Form 1040-NR: U.S. Nonresident Alien Income Tax Return (2015)

What Form 1040-NR Is For

Form 1040-NR is the tax return that nonresident aliens use to report their U.S. income and calculate the taxes they owe to the federal government. If you're not a U.S. citizen or green card holder and you 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), you're typically considered a nonresident alien for tax purposes.

Unlike U.S. citizens and residents who must report their worldwide income, nonresident aliens generally only report income from U.S. sources. The form handles two main categories of income differently: income that's ""effectively connected"" with a U.S. trade or business (like wages from a U.S. employer or income from operating a business in the U.S.), which is taxed at graduated rates similar to what U.S. residents pay, and income that's not effectively connected (like certain investment income, dividends, or interest), which is typically taxed at a flat 30% rate unless reduced by a tax treaty between your country and the United States.

The form also serves to claim refunds when too much tax was withheld from your income, to report various credits you may qualify for, and to disclose important information about your presence in the United States and any tax treaty benefits you're claiming. Whether you worked temporarily in the U.S., received scholarships, earned rental income from U.S. property, or had other U.S.-sourced earnings, Form 1040-NR is your primary tax filing document.

When You’d Use Form 1040-NR (Including Late and Amended Returns)

Who Must File for 2015

For the 2015 tax year, you must file Form 1040-NR if you were a nonresident alien engaged in a trade or business in the United States at any point during the year—even if you had no income, no U.S. source income, or your income was completely exempt under a tax treaty. You also must file if you were a nonresident not engaged in a trade or business but had U.S. source income that wasn't fully taxed through withholding, or if you owe special taxes like self-employment tax, alternative minimum tax, or household employment taxes.

Filing Deadlines and Extensions

The regular filing deadline depends on your situation. If you received wages subject to U.S. income tax withholding, your return was due by April 18, 2016 (the 15th day of the fourth month after the tax year ended; the deadline was April 18 instead of April 15 due to the Emancipation Day holiday in Washington, D.C.). If you didn't receive such wages, you had until June 15, 2016 (the 15th day of the sixth month).

If you couldn't meet these deadlines, you could file Form 4868 for an automatic six-month extension to file—but this extension doesn't give you more time to pay any tax you owe, and interest and penalties will accrue on unpaid balances.

Amended Returns (Correcting a Prior Filing)

For amended returns, use Form 1040X if you need to correct a previously filed Form 1040-NR. You generally have three years from the date you filed your original return or two years from the date you paid the tax (whichever is later) to file an amended return and claim a refund. Special exceptions extend this timeframe for people in federally declared disaster areas or those who are physically or mentally unable to manage their financial affairs.

Key Rules and Concepts for Nonresident Filers (2015)

Residency Status and Dual-Status Years

Understanding your residency status is crucial—the green card test and substantial presence test determine whether you're a resident or nonresident alien. Even if you meet one of these tests, you might still be treated as a nonresident if you're a resident of a treaty country and claim treaty benefits.

Some people experience ""dual-status"" years when they change from nonresident to resident status (or vice versa) during the year, typically in years of arrival or departure from the U.S.

Types of Income and How They’re Taxed

Income categorization matters significantly. You must separate your income into three categories:

• Effectively connected income (ECI) – goes on page one of Form 1040-NR and is taxed at regular graduated rates.
• Income not effectively connected with a U.S. trade or business – goes on Schedule NEC and is typically taxed at a flat 30%.
• Income that’s exempt from U.S. tax – often due to tax treaty provisions.

Getting this wrong can result in paying more tax than necessary or facing penalties.

Filing Status and Dependents

Your filing status options as a nonresident alien are more limited than for U.S. residents. You cannot file jointly or as head of household unless you're a resident of Canada, Mexico, or South Korea, or you're a U.S. national. Most nonresident aliens file as single or, if married, married filing separately.

You can only claim certain dependents and exemptions, and many credits available to U.S. residents aren't available to nonresident aliens.

Identification Numbers (SSN, ITIN, EIN)

Identification numbers are mandatory. You must have either a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), or for estates and trusts, an Employer Identification Number (EIN). If you don't have one and are eligible for an SSN, apply for it before filing. If you're not eligible for an SSN, apply for an ITIN using Form W-7.

