Form 1040-NR: U.S. Nonresident Alien Income Tax Return (2019) – A Complete Guide

What Form 1040-NR Is For

Form 1040-NR is the federal income tax return that nonresident aliens use to report their U.S. income and calculate their tax obligations to the IRS. A nonresident alien is anyone who is not a U.S. citizen or national and who has not passed either the "green card test" (lawful permanent resident status) or the "substantial presence test" (physically present in the U.S. for a certain number of days over a three-year period).

Unlike U.S. citizens and resident aliens who report their worldwide income, nonresident aliens generally only report income from U.S. sources. This income falls into two main categories that are taxed differently. First, there is "effectively connected income" (ECI)—income from wages, business activities, or other sources connected with conducting a trade or business in the United States. This type of income is reported on page 1 of Form 1040-NR and is taxed at the same graduated rates that apply to U.S. citizens, with allowable deductions subtracted first.

Second, there is "fixed, determinable, annual, or periodical" income, commonly called FDAP income. This includes passive income like dividends, interest, rents, and royalties that are not connected to a U.S. business. FDAP income is reported on Schedule NEC (attached to Form 1040-NR) and is taxed at a flat 30% rate, or a lower rate if a tax treaty applies. No deductions are allowed against FDAP income.

The form is required if you were engaged in a trade or business in the United States during the tax year—even if you had no income, no U.S.-source income, or income that is exempt under a tax treaty. It's also required if you had U.S.-source income that wasn't fully covered by tax withholding, if you owe certain special taxes, or if advance payments of the premium tax credit were made on your behalf through the healthcare marketplace.

When You’d Use Form 1040-NR

Filing Deadlines

For the 2019 tax year, your filing deadline depends on whether you received wages subject to U.S. income tax withholding. If you were an employee with wages subject to withholding, your Form 1040-NR was due by April 15, 2020. If you did not receive such wages, you had until June 15, 2020 to file. If the due date falls on a weekend or legal holiday, the deadline moves to the next business day.

Extensions to File (But Not to Pay)

If you cannot file by the deadline, you can request an automatic six-month extension by filing Form 4868 by the original due date. However, this extension only applies to filing the return itself—it does not extend the time to pay any tax you owe. If you don't pay by the original deadline, you will owe interest and may face penalties.

Late Filing, Penalties, and the 16-Month Rule

Missing the filing deadline can be costly. The penalty for late filing is typically 5% of the amount due for each month (or part of a month) your return is late, up to a maximum of 25%. If your return is more than 60 days late, the minimum penalty is $435 or the full amount of tax owed, whichever is less. In cases of fraudulent failure to file, the penalty increases to 15% per month, up to 75%. Late payment penalties add another 0.5% per month on unpaid taxes, up to 25%, plus interest charges that continue to accrue from the due date.

Nonresident aliens have a critical deadline to be aware of: to get the benefit of deductions and credits, you must file a "true and accurate" return within 16 months of the due date (including extensions). The IRS can deny deductions and credits on returns filed after this 16-month window closes.

Amended Returns

If you need to correct a mistake on a previously filed Form 1040-NR, you must file an amended return using Form 1040-X. Common reasons for amending include discovering math errors, forgetting to report income, incorrectly claiming deductions or credits, or realizing you should have filed Form 1040 instead of 1040-NR (or vice versa). Generally, you have three years from the date you filed the original return or two years from when you paid the tax—whichever is later—to file Form 1040-X and claim a refund. Longer time periods may apply if you live in a federally declared disaster area or are physically or mentally unable to manage your financial affairs.

Key Rules or Details for 2019

Determining Your Residency Status

Several important rules govern how nonresident aliens are taxed and what they can claim on Form 1040-NR. First, understand your residency status. The IRS determines whether you're a nonresident alien using two tests: the green card test (whether you held lawful permanent resident status at any time during the year) and the substantial presence test (a formula based on days physically present in the U.S. over a three-year period). If you don't meet either test, you're generally considered a nonresident alien. However, there are exceptions, such as the "closer connection" exception if you were in the U.S. fewer than 183 days, maintained a tax home in a foreign country, and can demonstrate closer ties to that country.

Deductions, Standard Deduction Limits, and Filing Status

Nonresident aliens generally cannot claim the standard deduction, with one notable exception: students and business apprentices from India may be eligible for a standard deduction under the U.S.-India tax treaty. Most nonresident aliens must itemize deductions if they wish to claim any at all. You also have limited filing status options—typically single, married filing separately, or in certain cases, qualifying surviving spouse.

