Form 1040-NR: U.S. Nonresident Alien Income Tax Return (2020) – A Complete Guide for Nonresident Taxpayers

What Form 1040-NR Is For

Form 1040-NR is the tax return used by nonresident aliens, estates, and trusts to report income earned from U.S. sources and to calculate their U.S. federal income tax liability. If you're not a U.S. citizen or green card holder and haven't met the substantial presence test, this is your tax form. IRS.gov

The form handles two main categories of income. First, there's effectively connected income (ECI)—money you earned from running a business or working in the United States. This income gets taxed at the same graduated rates that apply to U.S. citizens and residents. Second, there's fixed, determinable, annual, or periodical income (FDAP)—things like dividends, interest, and royalties from U.S. sources that aren't connected to a business. This income faces a flat 30 percent tax rate, though tax treaties may reduce that. IRS.gov

The 2020 version underwent a significant redesign. Instead of one long form, it now uses a base Form 1040-NR plus separate schedules. Schedule OI (Other Information) is mandatory for everyone. Schedule NEC handles income not connected to U.S. business. Schedule A deals with itemized deductions. You may also need the numbered schedules—Schedule 1 for additional income and adjustments, Schedule 2 for additional taxes, and Schedule 3 for additional credits and payments. The IRS structured it this way so that most line numbers align with the regular Form 1040, making it easier to follow standard instructions while accounting for special nonresident alien rules. IRS.gov

You must file if you were engaged in a U.S. trade or business during 2020, even if you had no income, no U.S. source income, or your income was exempt under a tax treaty. You also need to file if you had U.S. source income but not all the tax was withheld at source, or if you owe special taxes like self-employment tax or alternative minimum tax. Even students, teachers, and trainees on F, J, M, or Q visas are considered engaged in trade or business and must file if they have taxable income. IRS.gov

When You’d Use Form 1040-NR

Late and Amended Returns

The deadline depends on your employment situation. If you received wages as an employee with U.S. income tax withholding, your 2020 Form 1040-NR was due April 15, 2021. But if you didn't receive wages subject to withholding—perhaps you were self-employed or had only investment income—you had until June 15, 2021. If the due date falls on a weekend or legal holiday, the deadline shifts to the next business day. IRS.gov

Filing late carries consequences. The IRS charges both penalties and interest on any unpaid tax. Missing the deadline also puts your deductions and credits at risk. To protect these tax benefits, you must file a true and accurate return within 16 months of the original due date. After that window closes, the IRS has the authority to deny your deductions and credits entirely, which could substantially increase your tax bill. IRS.gov

If you can't meet the deadline, file Form 4868 to request an automatic extension. You must submit this extension request by your original due date. The extension gives you more time to file but doesn't extend the time to pay—any tax you owe is still due by the original deadline, and interest accrues on unpaid balances. IRS.gov

When you discover errors after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct your Form 1040-NR. You can now file Form 1040-X electronically for returns from the current year and two prior years. Generally, you have three years from when you filed the original return or two years from when you paid the tax—whichever is later—to claim a refund. However, simple math errors or forgotten forms usually don't require an amended return; the IRS will correct these automatically and notify you. IRS.gov

Key Rules or Details for 2020

Nonresident aliens face significant restrictions that don't apply to U.S. citizens. You cannot file jointly with your spouse or claim head of household status. Your only filing status options are single, married filing separately, or qualifying widow(er). This matters because filing status affects your standard deduction and tax rates. IRS.gov

Most tax credits aren't available to nonresident aliens. You can't claim the earned income credit, American opportunity credit, lifetime learning credit, or premium tax credit (with limited exceptions). However, residents of Canada and Mexico can claim the full child tax credit and additional child tax credit. Residents of India and South Korea may claim these credits in limited situations. These rules stem from U.S. tax law's general principle that tax benefits are reserved for residents and citizens. IRS.gov

Tax treaties can significantly reduce or eliminate your U.S. tax liability. If your home country has a treaty with the United States, you might qualify for reduced withholding rates on dividends, interest, and royalties, or even complete exemption of certain income. For example, students and business apprentices from India eligible for benefits under Article 21(2) of the U.S.-India treaty might not need to file at all if their income falls below certain thresholds. Report treaty-exempt income on line 1c of Form 1040-NR and provide details on Schedule OI. You may also need to attach Form 8833 if you're claiming treaty benefits that override U.S. tax law. IRS.gov

Your identification number—either a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)—is mandatory. If you don't have either, you must apply for an ITIN using Form W-7, which you submit along with your tax return. Without a valid identifying number, the IRS cannot process your return. IRS.gov

Starting in 2020, the standard deduction calculation changed. For students or business apprentices from India claiming benefits under Article 21(2) of the U.S.-India Income Tax Treaty, a new above-the-line deduction of up to $300 for charitable cash contributions became available (or $150 if married filing separately). The exemption amount for qualified disability trusts also increased to $4,300 for 2020. IRS.gov

Step-by-Step (High Level)

