What is Form 1040NR — the U.S. nonresident alien income tax return? Form 1040NR collects income tax from individuals who live or work in the U.S. for a significant part of the year, yet who do not possess a green card or U.S. citizenship. If you earn income in the U.S. and meet one of two “days of presence” tests, then you may be required to file this form. Form 1040NR is due on April 15. Although, individuals who have income that is not subject to withholding can file through June 15 with no penalties for filing late.
As with any tax form, the time it takes to complete Form 1040NR is highly individualistic. A nonresident with a single source of income and no deductions may be able to complete the form relatively quickly. Yet someone with a complicated tax situation could spend up to a week gathering documentation, reviewing the IRS instructions, and completing the tax form correctly.
The IRS estimates that taxpayers spend an average of eight hours filling out the form. While instructions for the standard Form 1040 are fairly brief, there are 30 pages of instructions that apply specifically to the nonresident alien tax return. For this reason, many nonresidents choose to seek professional guidance, so they know they’ve done everything right.
Taxpayers can be penalized with financial consequences for late filing of Form 1040NR and failing to file the nonresident tax form.
While nonresidents who aren’t U.S. citizens typically complete this form, there are times when U.S. citizens and permanent residents may need to file Form 1040NR. When a citizen or permanent resident officially leaves the U.S. — and does not officially take residency in another country — the individual will file Form 1040NR.
Expats and nonresident aliens may be required to file Form 1040NR as well as another form — Form 1040-C — in situations where the IRS terms them dual-status filers. For instance, a nonresident alien may move to the U.S. intending to establish permanent residency and need to file 1040NR until he or she is awarded dual residency. An expat not yet officially residing elsewhere will also need to complete both forms until he or she establishes a home base abroad.
Rules and Requirements With the Nonresident U.S. Tax Return
The IRS imposes a substantial presence test to determine whether nonresidents must file this tax form. Generally, anyone who resides in the U.S. for more than 31 days in a given calendar year must complete the form. Anyone who has spent more than 183 days in the U.S. during the present year and the two preceding it must file the form. The second test is somewhat trickier, as only one-sixth of the days from the earliest year and one-third of the days of the middle year are counted when determining the total number of days.
There are several exceptions when counting days that can affect whether or not you qualify. “Exempt individuals” possessing a certain type of visa — such as a student visa, foreign government-related visa or cultural exchange visa — aren’t required to complete Form 1040NR.
Someone who lives in Canada or Mexico and commutes to the U.S. for work should not count days he or she commutes, if the individual regularly does so. Sailors present in the U.S. while crewing a foreign vessel do not need to count the days stationed in a U.S. port. Individuals who remain in the U.S. longer than intended due to an unexpected medical condition should not count the days they are stuck stateside receiving medical care. Given the complexity of the tax code, it’s best to consult with a tax professional if you are unsure whether you qualify.
Get Expert Assistance With US Nonresident Alien Income Tax Return
While the information above will help you understand whether you must file Form 1040NR and how to do it correctly, it is not intended to be comprehensive. For personalized tax assistance, including cross-border tax planning, schedule a consultation with Expat CPA — the leading CPA providing expat and nonresident tax services.
Expat CPA can explain all the terminology surrounding Form 1040NR, help you complete the form accurately and file on time, calculate any taxes owed as a nonresident alien, and provide valuable insight surrounding tax planning.