Tax Treaties and Treaty Benefits

Tax treaties between the United States and many foreign countries can significantly impact your tax liability. These treaties may provide reduced tax rates or exemptions on certain types of income. If you're claiming treaty benefits, you may need to attach Form 8833 to disclose your treaty-based position. The IRS maintains detailed tax treaty tables that show which types of income may be exempt or subject to reduced rates for residents of specific countries.

Components and Schedules on Form 1040-NR

Form 1040-NR consists of multiple components. The main form (page 1) reports effectively connected income and calculates your tax using graduated rates. Schedule NEC reports income not effectively connected with a U.S. trade or business (like dividends and interest subject to the flat 30% rate). Schedule A is used to itemize deductions. Schedule OI (Other Information) must be completed by all filers and asks questions about your country of residence, visa type, treaty benefits claimed, and other important details.

Certain nonresident aliens who were students, teachers, or trainee temporarily in the U.S. on F, J, M, or Q visas and had no taxable income may not need to file Form 1040-NR. However, they should file Form 8843 to document their presence and claim exemption from the substantial presence test.

Step-by-Step (High Level)

Filing Form 1040-NR involves several key steps, though the exact process depends on your specific income sources and circumstances.

Step 1: Start with Personal Information

Start with personal information. At the top of page 1, enter your name exactly as it appears on your identification document (social security card or IRS notice assigning your ITIN). Include your taxpayer identification number—either a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Provide your U.S. address, or if you don't have one, your foreign address. Select your filing status and country of residence.

Step 2: Report Your Effectively Connected Income

Report your effectively connected income. On page 1, lines 8 through 21, report income that was effectively connected with a U.S. trade or business. This includes wages from Form W-2, business income, capital gains, and other income sources. Attach supporting schedules where required, such as Schedule C for business income or Schedule D for capital gains.

Step 3: Calculate Adjusted Gross Income

Calculate adjusted gross income. Lines 22 through 35 allow you to subtract certain adjustments from your total income. These might include educator expenses, student loan interest, or contributions to retirement accounts. The result is your adjusted gross income (AGI).

Step 4: Determine Your Deductions

Determine your deductions. Since most nonresident aliens cannot take the standard deduction, you'll likely need to itemize deductions on Schedule A. This includes expenses like state and local taxes (limited), mortgage interest, and charitable contributions. Some deductions available to U.S. citizens and residents may not be available to nonresident aliens.

Step 5: Figure Your Tax

Figure your tax. Use the tax computation method specified in the instructions—typically the tax tables or qualified dividends and capital gain tax worksheet. Calculate any alternative minimum tax if applicable.

Step 6: Claim Credits

Claim credits. Nonresident aliens can claim certain tax credits, such as the child tax credit if you have qualifying children, or the foreign tax credit if you paid taxes to another country on U.S.-source income. The premium tax credit may be available if you were engaged in a U.S. trade or business and enrolled in marketplace health insurance.

Step 7: Complete Schedule NEC

Complete Schedule NEC. If you had income not effectively connected with a U.S. trade or business—such as dividends, interest, or royalties—report this on Schedule NEC. Enter amounts under the appropriate tax rate column (typically 30%, 15%, 10%, or other rate if a treaty applies). Calculate the tax due on this income separately from your effectively connected income.

Step 8: Fill Out Schedule OI

Fill out Schedule OI. Answer all questions on the Other Information schedule. This includes identifying your home country, any treaty benefits you're claiming, information about prior green card applications, and details about any tax home or office you maintained in the U.S.

Step 9: Calculate Your Total Tax and Payments

Calculate your total tax and payments. Add up all taxes from the various sections of the form. Then report your tax payments: federal income tax withheld from wages (shown on Form W-2), tax withheld at source on other income (shown on Forms 1042-S), estimated tax payments you made during the year, and any other credits or payments.

Step 10: Determine If You Owe or Get a Refund

Determine if you owe or get a refund. Subtract your total payments from your total tax. If payments exceed your tax, you're entitled to a refund. If tax exceeds payments, you owe the IRS. You can choose to have refunds directly deposited into your bank account or receive a paper check.

Step 11: Sign, Date, and Submit

Sign, date, and submit. Sign your return, enter your occupation, and date it. If you had someone prepare your return, they should also sign in the designated area. Attach all required forms and schedules in the proper order: Form(s) W-2 on the left margin of page 1, followed by other forms and schedules. Mail your return to the address specified in the instructions for your location.

Common Mistakes and How to Avoid Them

The IRS identifies several frequent errors that can delay refunds or trigger notices. Being aware of these pitfalls can help ensure smooth processing of your return.

