Form 1040-ES (NR): Estimated Tax for Nonresident Aliens – Tax Year 2024 Checklist
Understanding Form 1040-ES (NR)
Form 1040-ES (NR) is the specialized estimated tax payment tool for nonresident alien individuals earning U.S.-source income. This form addresses the unique tax situation of nonresident aliens, who are taxed only on U.S.-source income rather than worldwide income.
Their income falls into two categories: income effectively connected with a U.S. trade or business, taxed at graduated rates, and income not effectively connected with a U.S. trade or business, typically taxed at a flat 30% rate or lower treaty-based rates.
Step-by-Step Filing Process
Step 1: Verify Your Nonresident Alien Status
Before using Form 1040-ES (NR), confirm your nonresident alien status for federal income tax purposes. This determination differs significantly from the concepts of immigration law residency.
Green Card Test
You are considered a resident alien if you have been granted lawful permanent resident status at any point during the calendar year.
Substantial Presence Test
You meet this test if you were physically present in the United States for 183 or more days during the current year, or if you accumulate sufficient presence using this three-year calculation:
- Current year days count as one day each
- Prior year days count as one-third of a day each
- Days from two years prior count as one-sixth day each
Closer Connection Exception
Even if you meet the substantial presence test, you may qualify as a nonresident alien if you were present for fewer than 183 days during the tax year, maintain a tax home in a foreign country, and can demonstrate a closer connection to that foreign country than to the United States.
Exempt Individuals
Specific individuals are exempt from the substantial presence test, including those related to foreign governments, teachers, trainees, students holding authorized visa statuses, and professional athletes temporarily in the United States for competition purposes.
Step 2: Determine If You Must Make Estimated Tax Payments
You must make estimated tax payments for 2024 if both conditions apply simultaneously:
Condition One: You expect to owe at least $1,000 in federal income tax after subtracting all withholding amounts and refundable tax credits from your total projected tax liability.
Condition Two: Your expected withholding and refundable credits will be less than the smaller of two amounts: either 90% of the tax shown on your 2024 return, or 100% of the tax shown on your 2023 return (provided your 2023 return covered all 12 months).
Exception for No Prior Year Tax Liability
You do not need to make estimated payments if all three conditions apply: you had no tax liability for 2023, you were a U.S. citizen or resident alien for all of 2023, and your 2023 return covered a whole 12-month period.
Step 3: Apply Special Rules
Higher Income Taxpayers
If your 2023 adjusted gross income exceeded $150,000 (or $75,000 if married filing separately for 2024), substitute 110% for 100% when calculating the safe harbor based on the prior year’s tax. The current year’s 90% test remains unchanged.
Farmers and Fishermen
If at least two-thirds of your gross income comes from farming or fishing, substitute 66⅔% % for 90% in the calculation. You may pay all estimated tax by January 15, 2025, or file your complete 2024 Form 1040-NR by March 1, 2025, and pay the total tax due without owing underpayment penalties.
Household Employment Taxes
Include household employment taxes in your estimated tax calculation if either condition applies: you will have federal income tax withheld from wages, pensions, annuities, or other income effectively connected with a U.S. trade or business, or you would be required to make estimated payments even without including household employment taxes.
Step 4: Calculate Tax on Effectively Connected Income
Begin with your estimated adjusted gross income that is effectively connected with a U.S. trade or business, including wages, self-employment income, business profits, and rental income from U.S. real property.
Determine Your Deductions
Nonresident aliens generally cannot claim the standard deduction. You may claim itemized deductions directly connected with income effectively connected to a U.S. trade or business.
Limited Standard Deduction Availability: The standard deduction is available only to nonresident aliens who are students or business apprentices from India, or residents of Canada, Mexico, South Korea, or India, when specific conditions are met.
Apply 2024 Tax Rate Schedules
After determining taxable income from effectively connected sources, apply the appropriate 2024 tax rate schedule:
Schedule X (Single):
- 10% on income up to $11,600
- 12% on income $11,601 to $47,150
- 22% on income $47,151 to $100,525
- 24% on income $100,526 to $191,950
- 32% on income $191,951 to $243,725
- 35% on income $243,726 to $609,350
- 37% on income over $609,350
Schedule Y (Married Filing Separately):
- 10% on income up to $11,600
- 12% on income $11,601 to $47,150
- 22% on income $47,151 to $100,525
- 24% on income $100,526 to $191,950
- 32% on income $191,951 to $243,725
- 35% on income $243,726 to $365,600
- 37% on income over $365,600
Step 5: Calculate Self-Employment Tax
If you have self-employment income, calculate self-employment tax on net earnings exceeding $400. For 2024, the Social Security wage base limit is $168,600.