Tax Treaty Benefits and Form 8833

Tax treaty benefits require proper documentation. If your country has a tax treaty with the United States that reduces or eliminates tax on certain types of income, you must claim these benefits on Schedule OI (Other Information) and may need to file Form 8833 for certain treaty positions. You must be a resident of the treaty country as defined by that specific treaty and cannot have a permanent establishment or fixed base in the U.S.

Step-by-Step Filing Process (High Level)

Step 1: Gather Documents

Start by gathering all necessary documents:

• Forms W-2 from employers
• Forms 1042-S showing U.S. tax withheld at source
• Forms 1099 for various types of income
• Any other income statements
• Documentation of deductible expenses
• Proof of any tax treaty benefits you're claiming

Step 2: Complete the Top of Page 1 (Personal Info & Filing Status)

Begin filling out the form with your personal information at the top of page one: your name, current address, and identifying number (SSN or ITIN). Check whether you're filing as an individual, estate, or trust.

Select your filing status from boxes 1 through 6, remembering that most nonresident aliens will check box 1 (single) or boxes 3-5 (married resident of certain countries or other married nonresident).

Complete the exemptions section by:

• Checking box 7a for yourself (unless someone can claim you as a dependent)
• Checking 7b for your spouse if applicable
• Listing qualifying dependents in section 7c

Step 3: Report Effectively Connected Income (Page 1)

Report all effectively connected income on lines 8 through 22. This includes:

• Wages (line 8)
• Interest and dividends (lines 9–10)
• Business income (line 13)
• Capital gains (line 14)
• Rental income (line 18)
• Other categories of ECI

Remember to attach supporting schedules like:

• Schedule C for business income
• Schedule D for capital gains

If you have income exempt by treaty, enter it on line 22 but reference Schedule OI where you provide details. Calculate your total effectively connected income on line 23.

Step 4: Adjustments and Adjusted Gross Income

Work through adjustments to income on lines 24–35, which might include:

• Educator expenses
• Health savings account deductions
• Moving expenses
• Self-employment tax deduction
• IRA contributions
• Student loan interest

Subtract total adjustments (line 35) from total income (line 23) to get your adjusted gross income (AGI) on line 36.

Step 5: Deductions, Exemptions, and Tax Calculation (Page 2)

Move to page two to calculate your tax:

• Enter your AGI on line 37.
• Enter itemized deductions from Schedule A on line 38 (or take the standard deduction if more beneficial, where allowed).
• Enter the deduction for exemptions on line 40.

Subtract these from your AGI to get taxable income on line 41.

Calculate your tax using:

• The tax table, or
• Tax computation worksheet, or
• Qualified Dividends and Capital Gain Tax Worksheet, or
• Schedule D Tax Worksheet

as appropriate, and enter on line 42. Then add any alternative minimum tax or excess advance premium tax credit repayment.

Step 6: Credits and Additional Taxes

Claim eligible credits on lines 46–51, such as:

• Foreign tax credit
• Child and dependent care expenses credit
• Retirement savings contributions credit
• Child tax credit

(keeping in mind that nonresident aliens have more limited credit options).

Calculate additional taxes on lines 54–60, including:

• Tax on income not effectively connected with a U.S. trade or business from Schedule NEC (line 54)
• Self-employment tax (line 55)
• Any other additional taxes

Total your tax liability on line 61.

Step 7: Payments, Refunds, or Amount You Owe

Complete your payments section on lines 62–70 by entering:

• All federal income tax withheld from W-2s, 1099s, and 1042-S forms
• Any estimated tax payments you made during the year
• Other credits or payments

Total these on line 71.

• If this amount exceeds your total tax (line 61), you have a refund.
• If it's less, you owe additional tax.

Step 8: Schedules NEC and OI

Complete Schedule NEC (page 4) if you have income not effectively connected with a U.S. trade or business, entering amounts in the appropriate tax rate columns (10%, 15%, 30%, or other treaty rates).

Complete Schedule OI (page 5) by answering all questions about your:

• Citizenship
• Visa status
• Dates of U.S. presence
• Any tax treaty benefits

This schedule is mandatory for all filers.

Step 9: Sign, Attach Documents, and Mail

Before mailing:

• Sign and date your return.
• Enter your U.S. occupation.
• If filing jointly where allowed, your spouse must also sign.

Attach all supporting documents in order:

• Forms W-2, 1042-S, etc. to the left margin of page one
• All schedules (A, C, D, E, F, SE, etc.) behind the main form

Mail to the appropriate IRS address (different for returns with and without payments—see the instructions for current addresses). If claiming a refund, consider direct deposit for faster payment.