Identification Errors

Identification errors are among the most common problems. Make sure your name and taxpayer identification number (SSN or ITIN) match exactly what appears on your official identification documents. If you're claiming dependents for the child tax credit or credit for other dependents, verify that each dependent's name and number are entered correctly and match their social security cards. A mismatch here will result in denied credits.

Math Mistakes

Math mistakes delay many returns. While filing electronically helps prevent calculation errors, if you file by paper, double-check all arithmetic, especially for critical lines like total income, itemized deductions, taxable income, total tax, federal income tax withheld, and your refund or amount owed. Some Form 1040-NR lines require adding across (horizontally) rather than down (vertically), so follow the line instructions carefully.

Using the Wrong Tax Computation Method

Using the wrong tax computation method is another frequent error. Line 42 requires you to figure your tax using a specific method based on your income type and amount. Review the instructions to determine whether you should use the Tax Table, the Qualified Dividends and Capital Gain Tax Worksheet, or another computation method.

Missing Signatures and Dates

Missing signatures and dates seem simple but are surprisingly common. Don't forget to sign and date your return and enter your occupation in the United States. An unsigned return is not valid and will be sent back, delaying your refund.

Incomplete Addresses

Incomplete addresses create delivery problems. Always include apartment numbers and ensure your complete address is legible. If you move after filing, notify the IRS so they can send any correspondence or refund checks to your new address.

Forgetting Required Forms and Schedules

Forgetting required forms and schedules will result in an incomplete return. Attach all Form(s) W-2 to the left margin of page 1. Include all required schedules in the proper order—the instructions contain an assembly guide. If you claim capital gain distributions without filing Schedule D, remember to check the appropriate box on line 14.

Failing to Attach Form 8962 When Required

Failing to attach Form 8962 when required causes serious problems. If advance premium tax credit payments were made for you, your spouse, or a dependent who enrolled in marketplace coverage, you must attach Form 8962 to reconcile these advance payments—even if someone else enrolled you. Not doing so can delay your refund and may require you to repay excess advance payments.

Payment Errors

Payment errors occur when taxpayers don't include required information with checks or money orders. If paying by mail, write the tax year, form number, your name, address, and taxpayer identification number on your payment.

Submitting Multiple Returns

Submitting multiple returns for the same year confuses IRS systems and delays processing. Never file more than one original return for the same tax year—even if you haven't received your refund or haven't heard from the IRS—unless specifically instructed to do so.

Using E-File to Avoid Mistakes

The best way to avoid most mistakes is to file electronically. Tax software performs calculations automatically, checks for common errors, and ensures you've completed all required sections before submission. Eight in ten taxpayers use e-file and direct deposit to get faster, more accurate results.

What Happens After You File

IRS Processing and Information Matching

Once you've mailed your Form 1040-NR or filed it electronically, several things occur behind the scenes at the IRS.

The IRS will process your return and match the information you reported against data they received from employers, financial institutions, and other payers on information returns like Forms W-2, 1099, and 1042-S. This matching process helps verify the accuracy of your return.

Tracking Your Refund

If you're expecting a refund, you can track its status using the "Where's My Refund?" tool at IRS.gov/Refunds or through the free IRS2Go mobile app. These tools are available 24/7. For paper returns, refund information generally becomes available about four weeks after you mail your return. E-filed returns typically appear in the system much faster—often within 24 hours of acceptance. To check your status, you'll need your Social Security Number or ITIN, your filing status, and the exact dollar amount of your expected refund.

Refund Timing and Special Cases

The IRS aims to process e-filed returns within 21 days, though paper returns take longer. However, certain situations require additional processing time. If you're claiming a refund of tax withheld on Form 1042-S (for foreign persons' U.S. source income), Form 8805 (for partnership withholding), or Form 8288-A (for dispositions by foreign persons of U.S. real property interests), the IRS may need up to six months to process your refund.

If you requested direct deposit, your refund will be electronically transferred to your bank account. The IRS limits the number of refunds that can be deposited into a single account or prepaid debit card to three per year. After that limit, they will mail paper checks instead. If your deposited amount differs from what you expected, the IRS will mail you an explanation about two weeks after the refund is deposited.

IRS Notices and Correspondence

The IRS may send you a notice or letter if they need additional information, find an error on your return, or need clarification about something you reported. Don't panic if you receive correspondence—often these are routine requests for documentation or minor corrections. The notice will explain what the IRS needs and how to respond. You can find helpful information about understanding IRS notices at IRS.gov/Notices.

