Is bank interest taxable for F-1 students? Your 1099-INT explained

How do I tell my bank I am a nonresident alien?

Give the bank a Form W-8BEN. The form establishes that you are not a US person for tax, so the bank can stop treating you as one (IRS). With neither a Form W-8BEN nor a Form W-9 on file, a bank can apply backup withholding at 24% (IRC 3406).

Ask each US bank and broker where you earn interest how it wants to receive the form. A Form W-8BEN signed in 2026 generally stays valid through Monday, December 31, 2029, unless a change in circumstances makes it incorrect (W-8BEN instructions; Treas. Reg. 1.1441-1). Becoming a resident alien is such a change. The W-8BEN instructions say to tell the bank within 30 days of becoming a resident alien, and you may have to give it a Form W-9.

What if the bank withheld tax from my interest?

Box 4 of Form 1099-INT shows backup withholding, and you claim it back on line 25b of Form 1040-NR (the 2025 form and the 2026 draft). The 2025 Form 1040-NR instructions say to enter there the total US tax withheld on Forms 1099. To claim a refund of backup withholding, attach a copy of the Form 1099 that shows the income and the amount withheld.

You file Form 1040-NR to get the money back, even if bank interest was your only US income. With no wages subject to withholding, a 2026 return is due Tuesday, June 15, 2027 (tax deadlines for 2027).

Which interest is taxable for a nonresident alien?

Interest is taxable for a nonresident alien when it is connected with a US business, or when it is US-source interest that no exemption covers. Both are uncommon for students.

Interest on US Treasury securities is "portfolio interest". It is tax-free for a nonresident alien whose foreign status is documented with the payer, usually on Form W-8BEN (IRS). Interest on other bonds issued in registered form after July 18, 1984 generally counts too (Publication 519). Contingent interest and interest paid to someone who owns 10% or more of the issuer do not. The IRS says the tax code usually requires payers to report this interest when it is paid to a nonresident alien (IRS), but reporting does not make it taxable.

Unlike bank interest, portfolio interest depends on the payer having your Form W-8BEN. A 1099-INT from a broker with an amount in box 3 usually means the broker has a Form W-9 from you. Give it a Form W-8BEN now, and ask a tax professional how to report the interest it already paid.

Money market and bond fund payouts are dividends. Part can be exempt as "interest-related dividends" if the fund designates them that way (IRC 871(k)); our stocks and crypto guide covers dividends. Other taxable interest not connected with a business is taxed at a flat 30%, or a lower treaty rate, on line 2 of the 2025 Schedule NEC (Publication 519).

How much does leaving bank interest off change my tax?

Leaving exempt bank interest off Form 1040-NR saves the tax you would otherwise pay on it at your top rate. For 2026 that rate is 10% or 12% on taxable income up to $50,400 (IRS).

What changes when I become a resident alien?

The exemption ends in the year you become a resident alien for tax. From then on your interest is taxable wherever the bank is, including in your home country, and you report it on Form 1040.

For most F-1 students that is the sixth calendar year in the US. Students exclude their days for 5 calendar years in total, and any part of a year counts as a whole year (IRS). A sixth-year student who is in the US on January 1, 2026 and present at least 183 days in 2026 is a resident alien for all of 2026. The exception is a student who qualifies under Form 8843 line 12 (your sixth year on F-1).

A year in which you become a resident partway through is dual-status: worldwide income is taxed only from your residency start date (F-1 to H-1B).

In your first resident year:

1. Within 30 days of becoming a resident alien, tell each US bank and broker, and give it a Form W-9 to replace your Form W-8BEN.
2. Report all your interest on Form 1040. F1TaxReturn does not prepare Form 1040 or dual-status returns.
3. Check whether you must file an FBAR. A resident alien files one if foreign accounts together were worth more than $10,000 at any time in the year (IRS). The 2026 FBAR is due Thursday, April 15, 2027, with an automatic extension to Friday, October 15, 2027 (FBAR guide).

Does my state tax my bank interest?

Your state can count bank interest that the IRS does not tax, because state rules are separate from the federal exemption. California's 2025 instructions for Schedule CA (540NR) tell a nonresident alien to adjust federal AGI to include income from all sources. They add that California has no special rule limiting that total to US-source or effectively connected income (FTB).

So bank interest you leave off Form 1040-NR can still count on a California Form 540NR. Form 540NR works out tax on your income from all sources and applies that rate to your California income, so the interest can raise your California tax rate. For any part of the year you were a California resident, the interest is California income itself.

This page does not cover New York, Illinois or Massachusetts; read their instructions. Our state income tax guide explains which state returns a student files.

What to do next

1. Confirm that you are a nonresident alien for 2026 with the substantial presence test guide.
2. Give a Form W-8BEN to each US bank and broker that has a Form W-9 from you, or no form at all.
3. A bank that sends you a 2026 Form 1099-INT must send it by Monday, February 1, 2027 (January 31 is a Sunday). Allow a few days for it to arrive. Leave box 1 bank interest off Form 1040-NR. Claim any box 4 withholding on line 25b and attach a copy of the form.
4. If you had wages subject to US income tax withholding, such as an on-campus job reported on a W-2, file Form 1040-NR with Form 8843 by Thursday, April 15, 2027 (how to fill out Form 1040-NR).
5. If exempt bank interest was your only US income and nothing was withheld, mail only Form 8843 by Tuesday, June 15, 2027. Send it to Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215 (Form 8843 guide).

F1TaxReturn takes your Form 1099-INT and leaves bank interest off Form 1040-NR. The federal Form 1040-NR and Form 8843 are free, and the software prepares 2026 returns once the IRS publishes the final 2026 forms (start a return).