How to Complete Form 1040-NR

Step 1: Determine Your Status

Confirm you're a nonresident alien by checking you don't have a green card and don't meet the substantial presence test (generally, being physically present in the U.S. for at least 183 days over a three-year period, weighted by formula). If you're a dual-status alien—resident for part of the year and nonresident for part—special rules apply. IRS.gov

Step 2: Gather Your Documents

Collect all income documents: Forms W-2 (wages), 1042-S (income subject to withholding), 1099-INT (interest), 1099-DIV (dividends), 1099-R (pensions), 8288-A (FIRPTA withholding), 8805 (partnership withholding), and any other income statements. Also gather records of deductible expenses if you plan to itemize. IRS.gov

Step 3: Fill Out the Header

Enter your identifying information at the top: your name, U.S. address (or foreign address if you have no U.S. address), SSN or ITIN, country of residence, and filing status. Check the box indicating which type of identifying number you're using. IRS.gov

Step 4: Report Your Income

On page 1, report income effectively connected with a U.S. trade or business: wages (line 1a), scholarship and fellowship grants subject to tax (line 1b), interest (line 2b), dividends (line 3b), IRA distributions (line 4b), pensions and annuities (line 5b), capital gains (line 7), and other income (line 8). If you claimed treaty-exempt income, enter it on line 1c. Calculate your total effectively connected income on line 9. If you have income not effectively connected to a business—like portfolio dividends or interest with no U.S. business connection—report that on Schedule NEC instead. IRS.gov

Step 5: Claim Adjustments and Deductions

Use Schedule 1 to report additional income and adjustments to income like educator expenses, health savings account deductions, self-employment tax deduction, IRA contributions, and student loan interest. Calculate your adjusted gross income. Then either claim the standard deduction or itemize deductions on Schedule A (Form 1040-NR)—note this is different from Schedule A (Form 1040) used by residents. Enter your itemized deductions or standard deduction on line 12. If you qualify for the qualified business income deduction, claim it on line 13a. IRS.gov

Step 6: Calculate Your Tax

Subtract your deductions from income to get taxable income (line 15). Use the tax table in the instructions or Tax Computation Worksheet to calculate your tax on effectively connected income (line 16). If you have income not connected to a business, complete Schedule NEC to calculate the tax on that income (typically 30 percent or lower treaty rate), and enter it on line 23a. Add any additional taxes from Schedule 2 like alternative minimum tax or self-employment tax. IRS.gov

Step 7: Apply Credits and Payments

Claim any nonrefundable credits you're eligible for—foreign tax credit, child and dependent care credit, retirement savings contribution credit, or child tax credit (if you're a Canadian or Mexican resident). Calculate your total tax after credits. Then enter all your payments: federal income tax withheld from Forms W-2, 1042-S, 8288-A, and 8805; estimated tax payments; and any refundable credits. The IRS allows separate entry lines for different withholding forms to track which forms may need extra processing time. IRS.gov

Step 8: Finalize and File

Calculate whether you overpaid (refund due) or underpaid (amount owed). If you're due a refund, provide your direct deposit information or mailing address. If you owe, include payment with your return or arrange electronic payment. Complete Schedule OI with additional information about your visa type, tax home, days in the U.S., and treaty claims. Sign and date your return. Attach all required forms and schedules. Mail your return to the address specified in the instructions based on whether you're enclosing payment and your location. IRS.gov

Common Mistakes and How to Avoid Them

Using the Wrong Filing Status

Many nonresident aliens mistakenly try to file as "married filing jointly" or "head of household." These statuses are not available on Form 1040-NR. Even if you're married, you must select "married filing separately" (unless you qualify as a qualifying widow(er), which has specific requirements). Double-check the box you mark at the top of page 1. IRS.gov

Mixing Up Schedules

The IRS created separate schedules for Form 1040-NR that look similar to those for Form 1040 but aren't interchangeable. Schedule A (Form 1040-NR) is completely different from Schedule A (Form 1040). Never attach the wrong schedule to your form—it will confuse the IRS and delay your return. Look carefully at the schedule header to confirm it says "Form 1040-NR." IRS.gov

Reporting Income on the Wrong Lines

Income effectively connected to a U.S. business goes on page 1. Income not effectively connected goes on Schedule NEC. Getting this backwards is one of the most common errors. For example, dividend income from a U.S. stock portfolio when you're not engaged in a U.S. business belongs on Schedule NEC, not line 3b. Similarly, scholarship and fellowship grants have a specific line (1b) that's different from where residents report them. IRS.gov

Forgetting to Attach Required Forms

The IRS needs to see your withholding documents. Attach copies of Forms W-2, 1042-S, SSA-1042S, RRB-1042S, and 8288-A to the front of your return. If tax was withheld, also attach Forms 1099-R to the front. Form 8805 gets attached to the back. If you're claiming treaty benefits, attach Form 8833 when required. Missing documents cause processing delays and may result in the IRS denying your claimed withholding. IRS.gov

Using the Wrong Tax Table Columns

When looking up your tax in the tax table, use only the "Single" or "Married filing separately" columns. Never use the "Married filing jointly" column unless you qualify as a qualifying widow(er), in which case you can use that column. Using the wrong column will result in calculating the wrong tax amount. IRS.gov

