The 1% remittance tax: does it apply when students send money home?

Which ways of sending money home are taxed?

A transfer is taxed only if you pay for it with cash, a money order, a cashier's check or a similar physical instrument. A transfer paid from a US bank or credit union account, or with a debit or credit card issued in the US, is not taxed.

The typical taxed case is walking into a transfer agent's office and paying in cash. How you pay decides the tax, and a bank wire or an online transfer paid from your US checking account is not taxed. One company can offer both ways to pay, so we do not list companies as taxed or exempt.

The law's own card exception names only cards issued in the US. The proposed regulations do not put any debit or credit card on the list of payment methods that trigger the tax. A transfer paid with a card from a bank in your home country is therefore not taxed either.

Is a money order bought with money from my bank account taxed?

Yes. Under the proposed regulations, a money order or cashier's check is taxed at 1% even if you bought it with money from your bank account.

The exemption for bank accounts covers a transfer paid directly from your account. Once you turn the money into a money order or cashier's check, the transfer is paid with that paper instrument instead (REG-114499-25). To pay no remittance tax, pay the transfer company straight from your US account or with a debit card.

How much is the remittance tax?

The remittance tax is 1% of the amount sent: $5 on a $500 transfer and $10 on a $1,000 transfer. Under the proposed regulations, the 1% is figured on the total amount the person you send to will receive, including any promotional bonus. The company's fees are left out.

Do I report the remittance tax on Form 1040-NR?

No. The 2026 draft Form 1040-NR has no line for the remittance tax, and you cannot deduct it or claim it as a credit. The transfer company collects it from you and reports it on Form 720.

The money you send home is not a deduction either. On Schedule A (Form 1040-NR), the only gifts you can deduct are gifts to US charities (2026 draft Schedule A), and a gift to your family is not one. How to fill out Form 1040-NR goes through the return line by line.

Is money my family sends me from abroad taxed?

Money your family sends you from abroad is usually not taxed in the US. The remittance tax is aimed at transfers sent out of the US, and a gift from your family is generally not income.

The IRS says property you receive as a gift is generally not included in your income (Publication 525). What the money earns later can be taxable, the same publication says. For a nonresident alien, though, interest from a US bank, savings and loan or credit union is generally not taxable (IRS). Bank interest for F-1 students explains the 1099-INT you may receive.

Your home country may have its own rules for money sent from there. Banks and transfer services abroad may also charge their own fees. Those are not the US remittance tax, and this guide does not cover them.

Do I need to report large gifts from my parents?

While you are a nonresident alien, you do not file Form 3520 for gifts from your parents. Once you are a resident alien, gifts of more than $100,000 in a year from foreign individuals go on Form 3520, Part IV (Instructions for Form 3520).

Form 3520 is filed by US persons, which include resident aliens but not nonresident aliens. The $100,000 test counts gifts from a nonresident alien individual or a foreign estate. Gifts from related people, such as your two parents, are added together. You file Form 3520 separately from your income tax return, and the penalty for not filing it can reach 25% of the gifts.

Students do not count their days toward the substantial presence test for 5 calendar years in total, and any part of a year counts as a whole year (IRS). For a student who has been in the US every year since arriving, the first counted year is the sixth calendar year. Spending at least 183 days in the US that year makes you a resident alien, unless the Form 8843 line 12 exception applies. Your sixth year on F-1 shows how to tell. A resident alien may also need to report foreign bank accounts; see FBAR for F-1 students.

What to do next

1. Before you send money home, pay from your US bank or credit union account, or with a debit or credit card issued in the US. No remittance tax applies to those transfers.
2. If you must pay with cash, a money order or a cashier's check, expect the company to collect 1% of the amount sent: $5 on every $500.
3. Leave the remittance tax off your return. File Form 8843 for 2026, plus Form 1040-NR if you had US income that is taxed (Form 1040-NR instructions). If you had wages subject to US income tax withholding, Form 1040-NR is due Thursday, April 15, 2027; if not, it is due Tuesday, June 15, 2027 (tax deadlines for 2027).
4. Once you are a resident alien, keep a record of the money your family sends you. More than $100,000 in gifts in one year goes on Form 3520.
5. For everything else that changed for 2026, read what's new for tax year 2026.

F1TaxReturn prepares Form 1040-NR and Form 8843 for free once the IRS publishes the final 2026 forms. You print, sign and mail them. It does not prepare Form 3520.