Form 1040-NR: Complete Guide for Nonresident Aliens Filing US Taxes
File correctly the first time. Avoid the penalties and visa complications that come from getting it wrong.
TL;DR: Form 1040-NR Essentials
Form 1040-NR is the federal tax return for nonresident aliens with US-source income. You must file if you’re not a US citizen or resident alien AND you have income from US sources such as wages, business income, rental income, or investment income.
- Filing deadline: April 15 if you had wages with withholding (June 15 otherwise)
- Standard deduction: Not available (limited exceptions for students from India)
- Income reported: Only US-source income, not worldwide income
- Required schedule: Schedule OI for all filers
- FDAP income: Schedule NEC required for dividends, interest, royalties
What is Form 1040-NR?
- Form 1040-NR Definition
- Form 1040-NR is the U.S. Nonresident Alien Income Tax Return. It is an IRS form used by individuals who are not US citizens or resident aliens to report income from US sources and calculate their federal tax liability.
Form 1040-NR is the nonresident version of Form 1040, used by individuals who aren’t US citizens or resident aliens to report income from US sources and calculate their federal tax liability.
The critical distinction: Form 1040-NR reports only US-source income. US citizens and resident aliens file Form 1040 and report worldwide income. Nonresidents file 1040-NR and report only what’s sourced to the United States.
Historical Note
Form 1040-NR-EZ was discontinued after 2019. All nonresidents now use Form 1040-NR regardless of complexity. The IRS simplified to one form rather than maintaining separate simple and complex versions.
Who issues it: The IRS. Not your employer. Not your home country. You’re responsible for filing it.
Who Must File Form 1040-NR?
You must file Form 1040-NR if you meet ANY of these conditions:
Engaged in US Trade or Business
- Any US trade or business during the tax year
- Even with no income
- Even with no effectively connected income
- Includes self-employment in the US
FDAP Income Received
- Not engaged in US trade or business
- Received FDAP income (dividends, interest)
- Tax wasn’t fully withheld at 30%
- Claiming treaty rate reduction
Special Situations
- Representative of deceased nonresident
- Fiduciary of nonresident estate/trust
- Owe alternative minimum tax
- Household employment taxes due
Filing Exceptions
You may not need to file if:
- You’re a student/scholar on F, J, M, or Q visa with no US-source income other than exempt scholarship (but you still must file Form 8843)
- Your only US income was bank interest exempt under a tax treaty
Foreign-Owned LLC Owners
If you own a foreign-owned single-member LLC and file Form 5472, you likely also need to file Form 1040-NR to report any US-source income. Many CPA firms handle one but not both. See Section 13 for details, or read our complete Form 5472 guide for foreign-owned LLCs.
Resident vs. Nonresident Alien Status
Before filing, you need to determine your status. The IRS uses two tests to determine if you’re a resident alien or nonresident alien for tax purposes.
The Green Card Test
If you’re a lawful permanent resident at any time during the calendar year, you’re a resident alien for tax purposes. The green card test overrides the substantial presence test.
The Substantial Presence Test
- Substantial Presence Test
- You pass this test (and become a resident alien) if you are present in the US for 31+ days in the current year AND 183+ days over a 3-year weighted period calculated as: all days in current year + 1/3 of days in first prior year + 1/6 of days in second prior year.
Example Calculation
120 days each year for 3 years = 120 + 40 + 20 = 180 days. You fail the test and remain a nonresident alien.
Exempt Individuals (Days Don’t Count)
Certain visa holders don’t count their days toward the substantial presence test:
- F, J, M, Q visa students: First 5 calendar years exempt
- J, Q teachers/researchers: Any 2 of past 6 calendar years exempt
- Foreign government officials (A/G visa holders)
- Professional athletes in charitable events
Important: You must file Form 8843 to claim exempt status, even with zero income.
The Closer Connection Exception
Available if you have fewer than 183 days in the current year, maintain a tax home in a foreign country, and have a closer connection to that country.
- File Form 8840 to claim
- NOT available if you’ve applied for a green card
- Factors: permanent home, family, bank accounts, driver’s license, voter registration
Comparison Table
| Status | Files Form | Reports | Standard Deduction | Filing Status Options |
|---|---|---|---|---|
| US Citizen/Resident Alien | 1040 | Worldwide income | Yes ($14,600 single) | All options |
| Nonresident Alien | 1040-NR | US-source only | No (limited exceptions) | Single or MFS only |
Types of US-Source Income for Nonresidents
Income for nonresidents is categorized into two types. This distinction determines how you’re taxed.
