Form 1040-NR: U.S. Nonresident Alien Income Tax Return (2017)
What the Form Is For
Form 1040-NR is the tax return used by nonresident aliens—foreign nationals who don't meet the green card test or substantial presence test—to report income earned from U.S. sources and pay U.S. income tax. Unlike U.S. citizens and residents who must report worldwide income, nonresident aliens generally only report income from U.S. sources. The form handles two distinct types of income: income that's ""effectively connected"" with a U.S. trade or business (such as wages from a U.S. job) and income that's ""not effectively connected"" (such as investment dividends or interest). These two income types are taxed very differently, which is why the form has separate sections for each. Nonresident alien estates and trusts can also use this form, with modifications. If you're a foreign student, teacher, trainee, or business visitor who earned U.S. income, this is typically your required tax form.
When You'd Use It
You must file Form 1040-NR if you were a nonresident alien engaged in any U.S. trade or business during 2017—even if you had no income, no U.S. source income, or your income is exempt under a tax treaty. You also need to file if you're a nonresident alien who wasn't engaged in a U.S. business but received U.S. income where not all the tax was withheld at the source (like certain dividends or interest). Other filing triggers include owing special taxes (alternative minimum tax, additional IRA taxes, household employment taxes, or social security and Medicare taxes on unreported tips), receiving health savings account distributions, having self-employment earnings of at least $400 from work covered by a U.S. social security agreement, or having advance payments of the premium tax credit made on your behalf for health insurance purchased through the Marketplace.
For calendar year 2017, the deadline is April 17, 2018, if you received wages subject to U.S. withholding. If you didn't receive such wages, your deadline is June 15, 2018. Estates and trusts follow different schedules depending on whether they maintain a U.S. office. If you need more time, file Form 4868 by the original due date to get an automatic six-month extension, though this doesn't extend your time to pay any taxes owed.
Late or Amended Returns: If you miss the deadline, file as soon as possible. Late filing carries penalties of 5% of unpaid tax per month (up to 25%), and returns filed more than 60 days late face a minimum penalty of $210 or the full tax amount owed, whichever is smaller. To correct a mistake on a return you've already filed, use Form 1040X (Amended U.S. Individual Income Tax Return) within three years of the original filing date or two years from when you paid the tax, whichever comes later. You can track your amended return's status online using the IRS ""Where's My Amended Return"" tool, though it takes about three weeks to appear in the system.
Key Rules
The fundamental rule for nonresident aliens is that you're taxed only on U.S.-source income, divided into two categories with completely different tax treatments. Effectively connected income (ECI) includes wages, salaries, tips, business income, and certain rental income from U.S. activities or property. This income is taxed using the same graduated rates that apply to U.S. citizens and residents—ranging from 10% to 39.6% in 2017, depending on your income level and filing status. You can claim deductions and certain credits against this income, but only those properly connected to earning the income.
Income not effectively connected with a U.S. business—typically passive investment income like dividends, interest, royalties, and certain pensions—faces a flat 30% tax rate on the gross amount, with no deductions allowed. However, if your country of residence has an income tax treaty with the United States, you may qualify for a reduced rate or complete exemption on certain types of income. To claim treaty benefits, you must be a resident of the treaty country for tax purposes, not maintain a permanent establishment in the U.S. (unless allowed by the treaty), and properly report the benefit on your return, including completing Schedule OI (Other Information) and possibly filing Form 8833.
Your residency status determines which form you file. If you held a green card at any time during 2017 or met the substantial presence test (physically present in the U.S. for at least 31 days during 2017 and 183 days over a three-year period using a weighted formula), you're generally a resident alien and should file Form 1040, not Form 1040-NR. There are exceptions: you can be treated as a nonresident if you qualify as a resident of a treaty country and claim treaty benefits, or if you establish a closer connection to a foreign country where you maintained a tax home while present in the U.S. fewer than 183 days.
Unlike resident taxpayers, nonresident aliens generally cannot claim a standard deduction and face restrictions on exemptions. You can claim a personal exemption for yourself only if you're from certain countries (Canada, Mexico, South Korea, or if you're a U.S. national). Dependent exemptions for a spouse or children are similarly limited, primarily to residents of these same countries or students and apprentices from India covered by the U.S.-India tax treaty.
