1040-NR Form

The IRS Form 1040-NR is a nonresident alien income tax return. When you file your 1040-NR, you will be asked to enter information about your income, deductions, and credits. It can also show you how to reduce your tax rate. Read on this article to learn everything about the IRS Form 1040-NR.

A nonresident alien is an individual who lives abroad but still has US-source income. You may be required to fill out Form 1040-NR if you’re conducting business in the United States, have offices in the U.S., or have been employed in the country. However, you can get a refund if you file it correctly. In order to file, you need to fill out the necessary information. You can also consult an accountant to make sure you’re filing correctly.

The IRS Form 1040-NR is usually filed by foreigners who live and work in the U.S. but have not met the substantial presence test. They are taxed only on the income they earn in the U.S. Unlike American citizens, who must pay taxes on worldwide income, nonresidents are only liable for taxes on the income they earn in the United States.

1040-NR Form Eligibility

The IRS uses a “substantial presence test” to determine whether you are required to file a 1040-NR. You must have spent at least 183 days in the U.S. in the year you file your return and at least 31 days in each of the two prior years.

Those with a green card but not U.S. citizens may also have to file a Form 1040-NR. If you are a nonresident alien, you may be required to file a form on behalf of an estate, trust, or deceased person. Nonresidents have certain exemptions, which relate to visas and lack of income.

Nonresident aliens are required to report income they have earned from sources outside of the U.S. and are not allowed to claim dependents. As a result, filing is not as simple as it would be for a U.S. citizen. When you are an expatriate, you have to use Form 1040-NR for ten years after you leave the U.S. In addition, you are subject to the substantial presence test.

If you have a gross income, you should complete Form 1040-NR. However, you should attach a list of exclusions. Also, you may be required to complete Schedule NEC. Unless you are a treaty country, you will pay a flat rate of 30% for effectively connected income.

If you have no gross income, you can complete a form called a “non-itemized return” (NIR). This type of return excludes any state or local income taxes, social security tax on tip income, and student loan interest deductions. Moreover, it excludes social security tax on scholarships and fellowship grants.

How to Fill Out Form 1040-NR?

When you are completing Form 1040-NR, you will need to divide your income into two categories. First, you must include any income you earned from the United States. Second, you must include any income you earned from a foreign country. There is no minimum income threshold for nonresidents.

You can find free PDF downloads of the Form on the Internet, including our website. The IRS estimates that most taxpayers spend eight hours preparing this Form.

  • Line 1a: Wages, Salaries, Tips, etc
    • Exception 1: Enter on line 1a of Form 1040-NR only the wages, salaries, tips, etc
    • Exception 2: Unlike on Form 1040 or 1040-SR, do not include scholarship or fellowship grants on this line
  • Line 1b: Scholarship and Fellowship Grants.
  • Line 1c: Treaty-Exempt Income. The total of all your income that is exempt from tax by an income tax treaty.
  • Line 2a: Tax-Exempt Interest
    • Exception 1: The interest will not be includible on line 2a of Form 1040-NR unless it is effectively connected with a trade or business
    • Exception 2: Do not include interest from a U.S. bank, savings and loan association, credit union, or similar institution exempt from tax under a tax treaty or under section 871(i) because the interest is not effectively connected with a U.S. trade or business.
  • Line 2b: Taxable Interest
    • Exception 1: Report on line 2b only your taxable interest income from assets effectively connected with a U.S. trade or business.
    • Exception 2: Report any interest you received which is not effectively connected with a U.S. trade or business. Report it on Schedule NEC Form (Form 1040-NR) unless it is tax-exempt under a treaty and the withholding agent did not withhold tax on the payment.
  • Line 3a: Qualified Dividends
    • Exception:¬†Only report qualified dividends effectively connected with a trade or business on Form 1040-NR, line 3a.
  • Line 3b: Ordinary Dividends
    • Exception: Only report ordinary dividends effectively connected with a trade or business on Form 1040-NR, line 3b
  • Lines 4a and 4b: IRA Distributions
  • Lines 5a and 5b: Pensions and Annuities 
  • Line 6: Reserved for Future Use
  • Line 7: Capital Gain or (Loss)
  • Lines 10a, 10b, 10c, and 10d: Adjustments to Income
  • Line 10b Reserved for Future Use Leave line 10b blank.
  • Line 12a: Itemized Deductions or Standard Deduction. Enter the total itemized deductions, if any, from line 8 of Schedule A.
  • Line 12b: Charitable Deduction for Cash Contributions of Certain Residents of India.
  • Lines 13a, 13b, and 13c
  • Line 13a: Qualified Business Income Deduction
  • Line 13b: Deduction for Exemptions for Estates and Trusts Only
  • Line 16: Tax in the Instructions for Form 1040 for details on taxes includible on this line
    • Exception: Only include on line 16 any of the following that is listed in those instructions. They do not apply to persons filing Form 1040-NR.
      • Tax due to making a section 962 election.
      • Recapture of an education credit from Form 8863.
      • Tax from Form 8621.
      • Any amounts due to section 965

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