Form 1040-NR: U.S. Nonresident Alien Income Tax Return (2014)
What Form 1040-NR Is For
Form 1040-NR is the tax return specifically designed for nonresident aliens who have U.S. tax obligations. If you're not a U.S. citizen or resident alien but earned income from U.S. sources or engaged in business activities in the United States during 2014, this is likely the form you need to file. The form serves several critical purposes: it allows you to report your U.S.-source income, pay any taxes owed, claim refunds of taxes that were over-withheld from your income, and fulfill your legal reporting obligations to the U.S. government.
Your status as a nonresident alien is determined by specific tests. You're generally considered a nonresident alien if you don't meet either the "green card test" (being a lawful permanent resident) or the "substantial presence test" (being physically present in the U.S. for at least 31 days during 2014 and 183 days over a three-year period using a weighted formula). Even if you have a green card, you may qualify as a nonresident for tax purposes if you claim residence in a country with which the U.S. has a tax treaty and meet certain conditions.
Unlike U.S. citizens and resident aliens who are taxed on their worldwide income, nonresident aliens are typically taxed only on income from U.S. sources and on income effectively connected with a U.S. trade or business. This fundamental difference makes Form 1040-NR distinct from the standard Form 1040 used by residents.
When You’d Use Form 1040-NR (Including Late and Amended Returns)
You must file Form 1040-NR if you fall into any of these categories: you were engaged in a trade or business in the United States during 2014 (even if you had no income, no U.S. source income, or your income was exempt under a treaty); you were not engaged in a U.S. trade or business but received U.S.-source income that wasn't fully taxed through withholding; you're representing a deceased person who would have needed to file; or you're filing for an estate or trust with U.S. filing requirements.
Important exceptions exist. You don't need to file if your only U.S. income was from personal services, your wages were less than $3,950, and you have no other reason to file. Students, teachers, or trainees temporarily in the U.S. on F, J, M, or Q visas who have no income subject to tax also don't need to file.
Filing deadlines
Filing deadlines depend on your situation. If you received wages subject to U.S. income tax withholding, your deadline is April 15, 2015 (the 15th day of the 4th month after the tax year ends). If you didn't receive such wages, you have until June 15, 2015 (the 15th day of the 6th month). When the deadline falls on a weekend or legal holiday, you can file the next business day. If you can't meet the deadline, file Form 4868 by the original due date for an automatic six-month extension to file—but remember, this doesn't extend the time to pay any taxes owed.
Amended returns
For amended returns, use Form 1040-X to correct a previously filed Form 1040-NR or to switch between Form 1040-NR and the standard Form 1040 series if you filed the wrong form type. You generally have three years from when you filed your original return or two years from when you paid the tax (whichever is later) to file an amended return. Special circumstances, such as living in a federally declared disaster area or being physically or mentally unable to manage your financial affairs, may extend this timeframe.
Late filing
Late filing is still better than not filing at all. If you realize you should have filed but didn't, submit your return as soon as possible. While penalties and interest will likely apply, filing late can reduce the total amount you'll owe compared to waiting even longer.
Key Rules or Details for 2014
Several important rules govern Form 1040-NR that differ significantly from standard U.S. tax returns.
Tax identification numbers
First, your tax identification number matters tremendously. You must have either a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification Number (ATIN). If you have an ITIN, be aware that if you don't use it on a tax return for five consecutive years, it will expire and you'll need to reapply.
Filing status
Filing status options are more limited for nonresident aliens. You typically can only use "single" or "married filing separately." You generally cannot file jointly unless you and your U.S. citizen or resident alien spouse make a special election to be treated as residents, which means your worldwide income becomes taxable. Head of household status is not available to nonresident aliens.
Effectively connected income (ECI)
The concept of effectively connected income (ECI) is crucial. Income effectively connected with a U.S. trade or business is taxed at graduated rates similar to how U.S. residents are taxed, and you may be able to claim certain deductions against this income. Other U.S.-source income that isn't effectively connected—such as certain investment income, dividends, and interest—is typically taxed at a flat 30% rate (or a lower treaty rate if applicable) through withholding at the source.
