Form 1040-ES (NR): U.S. Estimated Tax for Nonresident Alien Individuals – Your Complete Guide
If you're a nonresident alien earning income in the United States, you may need to pay taxes throughout the year rather than waiting until you file your annual return. Form 1040-ES (NR) helps you figure out and pay these estimated taxes. Think of it as making installment payments on your tax bill as you earn income, rather than facing a large payment at year-end.
What Form 1040-ES (NR) Is For
Form 1040-ES (NR) is specifically designed for nonresident aliens who need to calculate and pay estimated taxes on income earned in the United States during the tax year. The form serves as both a calculation worksheet and a payment voucher system.
Estimated tax is the method used to pay tax on income that isn't subject to withholding at the source. This includes earnings from self-employment, interest, dividends, rental income, alimony, and other sources. Even if you receive wages, you may still need to make estimated tax payments if the amount of income tax being withheld from your paycheck isn't sufficient to cover your total tax liability.
The form package includes worksheets to help you estimate your total tax liability for the year, calculate how much you've already paid through withholding, and determine how much you need to pay in quarterly installments. It also includes payment vouchers you can mail with your checks if you choose to pay by mail, though electronic payment options are now available and encouraged.
Unlike U.S. citizens and residents who use Form 1040-ES, nonresident aliens have special considerations. Your estimated tax calculations must account for two categories of income: income effectively connected with a U.S. trade or business (which is taxed at graduated rates similar to U.S. citizens) and income not effectively connected (typically taxed at a flat 30% rate or lower treaty rate if applicable).
When You’d Use Form 1040-ES (NR) (Including Late and Amended Payments)
You must use Form 1040-ES (NR) for 2024 if both of the following conditions apply: you expect to owe at least $1,000 in tax after subtracting your withholding and refundable credits, and you expect your withholding and refundable credits to be less than the smaller of either 90% of the tax shown on your 2024 return or 100% of the tax shown on your 2023 return (your 2023 return must cover all 12 months).
There's an important exception: you don't have to pay estimated tax if you were a U.S. citizen or resident alien for all of 2023 and you had no tax liability for the full 12-month 2023 tax year. Additionally, higher income taxpayers—those with adjusted gross income above $150,000 ($75,000 if married filing separately)—must substitute 110% for the 100% requirement when looking at their prior year's tax.
Regular Payment Schedule
For nonresident aliens who have wages subject to U.S. income tax withholding, estimated tax can be paid in four equal installments with deadlines of April 15, June 17, September 16, and January 15 of the following year. However, you don't have to make the January 15 payment if you file your Form 1040-NR by January 31 and pay the entire balance due with your return.
Alternative Payment Schedule (No Wages Subject to Withholding)
If you don't have wages subject to withholding, you can pay all your estimated tax by June 17, or you can make three installments: half by June 17, one-quarter by September 16, and one-quarter by January 15.
Amending Your Estimated Tax
Life circumstances change, and your income may turn out higher or lower than expected. To amend your estimated tax payments, you simply refigure your total estimated tax using the worksheet. Then calculate what you still owe for remaining payment periods. If an earlier payment was less than one-fourth of your revised estimated tax, you may face a penalty when you file, but making corrected payments for future quarters can help minimize additional penalties.
Late Payments
The IRS doesn't send reminders about estimated tax payment due dates—you must track and make payments yourself. If your payments are late or insufficient, you may be charged an underpayment penalty calculated based on how late the payment was and how much was underpaid.
Key Rules and Requirements for 2024
Filing Status and Tax Rates
Nonresident aliens generally cannot file jointly unless specific elections are made. Most married nonresident aliens must use Tax Rate Schedule Y (married filing separately) unless exceptions apply, such as when married to a U.S. citizen or resident and electing to be treated as a U.S. resident.
The 90% / 100% / 110% Rule
This is perhaps the most important rule to understand. To avoid penalties, your estimated tax payments plus withholding must equal at least the smaller of: 90% of your current year's tax liability, or 100% of your prior year's tax (110% if your prior year AGI exceeded $150,000/$75,000). Meeting either threshold generally protects you from underpayment penalties.