Common Mistakes and How to Avoid Them

Identification and Personal Info Errors

Incorrect or missing identification numbers for you, your spouse, or dependents is one of the most frequent errors. Before filing, verify that names and numbers match official documents exactly—Social Security cards, ITIN assignment letters, or other identification. For children claimed for the child tax credit, ensure you've checked the box in column 4 of line 7c.

Address errors can also cause refund checks and IRS correspondence to go astray. Ensure your mailing address is complete and accurate, including apartment numbers. If you want your refund check sent to an address different from what's shown on page one, complete line 73e.

Math and Tax Computation Mistakes

Mathematical errors can delay processing. Double-check all calculations, particularly:

• Total income
• Itemized deductions
• Exemptions
• Taxable income
• Total tax
• Refund or amount owed

Many filers use the wrong tax computation method. The instructions for line 42 specify whether to use:

• The tax table
• Tax Computation Worksheet
• Qualified Dividends and Capital Gain Tax Worksheet
• Schedule D Tax Worksheet

Using the wrong method can significantly affect your tax liability.

Missing Boxes, Forms, or Attachments

Forgetting to check the box on line 14 when you received capital gain distributions but weren't required to file Schedule D is a common oversight.

Not attaching required forms and schedules is another frequent problem. Make sure you:

• Attach Forms W-2, 1042-S, etc. to page one
• Attach all completed schedules (Schedule A, C, D, etc.) in the proper order

Missing attachments will delay processing.

Signature and Duplicate Filing Problems

Missing signatures invalidate returns. Both you and your spouse (if filing as married where allowed) must sign and date the return. Also remember to enter your occupation in the United States in the signature area. If someone prepared your return for pay, they must also complete and sign the paid preparer section.

Filing duplicate returns for the same year causes significant processing delays. If you haven't received your refund or haven't heard from the IRS, don't file another original return—use the IRS's ""Where's My Refund"" tool online or call the IRS instead.

What Happens After You File

IRS Processing and Refund Timing

Once you mail your Form 1040-NR, the IRS begins processing it. For paper returns, information about your return is generally available within four weeks.

You can check your refund status using the ""Where's My Refund"" tool on IRS.gov or the IRS2Go mobile app, available 24/7. You'll need:

• Your Social Security Number or ITIN
• Your filing status
• The exact dollar amount of your expected refund

Standard refunds are typically issued within a few weeks of processing, either by direct deposit (fastest) or paper check.

If you're claiming a refund of tax withheld and reported on Form 1042-S, Form 8805, or Form 8288-A, processing requires additional time and verification—allow up to six months for these refunds to be issued.

If You Owe Tax

If you owe tax, you should pay by the filing deadline to avoid interest and penalties. You can pay:

• By check or money order
• Electronically through IRS Direct Pay
• Through EFTPS
• By credit/debit card (fees apply)

Include all required information on your payment and mail it with your return to the payment address shown in the instructions.

Interest and Penalties

Interest charges begin accruing on any unpaid tax from the original due date of the return, even if you got an extension to file. The IRS calculates interest daily using the federal short-term rate plus three percentage points, and it compounds daily. The IRS will send you a bill showing interest owed.

Penalties may apply for late filing or late payment:

• Late filing penalty: typically 5% of the unpaid tax for each month or part of a month your return is late, up to 25% (or 75% if the failure is fraudulent). If more than 60 days late, there's a minimum penalty of $135 or the amount of tax owed, whichever is smaller.
• Late payment penalty: generally 0.5% of unpaid tax per month, up to 25%, in addition to interest.

If you have a reasonable explanation for filing late, include it with your return—the IRS may waive penalties.

IRS Notices and Your Rights

If the IRS finds an error or has questions about your return, they'll send you a notice by mail. Always respond promptly and keep copies of all correspondence.

If you disagree with any IRS determination, you have appeal rights explained in the notice. For significant issues, consider consulting a tax professional who specializes in nonresident alien taxation.

FAQs About Form 1040-NR (2015)

Do I need to file if I'm an international student with only scholarship income?