Apply these rates to your net self-employment income after multiplying by 0.9235:
- 12.4% for Social Security on earnings up to $168,600
- 2.9% for Medicare on all earnings
- Additional 0.9% Medicare tax on earnings exceeding $200,000 (single) or $250,000 (married filing jointly) or $125,000 (married filing separately)
Deduct one-half of your self-employment tax when calculating adjusted gross income.
Step 6: Add Other Taxes
Include additional taxes as applicable:
- Alternative Minimum Tax calculated on Form 6251
- Additional Medicare Tax on high earners
- Net Investment Income Tax (3.8% on the lesser of net investment income or excess modified AGI over $200,000 for single filers, $250,000 for married filing jointly, or $125,000 for married filing separately)
- Household employment taxes if conditions in Step 3 apply
Step 7: Calculate Tax on Income Not Effectively Connected
Income not effectively connected with a U.S. trade or business, such as investment income, dividends, and royalties, is taxed at a flat 30% rate on gross income with no deductions allowed.
Enter your expected 2024 FDAP income and multiply by 30%, or use Schedule NEC (Form 1040-NR) if any income qualifies for a reduced tax treaty rate.
Step 8: Apply Tax Treaty Benefits
If you qualify for reduced withholding rates under a U.S. tax treaty, use Schedule NEC to calculate the treaty-reduced rate instead of the standard 30% rate.
Answer all questions on Schedule OI (Form 1040-NR) regarding tax treaty claims. Identify the treaty country, specific treaty articles, months you claimed benefits in prior years, and the amount of exempt income. Attach Form 8833 if required.
Step 9: Calculate Total Estimated Tax
Add your tax on effectively connected income and tax on FDAP income to determine your total 2024 estimated tax.
Important Note on Tax Credits
Most nonresident aliens filing Form 1040-NR are not eligible for common tax credits available to U.S. residents, including:
Child Tax Credit: Generally not available to nonresident aliens unless they are U.S. nationals or residents of Canada or Mexico with qualifying children who have valid Social Security numbers.
Adoption Credit: Generally not available to nonresident aliens.
Dependent Care Credit: Generally not available to nonresident aliens.
Do not include these credits in your estimated tax calculations unless you meet specific eligibility requirements for nonresident aliens.
Step 10: Determine Required Annual Payment
Calculate your required annual payment using safe harbor tests:
Multiply your total estimated tax by 90% (or 66⅔% % for farmers and fishermen). This represents 90% of your current year’s liability.
Calculate your required payment based on the prior year’s tax using the tax shown on line 24 of your 2023 Form 1040-NR, adjusted for specific items. If your 2023 AGI exceeded $150,000 (or $75,000 if married filing separately), use 110% of your 2023 tax instead of 100%.
Your required annual payment is the smaller of these two amounts.
Step 11: Determine Your Payment Schedule
For Nonresident Aliens with Wage Withholding
If you have wages subject to U.S. income tax withholding, divide your required payment into four equal installments due:
- First Payment: April 15, 2024
- Second Payment: June 15, 2024 (June 17, 2024, as June 15 falls on Saturday)
- Third Payment: September 15, 2024 (September 16, 2024, as September 15 falls on Sunday)
- Fourth Payment: January 15, 2025
You do not need to make the January 15, 2025, payment if you file your complete 2024 Form 1040-NR by January 31, 2025, and pay the entire balance due.
For Nonresident Aliens Without Wage Withholding
If you do not have wages subject to U.S. income tax withholding, you may pay all estimated tax by June 17, 2024, or pay in three installments:
- First Payment (one-half): June 17, 2024
- Second Payment (one-quarter): September 16, 2024
- Third Payment (one-quarter): January 15, 2025
Fiscal Year Taxpayers
Fiscal year taxpayers make payments on the 15th day of the 4th, 6th, and 9th months of their fiscal year and the 1st month of the following fiscal year.
Step 12: Choose Your Payment Method
Submit estimated tax payments using approved methods:
Electronic Options: IRS Direct Pay (free from bank account), Electronic Federal Tax Payment System (EFTPS) with enrollment, IRS online account, IRS2Go mobile app, credit or debit card through authorized processors (fees apply).
Mail Option: Complete payment voucher from Form 1040-ES (NR) and mail with check or money order payable to “United States Treasury.” Write “2024 Form 1040-ES (NR)” and your identification number on your payment.
