The 1040-NR is the tax return form for people who are not U.S. citizens and do not meet the residency test

The Form 1040-NR is the U.S. individual income tax return for nonresident aliens—people who earned income in the United States but are not U.S. citizens and did not pass the substantial presence test that makes you a resident for tax purposes. You file it instead of the standard 1040 when you meet the IRS definition of nonresident alien status for the tax year.

The form itself looks similar to a 1040, but the rules for what income you report, what deductions you can take, and how much tax you owe are significantly different. Most nonresident aliens can only deduct expenses directly tied to U.S.-source income, and certain types of income are taxed at flat rates regardless of your total earnings. The form is filed with the IRS by the same April important date as other returns, though you may be able to request an extension.

Key Takeaways

  • You file a 1040-NR if you earned U.S. income during the year and are a nonresident alien under IRS rules, which depend on citizenship status and the substantial presence test.
  • Nonresident aliens generally report only U.S.-source income on the 1040-NR and cannot claim the standard deduction that U.S. residents use.
  • Certain types of income—such as interest, dividends, and royalties—are taxed at a flat 30 percent rate unless a tax treaty reduces it, and this tax is usually withheld by the payer.
  • You may owe tax even if no tax was withheld from your paychecks, and you may be due a refund if too much was withheld.
  • Tax treaties between the U.S. and your home country can lower your tax rate or exempt certain income, so you may need to file a Form W-8BEN or similar to claim treaty benefits.

Who files the 1040-NR and when

You file a 1040-NR if you are a nonresident alien for U.S. tax purposes and had U.S. source income during the tax year. The IRS defines nonresident alien status using two tests: citizenship and the substantial presence test. If you are not a U.S. citizen and did not pass the substantial presence test—which generally requires 183 days in the U.S. over a three-year period, weighted toward the current year—you are a nonresident alien.

Even if you earned only a small amount of U.S. income, you must file if your income exceeds the filing threshold for your situation. The threshold varies depending on the type of income and your filing status. For example, if you had wages subject to U.S. income tax withholding, you generally must file even if your income is below the threshold, because you may be due a refund of tax withheld.

The important date to file is the same as for other individual returns—typically April 15 of the year following the tax year. You can request an automatic extension to October 15, but this extends only the filing important date, not the payment important date. If you owe tax, it is due by April 15 regardless of extension.

What income you report on the 1040-NR

The key difference between a 1040-NR and a standard 1040 is that you report only U.S.-source income. Income earned outside the United States is generally not reported, even if you received it while in the U.S. This includes wages earned abroad, foreign investment income, and rental income from foreign property.

U.S.-source income includes wages from a U.S. employer, self-employment income from a U.S. business, interest and dividends from U.S. investments, rental income from U.S. property, and royalties or fees for work performed in the U.S. If you are unsure whether a particular income stream is U.S.-source, the IRS publication 519 provides detailed guidance, and a tax professional familiar with nonresident alien rules can help you determine what to report.

Some types of U.S.-source income are subject to withholding at a flat rate—typically 30 percent—before you receive the payment. This includes interest, dividends, rents, royalties, and certain other payments. If withholding occurred, the payer reports it to the IRS on a Form 1042-S, and you must report it on your 1040-NR even if you did not actually receive the full amount.

Deductions and the standard deduction

Nonresident aliens cannot claim the standard deduction that U.S. residents use to reduce taxable income. Instead, you can only deduct expenses that are directly connected to U.S.-source income you reported. These are called itemized deductions, and they must be ordinary and necessary business expenses or investment expenses.

Common deductions for nonresident aliens include office supplies and equipment used for U.S. work, professional fees paid to prepare U.S. tax returns, and expenses directly tied to rental property or a U.S. business. You cannot deduct personal expenses, state and local taxes, mortgage interest on a personal residence, or charitable contributions—even if you made them to U.S. charities.

If your deductible expenses are small or zero, your taxable income may be your entire U.S.-source income. This is one reason why nonresident aliens often owe more tax than U.S. residents with the same gross income: they lose the standard deduction and can claim fewer itemized deductions.

Tax rates and withholding for different income types

Different types of U.S.-source income are taxed differently on the 1040-NR. Wages and self-employment income are taxed using the standard progressive tax brackets, just as they are for residents. However, investment income—interest, dividends, capital gains, rents, and royalties—is often taxed at a flat 30 percent rate, and this tax is usually withheld by the payer before you receive the money.

For example, if a U.S. bank pays you $1,000 in interest, the bank withholds $300 (30 percent) and sends it to the IRS, and you receive $700. You report both the $1,000 and the $300 withheld on your 1040-NR. If you owe less than $300 in total tax on all your income, you may be due a refund of the excess withholding.