It depends on your specific situation. If you're temporarily present on an F, J, M, or Q visa and substantially comply with your visa requirements, you may be an ""exempt individual"" for the substantial presence test. However, you must file Form 1040-NR if you were engaged in a trade or business in the U.S. (which includes most on-campus employment), or if you had U.S. source income that wasn't fully taxed through withholding. Many students must file to report scholarship income (especially amounts exceeding tuition and fees) or to claim refunds of withheld taxes. You may also need to file Form 8843 to exclude days of presence. Review Table A in the instructions to determine your filing obligation.

What's the difference between effectively connected income and other U.S. income, and why does it matter?

Effectively connected income (ECI) is income tied to conducting a trade or business in the United States—this includes wages from U.S. employment, income from operating a business in the U.S., and certain investment income when you elect to treat it as effectively connected. ECI is taxed at graduated rates (the same rates U.S. citizens and residents pay), ranging from 10% to 39.6% depending on your income level, and you can claim deductions against it.

Income not effectively connected (NEC) includes most passive investment income like dividends, interest, and royalties from U.S. sources—this is taxed at a flat 30% rate (or lower treaty rate) with no deductions allowed. Getting the classification right is crucial because it determines your tax rate and available deductions.

My country has a tax treaty with the U.S. How do I claim treaty benefits?

To claim tax treaty benefits, you must be a resident of the treaty country as defined in that specific treaty. Complete Schedule OI, Item L, identifying:

• The country
• The specific treaty article you're claiming under
• The number of months in prior years you claimed benefits
• The amount of exempt income

Enter treaty-exempt income on line 22 of Form 1040-NR. For certain treaty positions, you must also file Form 8833 (Treaty-Based Return Position Disclosure). You can find complete texts of U.S. tax treaties at IRS.gov by searching ""tax treaties,"" and Publication 901 provides a quick reference guide.

I arrived in the U.S. in June 2015 and became a resident in November. How do I file?

You're a dual-status taxpayer, which means different rules apply to different parts of your tax year. If you were a U.S. resident on December 31, 2015, file Form 1040 as your main return and write ""Dual-Status Return"" across the top. Attach a statement (you can use Form 1040-NR as this statement) showing your income for the part of the year you were a nonresident.

Report income earned or received during your nonresident period on this statement according to nonresident rules, and income from your resident period on Form 1040 according to resident rules. The instructions provide specific guidance on dual-status filing, including which address to use and how to handle deductions and exemptions for each period.

Can I file Form 1040-NR electronically, or must I mail a paper return?

For the 2015 tax year, most nonresident aliens had to file paper returns because electronic filing options for Form 1040-NR were very limited. Unlike Form 1040 for residents, which could be e-filed through various commercial software programs, Form 1040-NR required physical mailing to the IRS addresses specified in the instructions (different addresses depending on whether you included payment). Make sure to keep copies of everything you mail and consider using certified mail with return receipt requested for proof of filing.

What if I don't have a Social Security Number and can't get one?

If you're not eligible for a Social Security Number (SSN), you must apply for an Individual Taxpayer Identification Number (ITIN) using Form W-7, Application for IRS Individual Taxpayer Identification Number. Submit Form W-7 along with your completed tax return and documentation proving your identity and foreign status (such as a passport).

You can apply through an IRS Taxpayer Assistance Center, an IRS-authorized Certifying Acceptance Agent, or by mail. The ITIN is for tax use only and doesn't authorize you to work in the U.S. or make you eligible for Social Security benefits. Once issued, use your ITIN wherever Form 1040-NR requests an identifying number. Note that ITINs expire if not used on a tax return for three consecutive years, so you may need to renew it.

If I overstay my visa or my status expires, does that change my tax filing requirements?

Your tax status and filing requirements are based on your physical presence and activities in the U.S., not your immigration status. Even if your visa expires or you overstay, you still have tax obligations. You may still be considered a nonresident alien (or you might become a resident alien if you meet the substantial presence test).

Regardless of immigration status, you must file Form 1040-NR if you meet the filing requirements in Table A—particularly if you engaged in a trade or business in the U.S. or had U.S. source income. Failing to file doesn't resolve immigration problems and creates additional tax problems. Consider consulting both an immigration attorney and a tax professional familiar with nonresident taxation to address both issues properly.

Sources

All information in this guide is sourced from official IRS publications available at IRS.gov, including the 2015 Form 1040-NR instructions and the form itself. For the most current information and additional details, visit www.irs.gov/form1040nr or consult IRS Publication 519, U.S. Tax Guide for Aliens.

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