UK students are increasingly looking to US universities as an alternative to the British higher education system, but they need to be mindful of the oftentimes complex US Federal and State tax regimes. We’ve outlined the processes and pitfalls in this article.

If you've chosen to attend a US university, you must also have the right to move there.

Whether you already have that right as a US citizen, or you request that right through a US visa program, this will have an impact on how you are treated for US Income Tax purposes and what steps you will need to take to ensure you are US tax compliant.

American citizens and Green Card holders living in the UK

As an American citizen or Green Card holder you are already required to report your worldwide income to the IRS on your annual Form 1040 filing. Joining a US university as a student will not change this. Changes that you should be alerted to, but are not limited to, include:

1. Your residence status

Dependant on various factors, most significantly how many days you spend in the US and the UK, you may lose your UK tax residence and gain a US tax residence or, very possibly, keep your UK tax residence while also acquiring a US tax residence. You’ll then need to consider making a treaty claim to avoid double taxation.

2. The US tax filing and payment deadlines

If you’re US resident on the initial 15 April Income Tax filing deadline, you’re not entitled to the automatic two-month extension to June. You must therefore remember to request your 15 October extension by the 15 April deadline. Moreover, any US tax will be due on 15 April and late payment penalties and interest will apply thereafter. Furthermore, you will not be eligible to request the extra filing extension to 15 December.

3. Your US State tax position

If you’re returning to your home State, or moving to a completely new State, you‘ll need specialist advice on the tax consequences for you, and your family if you’re still a minor or a dependant.

Student visa holders

Federal taxes

Most non-US UK citizens intending to study at a university in the US will apply for an F-1 visa. For US Federal Income Tax purposes, as an F-1 visa holder you’ll be considered an ‘exempt individual’ for up to five calendar years, as long as you remain in compliance with the rules of your visa.