Tax treaties
Tax treaties can significantly impact your tax obligations. The United States has tax treaties with many countries that may reduce or eliminate U.S. tax on certain types of income. If you're claiming treaty benefits, you may need to file Form 8833 to disclose your treaty-based position. You must generally be a resident of the treaty country and not have a permanent establishment in the United States to claim benefits.
Deductions and exemptions
Deductions and exemptions work differently for nonresident aliens. You can claim a personal exemption ($3,950 in 2014), but it's reduced if your adjusted gross income exceeds certain thresholds ($254,200 for single filers, $152,525 for married filers, or $305,050 for qualifying widows/widowers). You cannot claim the standard deduction. Instead, you must itemize deductions if you claim any, and only certain itemized deductions are allowed. Dependent exemptions are limited—you can generally only claim exemptions for dependents who are U.S. nationals, U.S. residents, or residents of Canada or Mexico.
Step-by-Step (High Level)
Step 1: Gather Your Documents. Collect all Forms W-2 showing wages and withholding, Forms 1042-S showing income and withholding on U.S.-source income, Forms 1099 for other income types, and any documents supporting deductions or treaty claims. You'll also need your SSN or ITIN.
Step 2: Determine Your Filing Requirement. Confirm that you're truly a nonresident alien and that you have a filing obligation. Review the "Who Must File" section carefully. If you're uncertain about your residency status, Publication 519 provides detailed guidance.
Step 3: Complete Your Personal Information. Fill in your name, current foreign address, and identifying number on page 1. If you're married and filing with a married status, include your spouse's information as well.
Step 4: Report Your Income. The form separates income into effectively connected income (ECI) and non-effectively connected income. Report wages, scholarships, business income, and other ECI on page 1, lines 8-21. Complete Schedule NEC (on page 4) for income not effectively connected with a U.S. trade or business, such as certain dividends, interest, and royalties that were subject to withholding.
Step 5: Calculate Deductions. Determine your allowable itemized deductions using Schedule A. Remember that nonresident aliens cannot take the standard deduction. Calculate your exemption deduction, keeping in mind any phase-outs based on your income level.
Step 6: Figure Your Tax. Calculate the tax on your effectively connected income using the tax tables or worksheets for your filing status. Add the tax on non-effectively connected income from Schedule NEC, which is typically withheld at source. Don't forget to include any additional taxes such as alternative minimum tax or self-employment tax if applicable.
Step 7: Claim Credits and Payments. Enter any tax credits you're eligible for, such as the child tax credit if you have qualifying dependents. Report all tax payments, including amounts withheld shown on Forms W-2, 1042-S, and 1099, estimated tax payments, and any other payments made during the year.
Step 8: Complete Required Schedules. You must complete Schedule OI (Other Information) on page 5, answering all questions. This includes information about tax treaty benefits, visa types, days present in the U.S., and your country of residence. If you're claiming treaty benefits, attach Form 8833 if required.
Step 9: Sign, Date, and Assemble. Sign and date the return in the designated space on page 1. Enter your occupation(s) in the United States. Attach all W-2s, 1042-S forms, and required schedules in the proper order. Make a copy for your records before mailing.
Step 10: Mail to the Correct Address. Send your return to the appropriate IRS address. For individuals without payment, mail to: Department of the Treasury, Internal Revenue Service, Austin, TX 73301-0215. If you're including a payment, mail to: Internal Revenue Service, P.O. Box 1303, Charlotte, NC 28201-1303.
Common Mistakes and How to Avoid Them
Mistake 1: Using the Wrong Identifying Number
Mistake 1: Using the Wrong Identifying Number. One of the most frequent errors is entering an incorrect SSN, ITIN, or ATIN for yourself or your dependents, or having a mismatch between your tax return and your identification documents. This can delay processing and refunds significantly. How to avoid it: Double-check that every identifying number matches the actual Social Security card, ITIN letter, or other official document. Verify spelling of names as well.