Step 13: Complete Payment Vouchers
If paying by mail, print or type your name, address, and identification number (SSN, ITIN, or EIN) on the voucher. Enter only the payment amount in the designated box. Do not include any 2023 overpayment in this amount. Enclose your payment, but do not staple it.
The IRS does not send reminder notices. You are responsible for tracking due dates and ensuring timely submission.
Step 14: Use the Annualized Income Method for Uneven Income
If you receive income unevenly throughout the year due to seasonal business operations or significant capital gains, consider using the annualized income installment method to calculate unequal quarterly payments based on actual income received during each period.
This method may help you avoid or reduce underpayment penalties. If you use this method, file Form 2210 with Schedule AI when you submit your 2024 Form 1040-NR return, even if no penalty is owed.
Step 15: Consider Increased Withholding
Nonresident aliens receiving wages subject to withholding can request additional federal income tax withholding through Form W-4. Consult Notice 1392 (Supplemental Form W-4 Instructions for Nonresident Aliens) before completing Form W-4.
Adequate withholding combined with credits that equal or exceed the safe harbor threshold eliminates the need for estimated payments. Withholding is treated as paid evenly throughout the year, regardless of when it actually occurs, which differs from estimated costs, which are credited only on the date of payment.
Step 16: Address Dual-Status Situations
Dual-status aliens who change residential status during 2024 must segregate income into two periods: the nonresidency period (when nonresident alien rules apply) and the residency period (when resident alien rules apply).
Dual-status aliens married to U.S. citizens or resident aliens may elect to be treated as U.S. residents for the entire year and file a joint return using Form 1040 or 1040-SR. This election provides access to certain tax benefits but expands the tax base to include worldwide income.
Step 17: Adjust Payments If Circumstances Change
If your income, deductions, or credits change significantly after making an initial estimated payment, complete another Form 1040-ES (NR) worksheet to recalculate your estimated tax and adjust remaining quarterly payments.
If you have a significant income change after March 31, 2024, consider using the annualized income installment method described in Publication 505.
Step 18: Understand Underpayment Penalties
Underpayment penalties are calculated at rates established quarterly by the IRS based on the federal short-term interest rate plus 3% per annum. The penalty applies to the underpayment amount for each quarter multiplied by the number of days the payment was late.
Safe Harbor Protection
You avoid penalties if any of these conditions apply:
- Your total tax liability is less than $1,000 after subtracting all withholding and credits
- You paid at least 90% of your current year tax liability through withholding and estimated payments
- You paid at least 100% of your prior year tax liability (110% for higher income taxpayers whose 2023 AGI exceeded $150,000 or $75,000 if married filing separately)
Penalty Waivers
The IRS may waive penalties if your underpayment resulted from casualty, disaster, or unusual circumstances, or if you retired after age 62 or became disabled during 2024 or 2023, and the underpayment was due to reasonable cause. Request a waiver by filing Form 2210 with a written explanation.
Step 19: Maintain Accurate Records
Keep records showing the dates and amounts of all estimated tax payments made for 2024, along with the name and identifying number under which each payment was made.
If your identifying number or name changed during the year due to marriage, divorce, or other circumstances, attach a statement to your paper return showing all estimated payments and identifying numbers used. Report name changes to the Social Security Administration before filing your 2024 Form 1040-NR.
Step 20: Reconcile Payments on Your Annual Return
When filing your 2024 Form 1040-NR, report all estimated tax payments made during the year, plus any 2023 overpayment applied to 2024 estimated tax on the designated line of your return.
The reconciliation determines whether you receive a refund, owe additional tax, or your payments match your actual liability. Any overpayment can be refunded or applied to your 2025 estimated tax.
Key Reminders for 2024
- Nonresident aliens cannot file as married filing jointly or head of household. Use Schedule X (Single) or Schedule Y (Married Filing Separately).
- Joint estimated tax payments are never permitted for nonresident aliens. Each spouse must calculate and pay their own separate amounts.
- The standard deduction is generally not available to nonresident aliens, with minimal exceptions for residents of certain countries and specific visa holders.
- Most common tax credits available to U.S. residents are not available to nonresident aliens filing Form 1040-NR.
- Income effectively connected with a U.S. trade or business is taxed at graduated rates. FDAP income is taxed at a flat 30% rate unless reduced by treaty.
- The Social Security wage base for 2024 is $168,600. Self-employment income and wages exceeding this amount are not subject to Social Security tax but remain subject to Medicare tax.
By following these steps and meeting all quarterly payment deadlines, you ensure compliance with federal estimated tax obligations and avoid costly underpayment penalties for tax year 2024.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