Effectively Connected Income (ECI)
- Income connected with US trade or business
- Taxed at graduated rates (same as residents)
- Examples: wages, self-employment, business income
- Reported in main body of Form 1040-NR
- Deductions allowed against ECI
FDAP Income (Fixed, Determinable, Annual, Periodical)
- Passive income NOT effectively connected
- Taxed at flat 30% rate (or treaty rate)
- Examples: dividends, interest, royalties
- Reported on Schedule NEC
- No deductions allowed against FDAP
Income Source Rules
| Income Type | Source Determined By |
|---|---|
| Wages/Salaries | Where services performed |
| Self-employment | Where services performed |
| Dividends | Residence of paying corporation |
| Interest | Residence of payer |
| Rents | Location of property |
| Royalties | Where used |
| Gains on securities | Generally NOT US-source |
| Real property gains | Location of property (FIRPTA applies) |
Key Point
Non-US-source income is generally not taxable to nonresident aliens. Unlike US citizens who owe tax on worldwide income, you only report and pay tax on US-source income.
Required Forms and Schedules
Always Required
| Form/Schedule | Purpose |
|---|---|
| Form 1040-NR | Main tax return |
| Schedule OI | Other Information: visa type, days in US, tax treaty claims, closer connection |
Required If Applicable
| Form/Schedule | When Required |
|---|---|
| Schedule NEC | FDAP income (dividends, interest, royalties) |
| Schedule A (1040-NR) | Itemized deductions |
| Schedule 1, 2, 3 | Additional income, taxes, credits |
| Schedule C | Self-employment/business income |
| Schedule D | Capital gains/losses |
| Schedule E | Rental, royalty, S-corp, partnership income |
| Form 8833 | Treaty-based return position disclosure |
| Form 8843 | Statement for exempt individuals (students/scholars) |
| Form W-7 | ITIN application (if no SSN) |
Schedule OI: Required for ALL Filers
Every 1040-NR filer must complete Schedule OI. It asks about:
- Visa type and date of entry
- Days present in US (current and prior years)
- Tax treaty claims
- Closer connection to foreign country
- Changes in immigration status
Incomplete Schedule OI is one of the most common reasons for processing delays.
Filing Deadlines and Extensions
Regular Deadlines
| Situation | Deadline |
|---|---|
| Wages subject to US withholding OR US office/place of business | April 15 |
| No wages subject to withholding AND no US office | June 15 |
| Estates/trusts with US office | 4th month after year end |
| Estates/trusts without US office | 6th month after year end |
Extension Rules
Form 4868 gives you an automatic 6-month extension (to October 15).
- File by original due date
- Extension is for filing, NOT for payment
- Interest accrues on unpaid tax from original due date
The 16-Month Rule
You must file within 16 months of the original due date to claim deductions and credits.
File later than 16 months? The IRS can disallow your deductions and credits entirely.
Common Filing Mistakes and Penalties
Most Common Errors
- Filing Form 1040 instead of 1040-NR (or vice versa) – Leads to incorrect deductions/credits and can affect visa/green card applications
- Claiming the standard deduction when not eligible – Only India treaty students/apprentices qualify
- Reporting foreign-source income – Nonresidents report only US-source income
- Failing to claim treaty benefits – Must complete Schedule OI and Form 8833
- Using wrong filing status – Cannot file jointly, cannot use Head of Household
- Not filing Form 8843 – Required for students/scholars even with no income
- Missing Schedule OI or Schedule NEC – Schedule OI required for ALL filers
Penalty Structure
| Violation | Penalty |
|---|---|
| Failure to file | 5% of unpaid tax per month, up to 25% |
| Failure to pay | 0.5% of unpaid tax per month, up to 25% |
| Late filing over 60 days | Minimum $525 or 100% of unpaid tax (whichever less) |
| Negligence/substantial understatement | 20% of underpayment |
| Fraud | 75% of underpayment |
Statute of Limitations
- 3 years from filing (or due date, whichever later)
- 6 years if over 25% underreporting
- Unlimited if no return filed or fraud
Form 5472 Penalty Comparison
While 1040-NR late filing penalties start at $525, the Form 5472 penalty is $25,000 per return, per year. If you own a foreign-owned LLC, missing Form 5472 is significantly more expensive than missing 1040-NR. Both forms are often required together.
