From a lack of clarity about federal tax policies to costs imposed by taxes on grant aid, international students on financial aid face challenges unique to their status as non-U.S. citizens.
Depending on their country of origin, international students can pay anywhere from no tax to a 14 percent tax on grant aid above tuition, Director of Financial Aid Caesar Storlazzi said. The taxable amount includes financial aid for room and board, which is included in students’ financial aid packages, and additional grants for textbooks and other personal expenses. International students must pay a reduced student effort, which is money that students on financial aid must contribute to the cost of their education each year and is currently set at $6,400. But the tax that international students pay can represent an additional expense, depending on the amount of grant aid received. Since students must first pay the tax and later file a return with the IRS to receive the money back, international students often need to find a way to raise the money by the time their bill must be paid. Storlazzi told the News in April that he was making the issue a priority for the class of 2019, but students say the problem persists.
Many international students have to work additional hours just to cover the cost of taxes on their grant aid, said Nadya Stryuk ’17, a student from Moscow. For Stryuk, the tax — which is paid directly to Yale and appears on students’ financial statements from the University — was $3,000, though she can receive all or a portion of it back after filing a tax return due to Russia’s tax treaty with the United States. Some countries, including Canada and China, have treaties with the U.S. where students are entitled to a refund on the money they pay in taxes.
“[The charge] hasn’t been talked about as much [as the student effort], but I wonder why, because $3,000 is a lot of money,” Stryuk said.
Camila Franco ’18, a student from Buenos Aires, Argentina, said she had to go into credit card debt to pay the tax charge listed on her Yale bill, which was just over $300. Though she works as a web designer at the School of Medicine, the income from her paychecks was not enough to cover the cost, given other expenses like textbooks and phone bills.
Storlazzi said the Office of Financial Aid increases the amount of grant aid for first-year international students to help offset the tax as they transition to Yale.
“Taxes are not hidden costs,” Storlazzi said. “These are IRS rules which every school has to follow in the U.S., and we’re trying to be really clear with our international students about this.”
Students who come from countries with tax treaties can have the charge waived, but the process is not automatic, Storlazzi said. Still, Stryuk said she tried to have the unnecessary tax expense cleared from her Yale bill, but that administrators in Yale’s Tax Office were inaccessible and unhelpful. She said workers in the Tax Office did not return her emails and that she had to visit multiple offices before her situation was resolved.
More broadly, international students interviewed spoke to a general feeling among the international community that they were unaware of or confused about tax policies that affected them.
“A lot of international students don’t know that they can actually get the refund,” said Wenbin Gao ’19, who is from China. “They’re not even aware of the tax treaties between their countries and the U.S.”
Gao added that he was not aware of a tax treaty between China and the U.S. until he arrived on campus in January for his second semester at Yale.
Daysi Cardona, Yale’s international tax coordinator, also said some students do not receive their refunds because they do not file their tax returns. However, she said that the International Tax Office does a good job of reaching out to international students about tax policies. She noted this information is included in a weekly newsletter that her office sends to first-year students with an additional email about tax policy.
“We really have to work hard on the communication,” Storlazzi said, adding that this challenge was not new.
Storlazzi said timing is a critical factor for communicating with international students. Even if information is in place to notify students of the option to have the payment returned, it will not be helpful if the information is not sent at the right time, he said.
Gao said he paid nearly $2,000 in taxes last semester, but did not know that he could avoid the charge by obtaining an Individual Taxpayer Identification Number from the IRS, which is issued to foreign nationals who have U.S. tax requirements to fulfill. However, he said that because of the stressful and time-consuming nature of the process, some students do not even bother obtaining this so that they can file their tax returns. To encourage more students to receive their returns, he suggested that the University communicate with students before they arrive on campus so that they can begin the process. Still, he said that staff from the Office of International Students and Scholars were helpful and that he was grateful to Yale for its generous financial aid.
International students have yet to receive from the IRS the funds which they are entitled to from fiscal year 2014. The IRS has delayed the arrival of funds twice, citing a need to further review the tax returns.