Income Types: Effectively Connected vs. Other U.S. Income
You must separate your income into two categories. Income effectively connected with a U.S. trade or business is taxed at graduated rates (the same progressive tax brackets that apply to U.S. citizens). Income not effectively connected with a U.S. trade or business is typically taxed at a flat 30% rate, though tax treaties may provide lower rates for certain types of income.
Special Rules for Certain Groups
Farmers and fishermen who receive at least two-thirds of their gross income from farming or fishing can substitute 66⅔% for 90% in the calculation and may have different payment deadlines. Dual-status aliens (those who change status during the year) have special rules outlined in Publication 519. Nonresident aliens engaged in a trade or business in the United States are generally considered to meet the estimated tax requirements even if they're students, teachers, or trainees on F, J, M, or Q visas.
Self-Employment Tax
If you're self-employed, you must include self-employment tax in your estimated tax calculations. For 2024, the maximum amount of earnings subject to Social Security tax is $168,600. You calculate self-employment tax on 92.35% of your net profit from self-employment, and you can deduct one-half of this self-employment tax when figuring your adjusted gross income.
Identification Requirements
You must have either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) to file. If you don't have and aren't eligible for an SSN, you must apply for an ITIN using Form W-7. If you're filing for a trust or estate, you'll need the Employer Identification Number (EIN).
Step-by-Step (High Level)
Step 1: Estimate Your Income
Begin by estimating all income you expect to receive during 2024 that's effectively connected with a U.S. trade or business. Use your 2023 tax return as a starting point, but adjust for any expected changes. Include wages, self-employment income, interest, dividends, rental income, and any other taxable sources. Don't forget to consider only income effectively connected to U.S. activities.
Step 2: Calculate Deductions and Credits
Determine your expected itemized deductions (nonresident aliens can only claim itemized deductions if they have effectively connected income, and generally cannot claim the standard deduction except in limited situations). Calculate any credits you expect to claim, such as the child tax credit or foreign tax credit. Also account for the qualified business income deduction (Section 199A) if applicable.
Step 3: Figure Your Estimated Tax
Using the 2024 Tax Rate Schedules included with Form 1040-ES (NR), calculate your expected tax on effectively connected income. Add any alternative minimum tax, self-employment tax, and other taxes that apply to your situation. If you have income not effectively connected with a U.S. trade or business, multiply that income by 30% (or the applicable treaty rate) and add it to your total estimated tax.
Step 4: Determine Your Required Payment
Subtract the credits you expect to claim and the tax you expect to be withheld from wages or other sources. The result is your estimated tax due. Compare this to 90% of your expected 2024 tax and 100% (or 110%) of your 2023 tax. Your required annual payment is generally the smaller of these amounts.
Step 5: Calculate Quarterly Payments
If your required payment is $1,000 or more, divide your required annual payment into four equal installments (or three installments if you don't have wages subject to withholding and are using the alternative schedule). Adjust for any overpayment from 2023 that you're applying to 2024 estimated tax.
Step 6: Make Your Payments
The IRS strongly encourages electronic payments through IRS Direct Pay, your online IRS account, EFTPS (Electronic Federal Tax Payment System), credit or debit card, or the IRS2Go mobile app. If you prefer to pay by check or money order, complete the appropriate payment voucher included with Form 1040-ES (NR), make your check payable to "United States Treasury," write "2024 Form 1040-ES (NR)" and your SSN or ITIN on the check, and mail it to the address provided in the instructions (generally P.O. Box 1303, Charlotte, NC 28201-1303).
Step 7: Keep Records
Use the Record of Estimated Tax Payments table included with the form to track all payments made, including the dates, amounts, payment methods, and any overpayment credits applied. These records will be essential when you file your annual Form 1040-NR.
Common Mistakes and How to Avoid Them
Mistake #1: Mixing Up Effectively Connected Income With Other Income
Many nonresident aliens incorrectly calculate their estimated tax by not properly separating income types. Income effectively connected with a U.S. trade or business is taxed at graduated rates and allows deductions, while other U.S. source income is typically taxed at a flat 30% with no deductions. Solution: Carefully review the definitions in Publication 519 and categorize each income source correctly before calculating your estimated tax.