Form 5472 Connection for Foreign-Owned LLCs
If you’re a nonresident alien who owns a US LLC, you likely have BOTH obligations:
Form 5472
- Entity-level reporting for the LLC
- Reportable transactions with related parties
- Filed with pro forma Form 1120
- Due April 15 (entity deadline)
Form 1040-NR
- Individual-level reporting
- Your US-source income
- Schedule E for rental, Schedule C for business
- Due April 15 or June 15
Common Scenarios
| Scenario | Form 5472 | Form 1040-NR |
|---|---|---|
| SMLLC with US rental property | Reports LLC transactions | Reports rental income (Schedule E) |
| SMLLC holding US investments | Reports LLC transactions | Reports dividends/interest (Schedule NEC) |
| SMLLC operating US business | Reports LLC transactions | Reports business income (Schedule C) |
Why This Matters
Many CPA firms handle Form 5472 OR Form 1040-NR, but not both. SDO CPA handles the full picture: entity compliance AND owner’s personal US tax obligations. See our Form 5472 penalties and relief guide for what happens when these requirements are missed.
Outbound vs. Inbound Investment
Form 5472 is for inbound investment: foreign persons owning US entities. Form 5471 is the opposite: US persons owning foreign entities. If you’re a US person with ownership in a foreign corporation, see our Form 5471 guide for US shareholders of foreign corporations.
Frequently Asked Questions About Form 1040-NR
Who needs to file Form 1040-NR?
Nonresident aliens who have US-source income must file Form 1040-NR. This includes individuals who worked in the US, received US rental income, received dividends from US companies, or sold US real estate. You do NOT need to file if your only US income was bank interest exempt under a tax treaty.
What is the difference between Form 1040 and Form 1040-NR?
Form 1040 is for US citizens and resident aliens who report worldwide income. Form 1040-NR is for nonresident aliens who report only US-source income. Key differences: 1040-NR filers cannot claim the standard deduction (with limited exceptions), cannot file jointly, and cannot claim many credits available to residents.
When is Form 1040-NR due?
April 15 if you received wages subject to US withholding or have a US office/place of business. June 15 if neither applies. You can request an automatic 6-month extension by filing Form 4868 by the original due date.
Can I file Form 1040-NR online?
Yes, many nonresidents can e-file Form 1040-NR. However, most consumer tax software (TurboTax, H&R Block, TaxAct) does not support 1040-NR. Sprintax is the main software option for nonresident e-filing.
What is Schedule OI on Form 1040-NR?
Schedule OI (Other Information) is required for ALL Form 1040-NR filers. It collects information about your visa status, days present in the US, tax treaty claims, and closer connection to a foreign country. Failure to complete Schedule OI properly can delay processing.
Can nonresident aliens claim the standard deduction?
Generally no. Nonresident aliens must itemize deductions or take zero deductions. The only exceptions are students and business apprentices from India, who can claim the standard deduction under the US-India tax treaty.
What if I filed Form 1040 but should have filed 1040-NR?
File an amended return using Form 1040-X as soon as possible. Attach the correct Form 1040-NR to your amendment. Incorrect filing can affect future visa and green card applications.
Do I need an SSN to file Form 1040-NR?
You need either an SSN or an ITIN. If you don’t have an SSN and are ineligible for one, apply for an ITIN using Form W-7. You can submit Form W-7 with your 1040-NR.
What is the substantial presence test?
The substantial presence test determines if you’re a resident alien for tax purposes. You pass the test (and become a resident) if you’re present in the US for 31+ days in the current year AND 183+ days over a 3-year weighted period. Certain days don’t count, including days present on F, J, M, or Q visas during exemption periods.
How are nonresident aliens taxed on dividends and interest?
FDAP income (dividends, interest, royalties) from US sources is generally taxed at a flat 30% rate, withheld at the source. Tax treaties may reduce this rate, commonly to 15% for dividends and 0-10% for interest. This income is reported on Schedule NEC.
Do I need to file state taxes as a nonresident alien?
It depends on the state. Most states tax nonresidents on income sourced to that state. Nine states have no income tax. Some states have minimum thresholds (days present or income amount). Check your specific state’s requirements.
What happens if I don’t file Form 1040-NR?
Penalties include 5% of unpaid tax per month for failure to file (up to 25%) plus 0.5% per month for failure to pay (up to 25%). If you’re more than 60 days late, the minimum penalty is $525. Not filing can also affect future visa and green card applications.