Step-by-Step (High Level)
Step One: Determine Your Status
Confirm you're truly a nonresident alien by reviewing the green card and substantial presence tests. If you qualify for the closer connection exception or claim treaty benefits that treat you as a nonresident, you'll need to document this.
Step Two: Gather Your Documents
Collect all Forms W-2 (for wages), Forms 1042-S (for income with tax withheld at source), Forms 1099 (for various types of income), and any other income documentation. If you're claiming treaty benefits, gather evidence of your foreign residency and review the applicable treaty provisions.
Step Three: Categorize Your Income
Separate your income into effectively connected income (reported on page 1 of Form 1040-NR) and income not effectively connected with a U.S. business (reported on page 4, Schedule NEC). If you received scholarship or fellowship grants, determine what portion, if any, is taxable.
Step Four: Calculate Effectively Connected Income and Deductions
Report wages, business income, rental income, and other ECI on the appropriate lines of page 1. Calculate your adjusted gross income by subtracting allowable adjustments like the deductible portion of self-employment tax, IRA contributions (if eligible), moving expenses, and student loan interest. Then itemize deductions on Schedule A if they exceed your allowable exemptions, but remember that only expenses connected to your ECI are deductible.
Step Five: Figure Your Tax on Effectively Connected Income
Subtract your exemptions from adjusted gross income to get taxable income, then use the tax tables or Tax Computation Worksheet to calculate your tax. This is where you'll use the graduated rates. Check if you owe alternative minimum tax by completing Form 6251 if your income and deductions suggest you might.
Step Six: Report Non-Effectively Connected Income
On Schedule NEC (page 4), list income like dividends, interest, and royalties under the appropriate tax rate columns: 30%, 15%, 10%, or other rates as applicable. If you're claiming a treaty exemption or reduced rate, identify the treaty article and place exempt amounts in the correct column. Calculate the flat-rate tax on this income.
Step Seven: Calculate Credits and Other Taxes
Determine if you qualify for any credits like the foreign tax credit (for foreign taxes paid on the same income), child tax credit, or credit for child and dependent care expenses. Add any additional taxes you owe, such as self-employment tax or the premium tax credit repayment.
Step Eight: Figure Payments and Refund or Amount Owed
Total all your federal tax withheld (from Forms W-2, 1042-S, etc.), estimated tax payments, and any credits. Compare this to your total tax liability. If you paid more than you owe, you'll receive a refund, which you can have directly deposited into your bank account or even split among multiple accounts. If you owe money, calculate the amount due and determine how to pay (check, money order, or electronic payment).
Step Nine: Complete Required Schedules
Fill out Schedule OI (Other Information) completely, answering all questions about your citizenship, visa status, days present in the U.S., and any treaty claims. This schedule is mandatory. Attach any other required forms like Schedule SE (for self-employment tax), Form 8962 (for premium tax credit reconciliation), or Form 8833 (for certain treaty-based positions).
Step Ten: Sign, Attach Documents, and File
Sign and date your return, enter your U.S. occupation, and attach copies of all Forms W-2, 1042-S, 1099-R (if tax was withheld), and other withholding statements to the front of your return. Mail your return to the appropriate IRS address based on whether you're including a payment, or e-file if you have access to software that supports Form 1040-NR.
Common Mistakes and How to Avoid Them
Name and Identification Errors: The most frequent mistake is entering incorrect names or identifying numbers for yourself, your spouse, or your dependents, or having mismatches between what you write and what appears on your Social Security card, Individual Taxpayer Identification Number (ITIN) notice, or other identification documents. Double-check every name and number against official documents. If you're married and claim married filing status, make sure your spouse's information is completely filled in.
Math Errors: Calculation mistakes in total income, itemized deductions, exemptions, taxable income, total tax, federal income tax withheld, and refund or amount owed are common and delay processing. Use the worksheets provided, double-check your addition and subtraction, and consider using tax software or a calculator to verify amounts. Pay special attention to the child tax credit calculation, which involves multiple steps.
Wrong Tax Computation Method: Using the wrong tax table or rate schedule for your filing status will produce an incorrect tax amount. Make sure you're using the correct column in the tax table or the right section of the Tax Computation Worksheet based on your filing status (single, married, qualifying widow(er)).
