For international students, scholarship money that pays tuition and required course fees is not taxed by the U.S. government, but any portion that covers room, board, travel, or other living costs is taxable income. If you’re on an F, J, M, or Q visa, the federal government withholds 14% on that taxable portion, and you’re expected to file a U.S. tax return whether or not tax was already withheld. That’s the short version of how international student scholarship taxes work; the details below decide how much you actually owe and what you need to file.
Which Part of Your Scholarship Gets Taxed
Federal law splits your award into two buckets. Under 26 U.S.C. § 117, a “qualified scholarship” covers tuition, enrollment fees, and books, supplies, or equipment your courses require. That money stays out of your gross income entirely.1Office of the Law Revision Counsel. 26 U.S. Code 117 – Qualified Scholarships
Everything else is taxable. The IRS specifically lists “incidental expenses, such as room and board, travel, and optional equipment” as amounts you must include in gross income.2Internal Revenue Service. Topic No. 421 Scholarships, Fellowship Grants, and Other Grants Health insurance stipends and equipment that isn’t tied to a specific course fall on the taxable side too.
Many funding packages bundle a tuition waiver with a living stipend in a single number, so the split isn’t always obvious from your award letter. Your university’s financial aid office can usually break down how much of the award went to qualified expenses and how much to living costs. That breakdown is what your tax bill turns on.
The 14% Withholding Rate
The default federal withholding rate on income paid to nonresident aliens is 30%. Students in the U.S. on an F, J, M, or Q visa get a reduced rate of 14% on the taxable portion of their scholarship. The rate is set directly in 26 U.S.C. § 1441(b), which lowers withholding to 14% for amounts received by nonresident aliens on those visa types that are connected to a qualified scholarship but still includible in gross income.3Office of the Law Revision Counsel. 26 USC 1441 – Withholding of Tax on Nonresident Aliens
Your university or the scholarship provider withholds this tax before paying you the rest. At year-end you receive Form 1042-S showing the amount paid and the amount withheld. If withholding turns out to be more than you actually owe, the way to get the difference back is to file a return.
Tax Treaties That Reduce or Eliminate the Tax
The U.S. has income tax treaties with dozens of countries, and many contain provisions that reduce or fully exempt scholarship income from federal tax, even when it went to room and board. The terms vary widely. Some treaties cap the exempt amount at a few thousand dollars, others are broader, and student articles often carry time limits, frequently five years from arrival.4Internal Revenue Service. Withholding Federal Income Tax on Scholarships, Fellowships and Grants Paid to Nonresident Aliens
Treaty benefits are never automatic. There are two ways to claim them.
Before You Get Paid: Form W-8BEN
To cut withholding at the source, give Form W-8BEN to your university’s payroll or financial aid office. It certifies your foreign status and points to the treaty article you’re relying on. Most treaties require that you were a resident of the treaty country at the time you entered the United States or immediately before, and a U.S. address on the form doesn’t disqualify you.5Internal Revenue Service. Instructions for Form W-8BEN You need a fresh W-8BEN for each calendar year you’re claiming the benefit. Skip it, and withholding runs at the full rate until you recover the money on your return.
On Your Return: Schedule OI
If withholding already happened, you claim the treaty exemption when you file Form 1040-NR by reporting the taxable scholarship and then subtracting the treaty-exempt amount on Schedule OI. The IRS asks you to identify the specific treaty article and your country of residence.6Internal Revenue Service. Claiming Treaty Exemption for a Scholarship or Fellowship Grant Check the treaty for your country to confirm the dollar cap and the time limit.
Are You a Nonresident or a Resident for Tax Purposes?
Your tax residency status decides which return you file and whether you report only U.S. income or worldwide income. The IRS applies the Substantial Presence Test: you’re treated as a resident alien if you were physically present in the U.S. for at least 31 days in the current year and at least 183 days over a three-year period, counting all days in the current year, one-third of the prior year’s days, and one-sixth of the year before that.7Internal Revenue Service. Substantial Presence Test
Students catch a break here. If you hold an F, J, M, or Q visa, the IRS classifies you as an “exempt individual,” and your days in the country don’t count toward the test. That treatment generally runs for your first five calendar years in the U.S.8Internal Revenue Service. Exempt Individual – Who Is a Student
Past the five-year mark, you can still qualify as exempt if you can show the IRS you don’t intend to live in the U.S. permanently, for instance by demonstrating a closer connection to your home country and no green card application. Many students who stay longer end up meeting the Substantial Presence Test and becoming resident aliens.8Internal Revenue Service. Exempt Individual – Who Is a Student
Once you’re a resident alien for tax purposes, the rules shift. You file Form 1040 instead of Form 1040-NR, and you owe U.S. tax on worldwide income, not just U.S.-sourced income. If your status changes mid-year, you may need to file as a dual-status alien, which is a more complicated return. Filing as a nonresident when you’re actually a resident, or the reverse, can trigger a rejected return or an incorrect tax bill.
