Form 1040-ES (NR): U.S. Estimated Tax for Nonresident Alien Individuals — A Simple Guide
What Form 1040-ES (NR) Is For
Form 1040-ES (NR) is the package nonresident aliens use to calculate and pay estimated taxes throughout the year on income that isn't subject to automatic withholding. If you're a nonresident alien earning income in the United States that doesn't have taxes taken out at the source—or if the amount withheld isn't enough to cover what you'll owe—this form helps you stay current with the IRS by making quarterly payments.
Estimated tax is essentially a pay-as-you-go system. Rather than waiting until you file your annual return to pay all your taxes at once, you make periodic payments based on the income you expect to receive during the year. This applies to income effectively connected with a U.S. trade or business, as well as certain income not effectively connected but still subject to U.S. tax. The form includes worksheets to help you estimate your adjusted gross income, deductions, exemptions, and tax liability for the year, then divides that liability into manageable installment payments.
The 2013 version reflects several important updates, including the restoration of the 39.6% top tax rate, a new 0.9% Additional Medicare Tax for higher earners, increased personal exemption amounts for certain taxpayers, and changes to capital gains rates. Nonresident aliens who expect to owe at least $1,000 in tax after subtracting withholding and refundable credits generally must make these estimated payments to avoid penalties.
When You’d Use Form 1040-ES (NR) (Including Late and Amended Situations)
You must use Form 1040-ES (NR) if you're a nonresident alien and you expect to owe at least $1,000 in tax for 2013 after accounting for withholding and credits. Additionally, your withholding and refundable credits must be less than the smaller of either 90% of your current year's tax or 100% of the prior year's tax (110% if your 2012 adjusted gross income exceeded $150,000, or $75,000 if filing separately). Special thresholds apply to farmers, fishermen, and higher-income taxpayers.
The standard payment schedule calls for four installments due on April 15, June 17, September 16, and January 15 of the following year. However, if you have no wages subject to U.S. withholding, you can make only three payments beginning June 17. You can skip the January payment entirely if you file your annual return by January 31 and pay your full balance at that time.
If your circumstances change during the year—perhaps your income increases significantly, you receive an unexpected capital gain, or your deductions decrease—you should amend your estimated tax payments. To do this, recalculate your total estimated tax using the worksheet and adjust your remaining payments accordingly. The IRS provides guidance for this ""amended estimated tax"" calculation in Publication 505, chapter 2. If you discover you underpaid in an earlier quarter, increasing your later payments may not fully protect you from penalties, so it's wise to adjust as soon as circumstances change.
There's also flexibility for those with uneven income throughout the year. If you operate a seasonal business or receive a large year-end bonus or capital gain, you can use the annualized income installment method to match your payments more closely to when you actually earned the income. This can reduce or eliminate penalties that might otherwise apply.
Key Rules or Details for 2013
Several important rules govern who must file and how much to pay. First, you're only required to make estimated payments if you expect to owe at least $1,000 and your withholding won't cover at least 90% of the current year's tax or 100% of the prior year's tax. For higher earners—those with 2012 adjusted gross income over $150,000 ($75,000 if married filing separately)—the prior-year threshold jumps to 110%.
Farmers and fishermen enjoy special treatment: if at least two-thirds of your gross income comes from farming or fishing, you can pay your entire estimated tax in one payment by January 15, or file your return by March 3 and pay everything then. Household employers must include household employment taxes in their estimated payments if they have federal income tax withheld or would otherwise need to make estimated payments.
For 2013, several significant tax changes affect your calculations. The Alternative Minimum Tax (AMT) exemption amounts increased substantially, with the single exemption rising to $51,900 and the qualifying widow(er) exemption to $80,800. Personal exemptions increased to $3,900 per person, though they phase out for higher earners. Itemized deductions also face limitations when adjusted gross income exceeds certain thresholds—$250,000 for single filers, $300,000 for qualifying widow(er)s, and $150,000 for those married filing separately.
