W-2 Withholding vs. Tax Owed for Nonresident Students
Why federal tax withheld from an international student paycheck can differ from final Form 1040-NR tax and refund.
The federal income tax taken from your paycheck is an estimate paid during the year. Your final tax is calculated on your tax return. The difference can be a refund or an amount due, depending on your income, treaty benefits, and allowable tax items.
Read the W-2 correctly
Form W-2 box 1 generally reports federal wages, and box 2 reports federal income tax withheld. State withholding appears elsewhere. Social Security and Medicare withholding in boxes 4 and 6 is a separate payroll tax question; it is not federal income tax paid toward Form 1040-NR.
If you had multiple jobs, collect a W-2 from each employer. If you also received Form 1042-S, review it separately for payments and withholding not shown in the same way on the W-2.
Calculate the return
A nonresident student with a filing requirement generally uses Form 1040-NR. Report applicable income and calculate the tax under that year’s instructions, including any properly supported treaty benefit. Then credit eligible withholding and payments. More withheld than tax can produce a refund; less can produce a balance due.
Some tax software assumptions for resident filers do not apply to nonresidents. For example, Form 1040-NR filers generally cannot claim education credits. Confirm your tax residency before relying on a projected refund.
Fix payroll issues early
If your W-2 contains incorrect pay or withholding, contact payroll for a corrected form. If Social Security or Medicare was withheld in error, use the separate employer-first process described by the IRS. A Form 1040-NR refund is not the normal way to recover erroneous FICA.
What to do next
Use the completed return to compare final federal income tax with federal income tax already paid.
Related guides
Topics: Tax withholding, Form W-2, Form 1040-NR, Tax refund
Official sources
General educational information. Tax rules depend on your facts and the tax year; check current IRS instructions before filing.