Tax year 2026Checked October 25, 2026

No tax on tips and overtime: can F-1 students claim it on Form 1040-NR?

Who on Form 1040-NR can use Schedule 1-A for tips and overtime in tax year 2026, what counts as qualified, and what the deduction saves on an OPT paycheck with overtime.

By F1TaxReturn Tax Team. Published October 25, 2026. Facts checked against the sources below on October 25, 2026. 5 minute read.

In short

For tax year 2026, a single nonresident alien filing Form 1040-NR can deduct up to $25,000 of qualified tips and up to $12,500 of qualified overtime on Schedule 1-A.
You need a Social Security number that is valid for work and issued before the return's due date; an ITIN does not qualify.
The overtime deduction covers only the extra half of time-and-a-half that federal law requires, not the whole overtime paycheck.
On the 2026 draft Form 1040-NR the Schedule 1-A total goes on line 13a; on the 2025 form it went on line 13c.
Nonresident aliens generally cannot claim the Schedule 1-A deduction for car loan interest.

Contents, 9 sections

F-1 and J-1 students who are nonresident aliens and file as single can claim the tips and overtime deductions on a 2026 Form 1040-NR, filed in 2027. You need a Social Security number valid for work; married 1040-NR filers generally cannot claim them, and people with only an ITIN cannot.

The rest of the return is in the guide to US taxes for international students.

Who can claim the tips and overtime deductions on Form 1040-NR?

A nonresident who files as single, holds an SSN valid for work and was paid qualified tips or overtime can claim them. The 2025 Form 1040-NR instructions tell an eligible nonresident to enter the Schedule 1-A amount.

Three tests decide it: filing as single, an SSN valid for work, and pay that is qualified.

The law allows a married person these deductions only on a joint return (Public Law 119-21), and the 2026 draft Form 1040-NR has no joint filing status.

The SSN must be valid for employment and issued before the due date of the return, including extensions (2025 Form 1040 instructions). If your card says "Valid for work only with DHS authorization", the SSN counts only while that authorization is valid. An ITIN never counts.

Key facts

Tips deduction: Up to $25,000 of qualified tips
Overtime deduction: Up to $12,500 of the overtime premium
Who on Form 1040-NR: Single filers with an SSN valid for work
Where it goes: Schedule 1-A, then 2026 draft Form 1040-NR line 13a
Car loan interest: Generally not for nonresident aliens

For: F-1 and J-1 students who are nonresident aliens in 2026, file Form 1040-NR as single and were paid tips or hourly overtime.
Not for: Married 1040-NR filers, who generally cannot file the joint return these deductions require, and students who have become resident aliens and file Form 1040.

How much can I deduct, and what counts as qualified?

For tax year 2026 the limits are $25,000 of qualified tips and $12,500 of qualified overtime, and both shrink once modified AGI passes $150,000. Each has its own part of the 2026 draft Schedule 1-A.

Tips and overtime on the 2026 draft Schedule 1-A
	Tips	Overtime
Most you can deduct	$25,000	$12,500
What counts	Voluntary tips in a listed occupation	The extra half the FLSA requires
On the 2026 draft W-2	Box 12, code TP (all reported cash tips)	Box 12, code TT
Schedule 1-A line	Line 15	Line 27
Reduced above	$150,000 of modified AGI	$150,000 of modified AGI

Tips must be paid voluntarily, so a mandatory service charge does not count (Public Law 119-21, section 70201). The job must be on the IRS list of tipped occupations, which includes bartenders, wait staff and bussers.

Overtime counts only where the Fair Labor Standards Act (FLSA) requires it. The IRS overtime Q&A says only the "half" of time-and-a-half qualifies, and employers must report it separately for 2026. A salaried job exempt from FLSA overtime gives nothing to deduct. Pay that does not qualify is taxed as ordinary wages; there is no deduction.