Mistake #2: Forgetting You Can't File Jointly
Nonresident aliens generally cannot file joint returns or make joint estimated tax payments, even if married. Solution: Unless you qualify for and elect one of the special treatments (such as electing to be treated as a U.S. resident when married to a U.S. citizen or resident), you must file separately and make separate estimated tax payments.
Mistake #3: Underestimating Self-Employment Tax
Self-employed nonresident aliens often calculate income tax correctly but forget to include self-employment tax in their estimated tax calculations. Solution: Use the Self-Employment Tax and Deduction Worksheet included with Form 1040-ES (NR) to properly calculate both your self-employment tax and the deduction for one-half of that tax.
Mistake #4: Missing Payment Deadlines
The IRS doesn't send reminder notices for estimated tax payments. Solution: Set calendar reminders for April 15, June 17, September 16, and January 15. Consider making electronic payments, which can be scheduled in advance through EFTPS, or pay more frequently if that works better for your cash flow—you can make payments as often as you like as long as the required amount is paid by each quarter's deadline.
Mistake #5: Applying the Wrong Prior-Year Percentage
Higher-income taxpayers must use 110% of their prior year's tax, not 100%. Solution: Before calculating your required payment based on prior year's tax, check whether your 2023 adjusted gross income exceeded $150,000 ($75,000 if married filing separately). If it did, multiply your 2023 tax by 110% when using the prior-year method.
Mistake #6: Not Adjusting When Circumstances Change
Many taxpayers calculate estimated tax in January based on expected income and never revise it, even when their actual income differs substantially. Solution: Review your estimated tax situation each quarter. If your income is higher or lower than expected, refigure your estimated tax and adjust your remaining payments accordingly.
Mistake #7: Failing to Account for Withholding
If you have wages with tax withheld, that counts toward your estimated tax requirement. Some people make full estimated tax payments without reducing them for withholding, essentially overpaying. Solution: Track how much federal tax is being withheld from your paychecks and reduce your estimated tax payments by this amount. Alternatively, you might be able to increase withholding from your wages instead of making estimated tax payments.
What Happens After You File (and Pay)
Record Keeping
After making your estimated tax payments, keep detailed records of all payments including dates, amounts, confirmation numbers for electronic payments, and check numbers for mailed payments. The Record of Estimated Tax Payments table provided with Form 1040-ES (NR) is an excellent tool for this purpose. You'll need this information when filing your annual Form 1040-NR.
Annual Reconciliation
When you file your 2024 Form 1040-NR (generally due April 15, 2025, if you receive wages subject to withholding, or June 15, 2025, if you don't), you'll report your total estimated tax payments for the year. The IRS will compare your total payments (estimated tax plus withholding) against your actual tax liability. If you paid more than you owe, you'll receive a refund or can apply the overpayment to your 2025 estimated tax. If you paid less than you owe, you'll need to pay the remaining balance.
Penalty Assessment
Even if you receive a refund, you may owe an underpayment penalty if you didn't pay enough estimated tax during the year or didn't make payments on time. The penalty is calculated separately for each payment period and is based on the interest rate for underpayments, which changes quarterly. The penalty accrues from the payment due date until either the amount is paid or the tax return due date, whichever comes first.
Form 2210 Calculation
If you underpaid your estimated tax, the IRS will generally calculate the penalty for you and send you a bill. However, you can calculate it yourself using Form 2210 (Underpayment of Estimated Tax by Individuals, Estates, and Trusts) and include it with your return. You must use Form 2210 if you're using the annualized income installment method, which can reduce or eliminate penalties if your income was received unevenly during the year.
Penalty Waivers
Some penalties may be waived if you meet certain conditions. The penalty may be waived if your underpayment was due to a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or if you retired after age 62 or became disabled during 2024 or 2023 and your underpayment was due to reasonable cause rather than willful neglect. To request a waiver, see the Instructions for Form 2210.
Payment Options for Remaining Balance
If you owe additional tax when you file your return, you can pay electronically, by check, or request an installment agreement if you cannot pay the full amount immediately. Keep in mind that interest and penalties continue to accrue on unpaid balances. If you anticipate difficulty paying, consider contacting the IRS to discuss payment options rather than ignoring the debt.