Amended Returns and Transcripts

If you filed an amended return using Form 1040-X, track its status at IRS.gov/WMAR. Amended returns take longer to process—typically up to 16 weeks, though it can take three weeks just for your mailed Form 1040-X to appear in the IRS system.

To obtain copies of your tax return for mortgage applications, loan applications, or other purposes, you can order a free tax return transcript at IRS.gov/Transcript. Transcripts show most line items but are not copies of the actual return. If you need an exact copy of your filed return, use Form 4506—there's a fee for each return requested.

Refund Statute of Limitations

Remember that to receive any refund, you must generally file within three years from the date your return was originally due (including extensions). This statute of limitations is strictly enforced, so don't delay filing if you're entitled to a refund.

FAQs

Do I need to file Form 1040-NR if I had no income or my income was exempt under a tax treaty?

Yes, if you were engaged in a trade or business in the United States during the tax year, you must file Form 1040-NR regardless of whether you had income, your income was from U.S. sources, or your income is exempt under a tax treaty. This filing requirement exists even when you owe no tax. If you have no gross income for the year, you don't need to complete the schedules—instead, attach a list of the types of exclusions you're claiming and the amount of each.

What's the difference between Form 1040-NR and Form 1040?

Form 1040-NR is specifically for nonresident aliens reporting U.S.-source income and income effectively connected with a U.S. trade or business. Form 1040 is for U.S. citizens and resident aliens who must report their worldwide income. The forms have different structures: Form 1040-NR includes Schedule NEC for non-effectively connected income taxed at flat rates, while Form 1040 doesn't. Nonresident aliens face different rules for standard deductions, filing status options, and available credits. Using the wrong form can result in incorrect tax calculations and potential penalties.

Can I e-file Form 1040-NR?

Yes, you can electronically file Form 1040-NR using compatible tax software. E-filing offers several advantages: immediate confirmation that the IRS received your return, faster processing times, automatic calculations that reduce math errors, and quicker refunds—especially when combined with direct deposit. Many tax preparers are required to use e-file, making it increasingly the standard method of filing. The IRS processed more than 1 billion e-filed returns safely since 1990.

I'm claiming benefits under a tax treaty. What do I need to do?

If you're claiming treaty benefits, you must generally complete Schedule OI and identify the specific country and treaty article(s) you're relying on, along with the amount of exempt income. You may also need to file Form 8833 (Treaty-Based Return Position Disclosure) if your treaty-based position reduces or modifies the taxation of income, deductions, credits, or exclusions. To qualify for treaty benefits, you typically must be a resident of the treaty country for income tax purposes and cannot have a permanent establishment or fixed base in the United States. Each treaty has different provisions, so consult IRS Publication 901 and the specific tax treaty for your country.

What if I discover an error after I've already filed my return?

If you discover a mistake after filing, you may need to file an amended return using Form 1040-X. However, you don't need to file an amended return for simple math errors—the IRS will correct these automatically and notify you. You should file an amended return if you need to change your filing status, correct income amounts, claim additional deductions or credits you forgot, or fix other substantive errors. Remember that you generally have three years from the date you filed your original return (or two years from when you paid the tax, whichever is later) to file an amended return and claim any additional refund. Processing an amended return can take up to 16 weeks.

I received Form 1042-S showing tax was withheld from my income. What do I do with it?

Form 1042-S reports foreign person's U.S. source income subject to withholding. You should attach a copy of all Forms 1042-S you received to your Form 1040-NR. If the income shown is not effectively connected with a U.S. trade or business, report it on Schedule NEC under the appropriate tax rate column. If too much tax was withheld based on your circumstances or a tax treaty, you can claim a refund by filing Form 1040-NR. Keep in mind that refunds involving Forms 1042-S may take up to six months to process due to additional verification requirements.

As a nonresident alien student on an F-1 visa, am I considered engaged in a trade or business in the United States?

Yes, nonresident alien students, teachers, or trainees temporarily present in the U.S. on F, J, M, or Q visas are considered engaged in a trade or business for tax purposes. However, you only need to file Form 1040-NR if you have income subject to tax—such as wages, tips, scholarship or fellowship grants, dividends, or other U.S.-source income. If you have no taxable income, you don't need to file Form 1040-NR, but you should file Form 8843 to document your exempt individual status and explain your days of presence in the United States.

Source: All information in this summary is derived from official IRS publications and resources, including the 2019 Instructions for Form 1040-NR, Taxation of Nonresident Aliens, and other IRS.gov pages referenced throughout.

‍