The 2013 tax year introduced the Additional Medicare Tax, a 0.9% levy on Medicare wages, Railroad Retirement Tax Act compensation, and self-employment income exceeding $200,000 for single filers or $125,000 for married filing separately. This must be factored into your estimated tax calculations. Additionally, the top capital gains rate rose to 20% for certain high-income taxpayers, changing the tax landscape for investment income.
Social security and Medicare taxes also shifted in 2013. The employee social security withholding rate returned to 6.2% (up from the temporary 4.2% rate), applying to wages up to $113,700. Self-employment tax calculations must account for 92.35% of net profits, with a 12.4% rate on amounts up to the social security wage base and a 2.9% Medicare rate on all self-employment income.
An important restriction: you cannot make joint estimated tax payments if either spouse is a nonresident alien, you're separated under a divorce decree, or you have different tax years. The IRS won't send reminder notices for estimated payments—the responsibility for tracking due dates falls entirely on you.
Step-by-Step (High Level)
The process begins with the 2013 Estimated Tax Worksheet included in the form package. Start by estimating your adjusted gross income for the year, using your 2012 return as a guide but incorporating any expected changes. If you're self-employed, you'll need to complete the Self-Employment Tax and Deduction Worksheet to calculate both your self-employment tax and the deduction for half of that tax.
Next, estimate your itemized deductions. If your adjusted gross income exceeds $300,000 (qualifying widow(er)), $250,000 (single), or $150,000 (married filing separately), use the Itemized Deductions Worksheet because your deductions may be limited. Similarly, if your income exceeds these thresholds, use the Deduction for Exemptions Worksheet to calculate your personal exemptions, which phase out at higher income levels.
After subtracting deductions and exemptions from your income, calculate your tax using the 2013 Tax Rate Schedules provided with the form. Be sure to use the correct schedule for your filing status—nonresident aliens who are married must use the ""married filing separately"" rate schedule unless specific treaty provisions apply. Add any Alternative Minimum Tax from Form 6251 and other taxes such as self-employment tax or Additional Medicare Tax.
Subtract any credits you expect to claim, such as the child tax credit, education credits, or foreign tax credit. The resulting figure represents your estimated tax on income effectively connected with a U.S. trade or business. If you also have income not effectively connected with a U.S. business—such as certain interest, dividends, or royalties—calculate that tax separately using the 30% rate or lower treaty rate if applicable.
The worksheet then helps you determine your required annual payment. Generally, this is the smaller of 90% of your current year's tax or 100% of your prior year's tax (110% for high earners). Subtract any withholding you expect from wages or other sources, plus any overpayment from your 2012 return that you're applying to 2013. Divide the remaining balance by four (or three, if you're making three payments) to determine each installment amount.
To make payment, you can mail a check or money order with the payment voucher included in the package, pay online through IRS Direct Pay or your bank's bill-pay system, pay by phone using a credit or debit card through approved service providers, or use the Electronic Federal Tax Payment System (EFTPS). Each voucher is pre-printed with a due date—simply fill in your identifying information and payment amount, then mail it to the address specified for Charlotte, North Carolina. Remember to write ""2013 Form 1040-ES (NR)"" and your taxpayer identification number on your check.
Common Mistakes and How to Avoid Them
One of the most frequent errors is simply not making estimated payments when required, or making them late. Unlike employee withholding, which happens automatically, estimated tax is entirely your responsibility. The IRS doesn't send reminders, so mark the due dates on your calendar: April 15, June 17, September 16, and January 15. Missing even one payment can trigger penalties, and the penalty applies separately to each underpayment for every day it remains unpaid.
Another common pitfall is failing to adjust payments when circumstances change during the year. Perhaps you receive an unexpected bonus, sell property at a gain, or lose a deduction you were counting on. When any significant change occurs, immediately recalculate your estimated tax and adjust your remaining payments. Some taxpayers mistakenly believe they can just ""catch up"" with a larger payment at year-end, but the IRS calculates penalties period by period. Underpaying in an early quarter isn't fully forgiven just because you overpay later.