Mistake 2: Mathematical Errors
Mistake 2: Mathematical Errors. Mistakes in calculating credits (especially the child tax credit), total income, itemized deductions, taxable income, total tax, or refund amounts are extremely common. How to avoid it: Use a calculator and check your math multiple times. If possible, have someone else review your calculations. Pay special attention to carrying numbers from one line to another and from schedules to the main form.
Mistake 3: Forgetting to Sign and Date
Mistake 3: Forgetting to Sign and Date. An unsigned return is not considered filed. How to avoid it: Before putting your return in the envelope, look at the signature area on page 1 and verify you've signed, dated, and entered your occupation(s) in the United States.
Mistake 4: Incorrect or Missing Attachments
Mistake 4: Incorrect or Missing Attachments. Failing to attach Forms W-2, 1042-S, required schedules, or treaty documentation can cause processing delays. How to avoid it: Create a checklist of required attachments before assembling your return. Attach forms in the correct order as specified in the instructions. Keep photocopies of everything you send.
Mistake 5: Using the Wrong Tax Calculation Method
Mistake 5: Using the Wrong Tax Calculation Method. Nonresident aliens have specific tax computation rules that differ from resident calculations. Using the wrong filing status column in the tax table or not properly separating effectively connected and non-effectively connected income leads to incorrect tax amounts. How to avoid it: Carefully read the instructions for line 42 (tax calculation). Make sure you're using the correct column in the tax table for your filing status. When in doubt, use the tax computation worksheet provided in the instructions.
Mistake 6: Claiming Ineligible Deductions or Credits
Mistake 6: Claiming Ineligible Deductions or Credits. Many deductions and credits available to U.S. residents aren't available to nonresident aliens. The standard deduction, certain education credits, and the earned income credit are not allowed. How to avoid it: Review the specific sections in the Form 1040-NR instructions for each deduction or credit you want to claim to confirm you're eligible.
Mistake 7: Not Completing Schedule OI
Mistake 7: Not Completing Schedule OI. This schedule is mandatory and must have all questions answered. Leaving questions blank can result in processing delays. How to avoid it: Set aside specific time to complete Schedule OI completely. If a question doesn't apply to you, write "N/A" rather than leaving it blank.
What Happens After You File
Once the IRS receives your return, it enters a processing queue. Processing typically takes longer for paper returns than for electronic returns. For Form 1040-NR filed by mail, you should generally allow at least four weeks before information about your return becomes available in IRS systems.
If you're owed a refund
If you're owed a refund, the IRS will process your return and issue your refund either by direct deposit (if you provided bank account information) or by paper check. However, be aware that refund processing can take significantly longer—up to six months—for refunds based on Forms 1042-S or Form 8805 withholding. You can track your refund status using the IRS "Where's My Refund?" tool online, though you'll need your SSN or ITIN, filing status, and exact refund amount.
Your refund may be offset to pay other obligations you have. If you owe federal taxes from previous years, state income taxes, student loans, unemployment compensation debts, child support, or spousal support, all or part of your refund can be diverted to pay those debts. You'll receive a notice explaining any offset that occurs.
If you owe taxes
If you owe taxes, you should have included payment with your return. If you didn't pay the full amount owed, or if the IRS determines you owe more than you calculated, you'll receive a bill. Interest and penalties will be added to any unpaid balance from the original due date of the return.
IRS notices and letters
The IRS may send you notices or letters for various reasons: to request additional information, to notify you of changes made to your return, to explain a refund offset, or to inform you of an examination (audit). Always respond promptly to IRS correspondence. Each notice includes contact information and a deadline for response if action is required.