Applying Overpayments
If you overpaid your 2024 estimated tax, you can choose to receive a refund or apply the overpayment to your 2025 estimated tax. Many taxpayers find it convenient to apply overpayments to the next year, effectively making their first 2025 estimated tax payment early. However, once you file your return with this election, you cannot change your mind and request a refund of that amount.
FAQs
Do I need to make estimated tax payments if my employer withholds federal tax from my paycheck?
It depends on whether the withholding is sufficient. Calculate your expected total tax liability for the year using Form 1040-ES (NR). If your withholding plus any planned estimated tax payments will be less than 90% of your current year's tax or 100% of your prior year's tax (whichever is smaller), you should make estimated tax payments. Alternatively, you can file a new Form W-4 with your employer to increase your withholding instead of making estimated tax payments—this often simplifies things because withholding is considered paid evenly throughout the year for penalty calculation purposes.
What happens if I pay estimated tax but then my actual income is much lower than I expected?
If you overestimate your income and pay too much estimated tax, you'll receive a refund when you file your annual return. You can also recalculate your estimated tax during the year and reduce or eliminate remaining quarterly payments. If your income drops significantly during the year, recalculate as soon as possible to avoid unnecessarily tying up your money in excess estimated tax payments. Remember to keep documentation showing when and why you adjusted your estimates.
Can I make estimated tax payments more frequently than quarterly?
Absolutely. While the IRS provides for four quarterly payment periods, you can make payments as often as you like—weekly, monthly, or any schedule that suits your cash flow. This is particularly helpful for self-employed individuals with variable income. Just ensure that the total amount paid by each quarterly deadline meets the required amount for that period. Electronic payment methods like EFTPS make frequent payments easy to manage.
What if I discover I should have been making estimated tax payments but didn't start until mid-year?
You can start making estimated tax payments at any time. Calculate your total required annual payment, subtract any tax already withheld, and divide the remaining amount among the payment periods that haven't passed yet. While you may face a penalty for underpaying early in the year, making proper payments for the remaining quarters will limit additional penalties. If your income is received unevenly throughout the year, you may be able to reduce penalties by using the annualized income installment method on Form 2210.
I'm a student on an F-1 visa receiving scholarship income. Do I need to pay estimated tax?
It depends on the nature of your scholarship and whether you have other income. Qualified scholarships used for tuition, fees, books, and required supplies are generally not taxable. However, amounts received for room, board, or services (such as teaching or research) are taxable income effectively connected with a U.S. trade or business. If you have taxable scholarship income, income from on-campus employment, or other U.S. source income and expect to owe $1,000 or more after withholding, you should make estimated tax payments. Many students don't realize that even temporary presence in the U.S. on a student visa makes them subject to estimated tax requirements if they have sufficient taxable income.
If I leave the United States permanently during the year, do I still need to make estimated tax payments?
Yes, you still need to settle your U.S. tax obligations. Before departing, you'll need to obtain a sailing permit (certificate of compliance) by filing Form 1040-C or Form 2063. You'll also need to file an annual Form 1040-NR for the year you leave. If you have U.S. source income after your departure, you may still need to make estimated tax payments for income received after leaving. The rules for departing aliens are complex, so consider consulting with a tax professional if you're planning to leave the United States permanently.
What's the difference between Form 1040-ES (NR) and Form 1040-NR?
Form 1040-ES (NR) is used throughout the year to calculate and pay estimated taxes in quarterly installments—it's a planning and payment tool. Form 1040-NR is your actual annual income tax return filed after the year ends, where you report all your income, deductions, credits, and reconcile your estimated tax payments and withholding against your actual tax liability. Think of Form 1040-ES (NR) as making deposits toward your tax bill throughout the year, while Form 1040-NR is the final accounting of what you actually owe.
This summary is based on information from IRS.gov, including Form 1040-ES (NR), Publication 519 (U.S. Tax Guide for Aliens), Publication 505 (Tax Withholding and Estimated Tax), and guidance on Estimated Taxes and Taxation of Nonresident Aliens. For the most current information and specific guidance for your situation, always consult the latest IRS publications or a qualified tax professional.