Many nonresident aliens overlook special rules that apply to them. High-income taxpayers—those with prior-year adjusted gross income over $150,000 ($75,000 if married filing separately)—must base their safe harbor on 110% of the prior year's tax, not 100%. Farmers and fishermen enjoy different thresholds entirely. Some taxpayers who receive income unevenly throughout the year would benefit from the annualized income installment method but don't realize it exists. This method can significantly reduce or eliminate penalties when most of your income arrives late in the year.
Calculation errors also create problems. The 2013 form requires attention to new provisions: the Additional Medicare Tax for higher earners, revised AMT exemption amounts, phaseouts of personal exemptions and itemized deductions, and the return of the 39.6% top rate. Taxpayers who simply copy numbers from the prior year without reviewing ""What's New"" often miscalculate. Self-employed individuals sometimes forget to include self-employment tax in their estimates or incorrectly calculate the deduction for half of that tax.
Finally, some taxpayers use an incorrect filing status or make improper assumptions about their residency status. Nonresident aliens generally cannot file jointly unless they elect to be treated as residents (an election with significant implications). Married nonresident aliens must use the married filing separately status and rate schedules. Dual-status taxpayers—those who change status during the year—face additional restrictions and cannot use the standard deduction even for the portion of the year they were residents.
To avoid these mistakes: carefully read the ""What's New"" section each year, use all applicable worksheets, maintain good records throughout the year, mark payment due dates prominently, and recalculate whenever your circumstances change. When in doubt, consult IRS Publication 505 or seek advice from a tax professional familiar with nonresident alien taxation.
What Happens After You File
After you make each estimated tax payment, the IRS credits it to your tax account for the year. If you mail a payment, the date of the U.S. postmark determines whether it's timely—payments postmarked by the due date are considered on time even if they arrive later. Electronic payments are credited on the date processed. You won't receive a confirmation notice for mailed payments, though electronic payment systems typically provide a confirmation number. It's your responsibility to keep records of when and how much you paid.
The IRS does not send reminder notices about upcoming estimated tax payments. This differs from many other tax obligations where the IRS contacts you about amounts due. With estimated tax, you must track the due dates yourself and make timely payments. If you miss a payment or pay too little, the first you'll hear about it is when you receive a penalty notice after filing your annual return—or when you file that return and calculate the penalty yourself.
When you file your Form 1040-NR for 2013 (due by April 15, 2014, if you had wages subject to withholding, or June 16, 2014, if you didn't), you'll report all estimated tax payments on the payments section of that return. The IRS compares your total payments—including both estimated payments and any withholding—against your actual tax liability. If you paid enough or more than enough, you'll receive a refund or can apply the overpayment to next year's estimated tax. If you didn't pay enough, you'll owe the balance plus potential penalties and interest.
Underpayment penalties are calculated on a period-by-period basis. The IRS determines the required payment for each quarter and applies a penalty for each day any underpayment remains unpaid. This means you can't fully escape penalties by making a large fourth-quarter payment if you underpaid in earlier quarters. However, penalties may be waived if you meet certain conditions detailed in IRS Publication 505, chapter 4—for example, if the underpayment was due to casualty, disaster, or unusual circumstances, or if you retired or became disabled during the year and the underpayment was reasonable.
For taxpayers who receive income unevenly throughout the year, the annualized income installment method can reduce or eliminate penalties. If you use this method, you'll need to file Form 2210 (Underpayment of Estimated Tax by Individuals, Estates, and Trusts) with your annual return to show how you calculated payments based on when you actually earned income rather than assuming it arrived evenly throughout the year.
The IRS typically processes any refund or sends any penalty notice within a few months of receiving your annual return. If your situation is complex or if discrepancies exist between your reported payments and IRS records, processing may take longer. Interest accrues on any unpaid tax from the original due date until you pay, and the IRS charges interest on penalties as well. Conversely, if you overpaid significantly, the IRS will pay you interest on the overpayment, though typically at a lower rate than what they charge.
FAQs
If I'm a nonresident alien with only wages subject to withholding, do I still need to file Form 1040-ES (NR)?