Record retention
Record retention is important. Keep a copy of your filed return and all supporting documents for at least three years from the filing date or two years from when you paid the tax, whichever is later. If you filed late, the three-year period starts from when you actually filed. Keep records longer if you filed a claim for a refund, filed a fraudulent return, or didn't file a return when required.
If you discover an error after filing, don't wait for the IRS to find it. File an amended return using Form 1040-X as soon as possible. If the error results in additional tax owed, filing an amended return quickly can help minimize interest and penalties.
FAQs
Do I need to file if all my income had tax withheld at the correct rate?
Even if your tax was fully satisfied through withholding, you generally still need to file if you were engaged in a U.S. trade or business or if you want to claim treaty benefits. However, there's a simplified procedure available if you meet all these conditions: you were not engaged in a trade or business in the U.S., you had no effectively connected income, your tax liability was fully satisfied through withholding, and you're filing solely to claim a refund of over-withheld taxes. In this case, you can complete a shortened version of the form with just your identifying information, Schedule NEC showing the over-withheld income, Schedule OI, and your signature.
Can I file Form 1040-NR electronically?
For the 2014 tax year, electronic filing of Form 1040-NR was not widely available. Most nonresident aliens needed to file paper returns. You must mail your completed form with all attachments to the appropriate IRS address. Make sure to use certified mail or a designated private delivery service if you want proof of delivery.
What's the difference between Form 1040-NR and Form 1040-NR-EZ?
Form 1040-NR-EZ is a simplified version available only if you meet specific conditions: your only U.S. income was wages, salaries, tips, taxable refunds of state and local income taxes, or scholarship/fellowship grants; you're not claiming any dependents; and you meet other requirements. Form 1040-NR-EZ is shorter and easier to complete, but most nonresident aliens with diverse income sources, business income, or those claiming dependents must use Form 1040-NR.
How do I know if my income is effectively connected with a U.S. trade or business?
Generally, income is effectively connected if you earn it through regular, continuous, and substantial business activity in the United States. Wages from a U.S. employer are typically effectively connected. Investment income, such as portfolio interest and dividends, usually isn't effectively connected unless you elect to treat it as such or it's derived in the course of a U.S. trade or business. The instructions for Form 1040-NR and Publication 519 provide detailed guidance on this complex issue.
I'm from a country with a U.S. tax treaty. How do I claim treaty benefits?
To claim treaty benefits, you must be a resident of the treaty country (as defined by the treaty) and generally cannot have a permanent establishment in the United States. Report the exempt income on line 22 of Form 1040-NR. Complete Schedule OI, item L, identifying the country, the specific treaty article, and the amount of exempt income. If you're claiming that a particular payment is not subject to withholding or is subject to a reduced rate of withholding, you may need to provide Form W-8BEN to the payer. Some treaty positions also require filing Form 8833.
What should I do if I receive a notice from the IRS after filing?
Read the notice carefully to understand what the IRS is requesting or informing you about. Most notices explain the issue clearly and tell you what action, if any, you need to take. If the IRS made a change to your return, review the explanation to see if you agree. If you disagree, follow the instructions in the notice for responding. Always respond by the deadline shown on the notice. Keep copies of all correspondence. If you're unsure how to respond, consider consulting a tax professional familiar with nonresident alien taxation.
If I was both a resident and nonresident during 2014, which form do I use?
If you have a dual-status year (part of the year as a resident, part as a nonresident), special rules apply. If you were a nonresident on the last day of 2014, file Form 1040-NR with "Dual-Status Return" written across the top and attach a statement (you can use Form 1040 as the statement) showing your income for the part of the year you were a resident. If you were a resident on the last day of 2014, file Form 1040 with "Dual-Status Return" written across the top and attach a statement (you can use Form 1040-NR) showing your income for the nonresident period. You cannot file a joint return as a dual-status taxpayer unless you make a special election to be treated as a full-year resident.
All information in this summary comes from official IRS sources: Form 1040-NR (2014), Instructions for Form 1040-NR (2014), Publication 519 (2014), and IRS.gov.
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