Schedule 1-A line 44 carries the total to line 13a of the 2026 draft Form 1040-NR. On the 2025 forms it went from line 38 to line 13c.

How much tax does the overtime deduction save?

The saving is about your top tax rate times the premium deducted. For a student in the 22% bracket, $3,000 of qualified overtime saves $660 of federal income tax.

Worked example: Example for tax year 2026: Lucas, F-1 on OPT in Texas

Lucas is a made-up single F-1 student on OPT, a nonresident alien with an SSN and no treaty benefit. In 2026 he works 2,000 hours at $30 and 200 overtime hours at $45. Texas has no state income tax, and he has no itemized deductions.

Step	Amount
Regular pay: 2,000 x $30	$60,000
Overtime pay: 200 x $45	$9,000
Wages on Form W-2	$69,000
Qualified overtime: 200 x $15 (the extra half)	$3,000
Taxable income without the deduction	$69,000
Taxable income with it: $69,000 minus $3,000	$66,000

By the 2026 rate schedule in Rev. Proc. 2025-32, tax on $69,000 is $5,800 plus 22% of $18,600 = $9,892. Tax on $66,000 is $5,800 plus 22% of $15,600 = $9,232. The deduction saves $660, which is 22% of $3,000. The IRS Tax Table can differ by a few dollars.

His other $6,000 of overtime pay is taxed like his wages (OPT tax guide).

These deductions lower federal income tax only. An F-1 nonresident's pay for on-campus work, CPT or OPT is usually exempt from both taxes anyway, under the IRS student rule.

A tax treaty is a separate route: treaty-exempt pay stays off line 1a of Form 1040-NR, as how to claim tax treaty benefits explains. Most nonresidents cannot take the standard deduction, but the IRS Schedule 1-A page says these deductions are allowed whether or not you itemize. The standard deduction guide covers the exception for India.

Can I deduct car loan interest on Form 1040-NR?

Nonresident aliens generally cannot claim the car loan interest deduction, even though it is on Schedule 1-A, according to the 2025 Form 1040-NR instructions. Guides written for Form 1040 often leave out that limit.

Does F1TaxReturn fill in Schedule 1-A?

F1TaxReturn prepares Form 1040-NR and Form 8843 for free once the final 2026 forms are published, but does not prepare Schedule 1-A or claim these deductions. Some VITA sites prepare nonresident returns free.

What to do next

Check box 12 of your 2026 Form W-2 for code TP (tips) or code TT (overtime) (2026 draft codes).
Confirm that you file as single and have an SSN valid for work.
For tips, find your job on the IRS list of tipped occupations.
Fill in Schedule 1-A and carry its total to Form 1040-NR. The campus job guide covers a campus W-2.
Mail your return by Thursday, April 15, 2027, the due date if you had wages subject to US income tax withholding. See the Form 1040-NR instructions guide and what changed for tax year 2026.

Questions students ask

Can I claim no tax on tips or overtime with an ITIN?

No. The IRS requires a Social Security number that is valid for work and issued before the return's due date, including extensions. An ITIN does not meet that rule, even if your tips or overtime would otherwise qualify.

Does the overtime deduction cover all of my overtime pay?

Only the premium does. If you are paid one and a half times your hourly rate for overtime that federal law requires, the deduction covers the extra half. The rest of the overtime pay stays taxable like your other wages.

I am married and file Form 1040-NR. Can I claim these deductions?

In general, no. The law lets a married person claim them only on a joint return, and Form 1040-NR has no joint filing status. The cases where a married person is treated as unmarried are rare and not covered here.

Where do I find my qualified overtime for 2026?

For tax year 2026 the IRS requires employers to report qualified overtime separately. On the 2026 drafts, overtime is in Form W-2 box 12 with code TT. Code TP shows all cash tips reported to your employer, with the occupation code in box 14b, and only the qualified part goes on Schedule 1-A.

Sources

This guide is checked against these 11 documents, most recently on October 25, 2026.