Claiming Unavailable Credits

Most nonresident aliens cannot claim education credits, the earned income credit, or the premium tax credit. Claiming credits you're not eligible for will trigger IRS correspondence and delay any refund. The child tax credit is available only to residents of Canada and Mexico (and in limited circumstances to residents of India and South Korea). Always check whether you meet the specific residency requirements for each credit. IRS.gov

Omitting Your Identifying Number

Every Form 1040-NR must have an SSN or ITIN at the top. Returns without valid identifying numbers cannot be processed. If you need an ITIN, file Form W-7 with your tax return. Processing takes several weeks, so apply early if possible. IRS.gov

What Happens After You File

The IRS processes your return and verifies the information you reported against documents they received from employers, banks, brokerages, and other payers. If everything matches and you're due a refund, the IRS will issue it via direct deposit or check. Standard processing typically takes a few weeks for electronically filed returns and longer for paper returns. IRS.gov

However, refunds for tax withheld on Forms 1042-S, 8805, or 8288-A require additional review and may take up to six months to process. The IRS manually verifies this withholding, which takes longer than automated wage verification from Forms W-2. If you're expecting a refund from these forms, plan for the extended timeline. IRS.gov

If you owe tax, payment is due by your original filing deadline regardless of any extension to file. The IRS accepts various electronic payment methods including direct pay from your bank account, debit or credit card, or same-day wire transfer. Paper check and money order options are also available. Make sure to include your SSN or ITIN, tax year, and "Form 1040-NR" on any payment. IRS.gov

The IRS may contact you by mail if they need additional information, find an error, or have questions about your return. Respond promptly to any IRS correspondence with the requested information. Delays in responding can result in additional penalties and interest. The IRS will never initiate contact by phone, email, or social media to demand immediate payment or ask for financial information—those are scams. IRS.gov

Keep all your tax records. Save copies of your filed return, all schedules, W-2s, 1042-S forms, receipts for deductions, and any correspondence with the IRS. The general rule is to keep records for at least three years from the date you filed, but some situations require longer retention. These records protect you if the IRS audits your return or if you need to file an amended return later. IRS.gov

FAQs

Do I need to report my worldwide income on Form 1040-NR?

No. Unlike U.S. citizens and residents, nonresident aliens only report U.S. source income. This includes income effectively connected with a U.S. trade or business, regardless of where earned, and U.S. source income not effectively connected to a business. You don't report foreign wages, foreign investment income, or other income with no connection to the United States. IRS.gov

Can I claim my spouse or children as dependents?

It depends. You can claim your spouse as a dependent only if they had no gross income, weren't filing a joint return, and were a U.S. citizen, U.S. national, or resident of the United States, Canada, or Mexico at some time during the year. For children, residents of Canada and Mexico can generally claim the same dependent exemptions and credits as U.S. residents. Other nonresident aliens face restrictions on claiming dependents and related tax benefits. IRS.gov

What if I was a resident alien for part of the year and nonresident for part of the year?

You're a dual-status alien. You must file a Form 1040 for the part of the year you were a resident and a Form 1040-NR for the nonresident portion. Attach a statement showing the computation of your U.S. tax liability for each period. Write "Dual-Status Return" at the top of your return. Special rules apply to dual-status aliens regarding filing status, standard deduction, and certain credits, so review the dual-status instructions carefully. IRS.gov

Do I need to file if my tax was already withheld at the source?

Maybe. If all your income was subject to withholding at the correct rate and you're not engaged in a U.S. trade or business, you might not need to file—but only if you meet one of the specific exceptions listed in the instructions. However, you should file if you want to claim a refund of overwithheld taxes or claim any credits. Many nonresident aliens are considered engaged in a trade or business (like students on F or J visas) and must file regardless of withholding. IRS.gov

How do I know if I'm engaged in a U.S. trade or business?

Generally, you're engaged in a U.S. trade or business if you perform personal services in the United States. This includes employees, self-employed individuals, and even students, teachers, and trainees on F, J, M, or Q visas. The definition is broad and includes most nonresident aliens who work or provide services in the United States. Even if you have no U.S. source income or your income is treaty-exempt, you must file if you're engaged in a trade or business. IRS.gov

Can I e-file Form 1040-NR?

Yes. Electronic filing is available and encouraged for Form 1040-NR. You can use commercial tax preparation software or work with a tax professional who e-files. E-filing is faster, more secure, and reduces errors. You'll receive electronic confirmation when the IRS accepts your return. If you're due a refund and use direct deposit, you'll typically receive it much faster than with a paper return. Most tax return preparers are required to e-file unless they meet specific exceptions. IRS.gov

What's the difference between effectively connected income and FDAP income?

Effectively connected income (ECI) is income from operating a trade or business in the United States or treated as such. Examples include wages, business profits, and rent from real property if you elect to treat it as effectively connected. This income is taxed at graduated rates (10% to 37% for 2020) and you can claim deductions against it. FDAP income (fixed, determinable, annual, or periodical) is passive income like dividends, interest, and royalties not connected to a business. It's taxed at a flat 30% rate (or lower treaty rate) with no deductions allowed, and is typically withheld at source. IRS.gov