The 30 percent rate applies unless you have a tax treaty between the U.S. and your home country that reduces it. Many treaties lower the rate on certain types of income—for example, to 15 percent on dividends or 0 percent on interest. To claim treaty benefits, you must file a Form W-8BEN (for investment income) or Form W-8IMY (for certain other situations) with the payer before the income is paid.

Tax treaties and how they affect your return

The United States has tax treaties with more than 60 countries. These treaties can reduce the tax rate on certain types of income, exempt some income from U.S. tax entirely, or allow you to claim deductions you would not otherwise be allowed. The benefit depends on your country of residence and the type of income.

To claim treaty benefits, you typically file a Form W-8BEN with your employer or the payer of investment income before the income is paid. This form certifies your country of residence and your claim to treaty benefits. Without it, the payer will withhold at the full 30 percent rate. If you file the form late, the payer may have already withheld at 30 percent, and you can claim a refund on your 1040-NR or request a refund from the IRS after filing.

Some treaties also allow you to claim a foreign earned income exclusion or a foreign tax credit if you paid tax to another country on the same income. These are reported on the 1040-NR or on additional forms attached to it. A tax professional in your home country or a U.S. tax advisor familiar with your country's treaty can help you determine what benefits you may claim.

Filing the 1040-NR and handling refunds or additional tax

You file the 1040-NR by mail to the IRS address listed in the form instructions, or in some cases electronically through an authorized e-file provider. You must include your Individual Taxpayer Identification Number (ITIN) rather than a Social Security number if you do not have a Social Security number. If you do not have an ITIN, you must obtain one from the IRS before filing; you cannot file without it.

Attach to your return any forms that document withholding (Form 1042-S), claim treaty benefits (Form W-8BEN), or report deductions (such as a Schedule C if you have self-employment income). Include a copy of your visa or passport page showing your status, and any other documents the IRS instructions require for your situation.

If you are due a refund because too much tax was withheld, the IRS will mail a check to your U.S. address or, if you provided a U.S. bank account, deposit it directly. If you owe additional tax, you must pay it by the April 15 important date to avoid penalties and interest. If you cannot pay in full, you can request an installment agreement with the IRS.

When to seek professional help

Nonresident alien tax rules are complex, and mistakes can result in overpaying tax, missing refunds, or triggering an audit. You should consider consulting a tax professional if you have multiple types of U.S.-source income, if you may be may have access to to treaty benefits, if you are unsure whether you are a resident or nonresident alien, or if you had significant withholding and want to understand whether you will receive a refund.

A CPA or tax attorney with experience in nonresident alien returns can review your situation, help you determine what income to report, identify deductions you may have missed, and may support you claim any treaty benefits you are may have access to to. Many offer consultations at a flat rate or hourly fee, and the cost is often far less than the tax you save or the refund you recover.

Frequently Asked Questions

Can I file a 1040 instead of a 1040-NR if I am a nonresident alien?

No. If you are a nonresident alien, you must file a 1040-NR. Filing a 1040 is incorrect and may delay processing or result in the IRS requesting you file an amended return. The IRS will reject a 1040 filed by a nonresident alien without an ITIN or with an ITIN in the nonresident alien section.

What happens if I do not file a 1040-NR when I owe one?

If you had U.S.-source income and did not file, the IRS may assess tax and penalties based on information it received from employers or payers. You may also lose the opportunity to claim a refund of withheld tax. Filing late is better than not filing; you can file an amended return and request relief from penalties if you have a reasonable cause.

Do I have to pay self-employment tax on my U.S. income as a nonresident alien?

Self-employment tax (Social Security and Medicare) generally applies only to U.S. citizens and residents. Nonresident aliens are usually exempt, though some tax treaties may impose it. You should verify your status with a tax professional, as the rules vary by country and visa type.

If I leave the U.S. mid-year, do I still file a 1040-NR?

Yes, if you were a nonresident alien for the entire year or for the part of the year you were in the U.S., you file a 1040-NR for that year. You report only the U.S.-source income you earned while you were in the country. The filing important date is still April 15 of the following year, though you may request an extension if you are outside the U.S.

Can I claim a spouse or dependent on a 1040-NR?

Generally, no. Nonresident aliens cannot claim a spouse or dependent exemption on a 1040-NR unless the spouse or dependent is also a U.S. citizen or resident alien. There are limited exceptions for residents of Canada or Mexico. Consult a tax professional if your spouse or dependent may may have access to.