Not necessarily. You must make estimated tax payments only if you expect to owe at least $1,000 in tax after subtracting withholding and refundable credits, and if your withholding won't cover at least 90% of the current year's tax or 100% of the prior year's tax. If your employer withholds enough tax from your wages to satisfy these thresholds, you don't need to make estimated payments. However, if you have substantial income from sources other than wages—such as self-employment income, investment income, or income not effectively connected with a U.S. business—you'll likely need to make estimated payments on that additional income.
Can I pay all my estimated tax in one lump sum instead of making four payments?
Yes. If you have wages subject to U.S. income tax withholding, you can pay your entire estimated tax by April 15. If you don't have such wages, you can pay everything by June 17. You can also skip the January 15 payment if you file your annual return by January 31 and pay the full balance due at that time. However, paying in installments throughout the year often makes budgeting easier and ensures you're keeping pace with your tax obligations. If most of your income arrives late in the year, you might also benefit from the annualized income installment method, which allows lower payments early and higher payments later.
What happens if my income changes significantly during the year—should I adjust my estimated payments?
Absolutely. If you experience a large change in income, deductions, credits, or additional taxes after April, you should recalculate your estimated tax immediately. To amend your estimated payments, refigure your total estimated tax using the worksheet, then determine the new payment amounts for the remaining periods. The form directs you to Publication 505, chapter 2, which explains how to calculate amended payments under the regular installment method. If you don't adjust and you underpaid significantly in earlier quarters, you may face penalties even if you increase later payments, because penalties are calculated separately for each period.
I'm a nonresident alien married to a U.S. citizen. Can we make joint estimated tax payments?
No. The form explicitly states that you cannot make joint estimated tax payments if either spouse is a nonresident alien. Each spouse must make separate estimated tax payments based on their individual circumstances and expected tax liability. However, when you file your annual return, you might be able to elect to be treated as a U.S. resident alien for the entire year, which would allow you to file a joint return—but this election has significant implications for how your worldwide income is taxed and may affect your eligibility for tax treaty benefits.
How do I know if I need to pay the Additional Medicare Tax, and how does it affect my estimated payments?
The Additional Medicare Tax is a 0.9% tax that applies to Medicare wages, Railroad Retirement Tax Act compensation, and self-employment income exceeding certain thresholds—$200,000 for single filers and qualifying widow(er)s, or $125,000 if you're married filing separately (which most married nonresident aliens must use). If you expect your wages or self-employment income to exceed these amounts, you must include the Additional Medicare Tax when calculating your estimated tax on line 12 of the worksheet. Your employer will withhold this tax on wages over $200,000, but you're responsible for paying it on self-employment income through your estimated tax payments.
What if I miss an estimated tax payment deadline—can I still pay late without penalty?
You should still make the payment as soon as possible, but you'll likely owe a penalty. The penalty is imposed on each underpayment for the number of days it remains unpaid, so paying late is better than not paying at all, as it stops the penalty from growing. The penalty may be waived under certain conditions—for example, if the underpayment was due to casualty, disaster, or unusual circumstances beyond your control, or if you retired or became disabled during the year. These waivers are detailed in Publication 505, chapter 4. When you file your annual return, you'll calculate the penalty on Form 2210 or the IRS will calculate it and send you a notice.
If I pay estimated tax but then file my annual return and discover I overpaid, how do I get my money back?
When you file Form 1040-NR for 2013, you'll report all your estimated tax payments in the payments section. If your total payments exceed your tax liability, the overpayment will show on your return. You can choose to have the IRS refund the overpayment to you—you can even split it among multiple bank accounts using direct deposit—or you can apply part or all of it to your 2014 estimated tax. The refund option typically results in the IRS depositing money in your account or mailing a check within a few months of processing your return. If you apply it to next year's estimated tax, that amount will be credited toward your first 2014 estimated payment.
Note: This summary is based on the 2013 version of Form 1040-ES (NR) and authoritative IRS sources. Tax laws change frequently. Always consult the current year's forms and instructions or seek advice from a qualified tax professional for your specific situation.
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