Once a nonresident alien meets the substantial presence test, they are required to file a U.S. tax return.
However, if an individual is present in the U.S. on an F-1 visa, such days are exempt from the substantial presence test.
Up to 5 Years
F-1 visa holders are considered exempt individuals for up 5 calendar years. They can be exempt for a longer period if they can establish to the IRS that:
- They do not intend to reside permanently in the U.S. and
- They have substantially complied with the requirements of their nonimmigrant status
Family Members are Also Exempt
Members of the family, including spouses and unmarried children, are also exempt if their nonimmigrant statuses are dependent on the F-1 holder’s status.
Filing as an Exempt Individual
If you qualify to exclude days of presence as an exempt individual, you must file Form 8843 with the IRS.
If you are filing an income tax return, such as Form 1040-NR, you can include the Form 8843 with the tax return. Otherwise, you must mail it directly to the IRS at the address listed in the Form 8843 instructions.
F-1 Students May Still Have to File a Non-resident Return
An exempt F-1 visa holder is not required to report foreign income.
If an exempt F-1 visa holder has U.S.-sourced income, they may need to file Form 1040-NR. However, filing is not required for the following income:
- Interest income from a U.S. financial institution (bank, savings and & loan, credit union, insurance company)
- An investment that generates portfolio interest
- A scholarship or fellowship grant that is entirely tax free
FBARs are only required to be filed by U.S. residents (U.S. Citizens, Green Card holders, and those that meet the substantial presence test). If they are no longer exempt (after 5 calendar years) F-1 visa holders should file FBARs if the filing threshold is met.