Be it the UK, Canada, or the USA all international students have their share of tax liabilities. While tax liabilities of international students may not be the most exciting thing, these foreign students must complete these formalities to avoid legal hassles. As expected, each country has its set of rules for paying taxes. Here’s a break of various tax liabilities of international students in the USA, UK, and Canada must comply with.
Tax Liabilities of International Students in the USA
For any temporary resident in the USA, the priority is to get a Green Card. And international students who want to get a Green Card must strictly comply with all the rules related to tax because it can have a major impact on your visa applications when you apply for permanent residency. In the USA an international student has to pay the tax in the same way as the nonresident aliens. It means that these students will have to pay tax only on their income in the United States.
As a rule, every student must file tax on their earned income in the previous financial year. Even those international students who did not have any income last year will still have to pay the tax.
Tax liabilities of these international students in the USA include a tax on salaries, tips, dividends, interest, wages and compensation, prize or awards, fellowship grants, and scholarships.
Tax Liabilities of International Students in Canada and UK
Foreign students have to pay tax on the income they earn in Canada. And even if they do not earn any income in the country, they still will have to file for the tax return for claiming credit or refund. As a rule, if you are employed with a Canadian company then you will have to file a tax return. Usually, students who work in Canada work part-time or during their vacations to pool in some extra money to make their life easy. And this applies to both non-residents as well as residents of Canada.
As an international student in the UK, you do not have to pay tax on foreign gains or income if the amount is used for educational fees or living costs such as bills, rent, food, and study materials. However, you may have to pay a tax if you intend to make UK permanent base, belong to a country with a double-taxation agreement, spend the amount on other things excluding living costs or have another income source