Forms You’ll Actually Deal With
Filing as an international student involves more paperwork than a typical U.S. return. The core documents:
- Form 1042-S, issued by your university or scholarship provider, reports the scholarship income paid to you and any federal tax withheld. You’ll receive one for any non-qualified scholarship amount or treaty-exempt income.9Internal Revenue Service. About Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding
- Form W-2, issued if you also held a campus job or work-study position, showing wages and taxes withheld.10Internal Revenue Service. About Form W-2, Wage and Tax Statement
- Form 8843, required from every international student in the U.S. on an F, J, M, or Q visa, even with no income. It documents your claim as an exempt individual under the Substantial Presence Test.11Internal Revenue Service. About Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition
- Form 1040-NR, the income tax return for nonresident aliens. Taxable scholarship income goes here, with any treaty-exempt amount subtracted on Schedule OI.
- Form W-8BEN, submitted to your scholarship provider before payment if you want treaty-reduced withholding. Not needed otherwise.5Internal Revenue Service. Instructions for Form W-8BEN
You’ll need a Social Security Number or an Individual Taxpayer Identification Number to file. If you’re not eligible for an SSN, apply for an ITIN with Form W-7. Processing usually runs about seven weeks, and stretches to nine or eleven during tax season from January 15 through April 30.12Internal Revenue Service. How to Apply for an ITIN If you’re close to the filing deadline and still need a number, submit Form W-7 together with your return; the IRS will assign the ITIN and forward the return for processing.
How and When to File
The deadline for the 2025 tax year is April 15, 2026.13Internal Revenue Service. When to File Form 1040-NR can now be filed electronically. The IRS instructions confirm e-filing is available, and paid preparers are generally required to file it that way, a change from earlier years when most nonresident filers had to mail paper returns.14Internal Revenue Service. Instructions for Form 1040-NR (2025)
Not every consumer tax product supports Form 1040-NR, so check before you pay for a subscription. Some universities license nonresident-specific tax software for their students, and the IRS VITA program on some campuses helps international students for free. If you mail your return, send your forms along with copies of your 1042-S or W-2 to the address in the Form 1040-NR instructions. E-filed returns are typically processed within about three weeks; paper returns take six weeks or more from the date the IRS receives them.15Internal Revenue Service. Refunds
State Taxes Are Separate
Federal filing isn’t the end of it. If your university is in a state with an income tax, your taxable scholarship income may also be subject to state tax. Most states impose an income tax, with rates running roughly from 1% to over 13% depending on the state and income level. A handful of states have no income tax at all. Each state sets its own rules for nonresident alien filers, and some handle treaty-exempt income differently from the federal government. Your school’s international student office can usually point you to the right state form.
What Happens If You Don’t File
Filing isn’t optional if you received taxable scholarship income, and the cost of skipping it isn’t only financial. The IRS charges a failure-to-file penalty of 5% of the unpaid tax for each month or partial month the return is late, up to 25%. For returns due after December 31, 2025, the minimum penalty is $525 or 100% of the unpaid tax, whichever is less.16Internal Revenue Service. Failure to File Penalty
The immigration side can hurt more than the money. Your visa requires compliance with U.S. law, and tax filing is part of that. When you later apply to change status, seek permanent residency, or re-enter after travel abroad, you may be asked for proof that you filed. Gaps are much harder to fix after the fact than to avoid in the first place. And even if you owe nothing, because withholding already covered your tax or your income was below the filing threshold, Form 8843 is still required to preserve your exempt-individual status under the Substantial Presence Test.11Internal Revenue Service. About Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition
Keep copies of every return and form you submit. That record protects you years later if an immigration officer or tax examiner asks about your time in the United States.