Year-End Tax Deductions for International Workers and Students

With Thanksgiving week underway and the calendar closing on December 31, 2025, tax planners and campus offices are urging international workers, students, and new green card holders to review year-end steps that can affect their refunds. The reminders focus on tax deductions, tax residency, and whether people on visas have the right paperwork in order before the IRS ends the tax year.

The timing matters: small moves now—such as checking payroll withholding or confirming student records—can mean hundreds of dollars saved when filing in early 2026, especially for those filing as resident aliens versus nonresident aliens.

Tax residency: the central decision

Tax residency controls the forms you file and the deductions you can claim.

• Resident aliens (often H-1B or L-1 workers or those who meet the Substantial Presence Test) file the standard individual return on Form 1040 and can access a wider range of tax deductions.
• Nonresident aliens (typically F-1 and J-1 students during their first five years in the U.S.) file Form 1040-NR and face tighter limits.

The IRS provides a guide on the Substantial Presence Test and an online calculator to confirm status before submission. Relevant IRS links:
– Form 1040
– Form 1040-NR
– Substantial Presence Test

Students: education relief, forms, and recordkeeping

International students on F-1, J-1, or on OPT/STEM OPT who qualify as resident aliens may claim education-related relief tied to tuition and student loan interest.

• Universities will issue Form 1098-T for 2025 filings to show qualified education expenses.
  • Request it early from campus bursars and confirm the address on file.
  • IRS link: Form 1098-T
• Student Loan Interest Deduction is capped at $2,500 and may lower taxable income if filing as a resident.
• Scholarships used for tuition and required fees are not taxed; amounts used for housing, meals, or non-required expenses are taxed as income.
• Nonresident students filing Form 1040-NR usually cannot claim the same breaks unless a tax treaty provides an exception.

Students on F-1/J-1 must also complete Form 8843 even if they had no U.S. income. Missing Form 8843 can cause delays or questions later. IRS link: Form 8843

Retirement contributions, HSAs, and other year-end levers

Two commonly missed year-end items for international workers (H-1B, L-1, O-1) are retirement and health savings accounts.

• Increase 401(k) contributions before year-end to reduce taxable wages; payroll records should reflect totals.
  • 2025 401(k) elective deferral limit: $23,000 (under 50).
• Health Savings Account (HSA) contributions are deductible for those with qualifying high-deductible health plans:
  • $4,150 for self-only coverage
  • $8,300 for family coverage
• Moving expenses are not deductible for most civilian workers.
• Charitable gifts can be deductible if you itemize and the recipient is an IRS-recognized 501(c)(3).

Advisors recommend making these adjustments in November if possible—there are still paychecks left to modify withholding or contributions.

Giving Tuesday and charitable donations

Giving Tuesday in 2025 falls on December 2, during Thanksgiving week. It’s a practical anchor date for itemizers.

• Donations to qualified charities—cash or goods—may reduce taxable income for itemizers if properly documented.
• For any gift above $250, keep a receipt showing:
  • Organization name
  • Date of the donation
  • Amount
• Donated items (Goodwill, Salvation Army, etc.) count if listed with fair market values.
• Check a charity’s IRS status before donating.

VisaVerge.com analysis shows many immigrants time year-end donations to align with expected income and deductions, making late November a practical time to give to community groups and lower taxable income.

Payroll withholding and W-4 checks

Payroll withholding is another quick lever to check before December 31.

• Life changes (job change, move from OPT to H-1B, spouse arriving midyear) may make your on-file Form W-4 out of date.
• The IRS recommends using its Withholding Estimator and submitting an updated Form W-4 to the employer if needed.
  • Tax Withholding page: https://www.irs.gov/payments/tax-withholding
  • Form W-4: https://www.irs.gov/forms-pubs/about-form-w-4
• Early corrections reduce the chance of owing a large tax bill or getting an overly large refund next spring.

Limits and treaty exceptions for nonresident aliens

Nonresident filers face specific limits:

• Generally cannot claim the standard deduction, the Child Tax Credit, or the Earned Income Credit.
• Typically do not claim mortgage or property tax deductions unless they file jointly as residents.

Notable treaty exception:
– Indian nationals: under the U.S.-India tax treaty, certain Indian students and trainees on F-1 or J-1 visas can claim the same standard deduction as U.S. residents.
– This treaty point can influence whether a student elects resident status when eligible.
– Advisers emphasize careful recordkeeping of days of presence and visa history to support any residency position.

Document flow in January — what to expect

Prepare for the documents employers, banks, and schools will send in January:

• Employers must send Form W-2 by January 31, 2026.
  • IRS link: Form W-2
• Financial accounts may issue Form 1099-INT or Form 1099-MISC for interest or freelance income.
  • IRS links: Form 1099-INT, Form 1099-MISC
• Schools issue Form 1098-T for tuition.
• F-1/J-1 students should ensure Form 8843 is completed.

Filers who gather everything now—physical or in a secure drive—often finish returns faster when tax software opens for the season.

Campus payroll coding, treaties, and common miscoding

Researchers and visiting scholars sometimes qualify for treaty-based tax deductions on wages or stipends. These benefits depend on the individual treaty and visa class, so university international offices frequently:

• Ask scholars to confirm days in the country and prior visits (usually in November).
• Encourage checking payroll/bursar codes for scholarship vs. living-cost classifications.

For students, amounts spent on tuition and required fees are not taxable, while living costs often are. Mis-coding can be corrected in the last pay cycles of the year.

Focus on Indian nationals and common planning patterns

Indian students and early-career workers are a significant group among international workers and scholars.

• The U.S.-India treaty allowance for the standard deduction can materially change filing outcomes.
• Many Indian H-1B professionals do not max pre-tax savings, foregoing potential tax savings of roughly 20% on those contributions.
• Families sending money abroad also track transfers for foreign reporting rules to align U.S. filings with Indian thresholds.

Practical year-end checklist

Before December 31, do these high-impact items:

1. Confirm your Tax residency (use the Substantial Presence Test if needed).
2. Check payroll records and withholding with the Withholding Estimator.
3. Consider last-chance tax deductions:
   • Increase 401(k) contributions if possible (2025 limit $23,000).
   • Max HSA contributions if eligible ($4,150 self-only, $8,300 family).
4. Make planned charitable donations by December 2 (Giving Tuesday) if you itemize; keep receipts for gifts over $250.
5. Request or confirm addresses for Form 1098-T from your school’s bursar.
6. Gather and store in one folder or drive: Form W-2, any Form 1099, Form 1098-T, and Form 8843 (for F-1 and J-1 students).
7. If status or job changed midyear, update your Form W-4.

Important deadlines and marker dates:
– Giving Tuesday: December 2, 2025
– Tax year close: December 31, 2025
– Employers’ wage statement deadline: January 31, 2026

Bottom line

The rules can feel strict, but the steps are straightforward. Resident aliens who pass the Substantial Presence Test and file Form 1040 can claim more credits and deductions. Nonresident aliens filing Form 1040-NR face tighter rules except where a treaty offers relief.

A few focused actions during Thanksgiving week—checking residency, confirming payroll and school records, adjusting withholding, and making planned charitable gifts—can make filing in 2026 simpler and leave more of your earnings in your own hands. For authoritative guidance, the IRS pages, including the Substantial Presence Test, remain the most reliable starting point.