantial presence test to be considered a resident alien. The video explains that students on F, J, M, or Q visas who have been in the U.S. for less than five years are classified as non-resident aliens for tax purposes and must file Form 1040 NR.
💡Form 1040 and Form 1040 NR
Form 1040 is the standard U.S. Individual Income Tax Return form used by residents and citizens. Form 1040 NR is used by non-resident aliens. The video clarifies that the choice between these forms depends on the individual's residency status as determined by their duration of stay in the U.S.
💡Taxable Income
Taxable income refers to the portion of an individual's gross income that is subject to income tax. The video discusses how income from scholarships for tuition, on-campus jobs, and investments within the U.S. are considered taxable income for international students.
💡Stimulus Checks
Stimulus checks are payments made by the government to taxpayers to stimulate the economy, especially during economic downturns. The video mentions that only residents, as defined by tax treaties, were eligible for stimulus checks during the COVID-19 pandemic, and non-residents who mistakenly received them should return them.
💡Sprint Tax
Sprint Tax is a tax preparation software that is popular among international students for filing their tax returns. The video recommends Sprint Tax as an alternative to other services like TurboTax, which may not support forms for non-residents, and notes that many universities provide discount codes for its use.
💡Form 8843
Form 8843 is used by nonresident aliens to report their U.S. income and the number of days they were present in the U.S. during the tax year. The video explains that even if an international student has no taxable income, they must still file Form 8843 to report their presence in the U.S.
Highlights

Earning money involves paying taxes, even for international students in a foreign country.

Filing tax returns can be complex for those unfamiliar with a new country's tax system.

U.S. tax season runs from January to mid-April, with the deadline for filing being April 18, 2022, for the 2021 tax year.

International students or dependents on F, J, M, or Q visas must file tax returns regardless of income.

Filing tax returns is crucial for visa requirements, potential refunds, and avoiding issues with the IRS.

Taxpayer status as a 'non-resident alien' applies to those on F, J, M, or Q visas in the U.S. for less than five years.

After five years, non-resident aliens become eligible for tax credits and benefits as 'residents'.

Residents file Form 1040, while non-residents file Form 1040 NR for tax returns.

Income from outside the U.S. is generally not taxed for those from countries with a tax treaty with the U.S.

Scholarships covering tuition fees are not taxable, but those for living expenses are.

Income from on-campus jobs, assistantships, CPT, or OPT is taxable, as is income from investments or passive sources within the U.S.

Employers and stipend providers typically deduct taxes from payments, but there are eligible deductions for international students.

Form 8843 must be filed by those without taxable income, providing basic visa, passport, and presence details in the U.S.

The deadline for submitting Form 8843 is June 15th, offering additional time beyond the regular tax return deadline.

Taxpayers should not use apps like TurboTax or Credit Karma until they have been in the U.S. for at least five years due to non-resident forms support.

Sprintax is recommended for international students as it supports non-resident forms and offers resources for tax filing.

Universities often provide coupon codes for discounts on Sprintax, which is not free but is affordable and user-friendly.

W2 forms from employers are critical for tax filing as most details are derived from them.

The standard tax deduction for the year 2021 is $12,550 for single individuals or married couples filing separately.

Non-resident aliens from countries with a tax treaty with the U.S. can also use the standard deductions.

Federal taxes are calculated based on taxable income after the standard deduction, using tax brackets and tables.

State and county tax rates vary, and some states offer deductions that can reduce the tax total.

International students are exempt from paying Social Security or Medicare/Medicaid taxes, even while working on CPT, OPT, or STEM extensions.

Investments in stocks require additional paperwork, and professional tax service consultation may be needed.

Transcripts

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