An International Campus Town
Denton's universities enrol thousands of international students and employ many foreign scholars and faculty. Families from abroad also live and work across the city. BOMCAS handles cross-border tax for Denton clients remotely.
Treaty and Canada–U.S. basics are on the Texas cross-border tax page; this page is about Denton's international students and scholars.
Students on F-1 and J-1 Visas
Students on F and J visas are generally exempt from the substantial presence test for their first five calendar years, so they remain nonresidents and file Form 1040-NR when they have income, plus Form 8843 each year. Their wages from campus jobs and practical training are generally exempt from Social Security and Medicare while they are nonresidents.
Tax Treaties for Students
Some treaties exempt part of a student's income. Students from China can generally exclude up to $5,000 a year of earnings, and students from India can claim the standard deduction on Form 1040-NR under their treaty. Treaty benefits are claimed with Form 8233 at work and on the return.
Visiting Scholars and Researchers
Teachers and researchers on J-1 visas are generally exempt from the substantial presence test for two of the last six calendar years. Some treaties exempt their teaching or research income for a limited period.
H-1B Faculty and Staff
Faculty and researchers who move to H-1B status usually become residents under the substantial presence test and are taxed on worldwide income. In the first year they may be dual-status. Accounts and assets at home must be reported.
Practical Training and Change of Status
Graduates on optional practical training remain nonresidents while within their exempt years. When they change to H-1B status, they become residents and lose the Social Security exemption.
Spouses and Dependants
Spouses of students on F-2 or J-2 visas are generally treated the same way for residency. J-2 spouses with work authorisation pay income tax on their earnings. Children born in the United States are citizens and may need Social Security numbers for credits.
Scholarships From Abroad
Scholarships paid by foreign governments or universities for study in the United States are generally foreign source income, so they are not taxable to nonresident students. Scholarships paid by U.S. universities may be subject to 14 percent withholding and reported on Form 1042-S.
Nonresident Spouse Elections
Residents married to nonresidents can choose to treat the spouse as a resident and file jointly, but must then report the spouse's worldwide income.
Accounts and Assets Abroad
Residents report foreign accounts on FBARs when the total exceeds $10,000, and file Form 8938 at higher thresholds. Foreign mutual funds may be passive foreign investment companies.
Leaving After Graduation
Students and scholars who leave the United States file a final return for the year they leave. Students and scholars on F or J visas whose only U.S. income is allowed by their status are generally exempt from the departure clearance often called a sailing permit, but should keep records of their status and pay.
Research Grants Paid to Foreign Researchers
Postdoctoral fellows and visiting researchers paid from grants should check how payments are classified, since wages and fellowships are reported on different forms and treaties may exempt one but not the other.
Common Filings
- Form 1040-NR and Form 8843.
- Form 8233 for treaty benefits.
- Dual-status returns.
- FBAR and Form 8938.
- Form 843 for refunds of FICA.
- Form W-7.
Denton Cross-Border Tax Questions
Do F-1 students file a tax return?
Yes, Form 8843 every year, and Form 1040-NR if they have income.
Can Chinese students exclude part of their wages?
Generally up to $5,000 a year under the treaty.
When do international students become residents?
Usually after five calendar years in student status.
Do H-1B workers report foreign accounts?
Yes, once they are residents.
Talk to BOMCAS About Cross-Border Tax in Denton
International students and scholars file U.S. returns, and foreign-owned companies need business returns, bookkeeping, payroll and sales tax. Status changes need planning, and missed forms late filing. You can read the statewide Texas rules on business returns, personal tax, sales tax, bookkeeping, payroll, planning and late filing on our state pages, linked from the Texas overview.
Running a venue off the Square, renting houses near campus or filing as an international student for the first time? Drop BOMCAS a line about it and we will let you know what we would look at first and what a quote would need. You can reach us on the contact page or the form below, by calling 780-667-5250 or by emailing info@bomcas.ca. Each Denton service is linked from the Denton overview. The information here is general and is not advice for your own situation.