Missing Signatures and Information: Forgetting to sign and date your return or leaving out your U.S. occupation makes the return incomplete. Both are required. If someone else prepared your return, that person must also sign. Missing checkboxes—like the capital gain distribution box on line 14 when applicable, or the child tax credit box in column (4) of line 7c for qualifying children—also cause problems.
Incomplete or Missing Attachments: Failing to attach copies of Forms W-2, 1042-S, 1099-R (if tax was withheld), 8288-A, or other required documentation is a common error. Attach these to the front of your return. Also attach any required schedules and forms like Schedule SE, Form 8962, or Form 8833. If you received a corrected Form W-2c, attach both the original W-2 and the W-2c.
Treaty Claims Without Proper Documentation: Claiming treaty benefits without completing Schedule OI, Item L (including the treaty country, article number, months claimed in prior years, and amount of exempt income) or failing to file Form 8833 when required will cause the IRS to disallow or question your treaty claim. Read the treaty and Form 8833 instructions carefully to determine if disclosure is necessary.
Misreporting Income Types: Reporting effectively connected income on Schedule NEC or vice versa creates problems because the income is taxed at the wrong rate. If you performed services or operated a business in the U.S., that income is almost always effectively connected and belongs on page 1, not Schedule NEC. Similarly, passive investment income not related to a U.S. business belongs on Schedule NEC, not page 1.
Filing Multiple Returns for the Same Year: Some taxpayers, worried they haven't heard back or haven't received their refund, file a second original return. Don't do this—it creates confusion and delays. If you need to correct your return, file Form 1040X (an amended return), not a second Form 1040-NR.
To avoid these mistakes: work slowly and carefully, use the line-by-line instructions, keep a checklist of required attachments, verify all identification numbers, and review your completed return before mailing or e-filing. If your tax situation is complex, consider consulting a tax professional who specializes in nonresident taxation.
What Happens After You File
Once you mail your return or e-file, the IRS processes it and checks for errors, missing information, and math mistakes. For paper returns, you can generally check your refund status online at IRS.gov/Refunds using the ""Where's My Refund"" tool or the IRS2Go mobile app about four weeks after mailing. You'll need your Social Security number or ITIN, filing status, and exact refund amount. Information is updated once daily, usually overnight. If you don't have internet access and are in the U.S., call 800-829-1954 for automated refund information 24 hours a day.
If you're due a refund, the IRS will process your payment. Most refunds are issued within 21 days of e-filing or six weeks of mailing a paper return, provided there are no errors. However, refunds involving tax withheld and reported on Forms 1042-S, 8805, or 8288-A may take up to six months because these require additional verification. You can choose direct deposit—even split your refund among multiple accounts—or have a paper check mailed to your U.S. address or an address outside the United States.
If you owe tax, make sure to pay by the original due date to minimize interest and penalties. The IRS accepts payments by check, money order, or electronic methods (credit card, debit card, or direct debit from your bank account through IRS.gov/Payments). Even if you get an extension to file, it doesn't extend your time to pay—interest accrues on unpaid balances from the original due date.
The IRS may send you a notice or letter if they need additional information, find a discrepancy, make an adjustment to your return, or determine you owe additional tax, interest, or penalties. Don't ignore IRS correspondence. Read it carefully, respond by the deadline given, and keep copies of everything. Most issues can be resolved through mail or phone without requiring an in-person visit.
You don't need to calculate interest and penalties yourself—the IRS will compute these amounts if you owe them and send you a bill. Interest is charged on unpaid taxes from the due date, even if you received an extension. Late filing penalties run 5% per month of unpaid tax (up to 25%, or up to 75% if the failure is fraudulent). Late payment penalties are 0.5% per month of the unpaid amount (up to 25%). These penalties are in addition to interest charges.
Keep a copy of your filed return and all supporting documents for at least three years, which is generally how long you have to file an amended return or how long the IRS has to assess additional tax. In some situations—such as if you underreported income by more than 25% or failed to file—the IRS has longer to audit your return.
FAQs
Do I really need to file if my only income was wages and all the tax was withheld?
If you were an employee, your wages were less than $4,050, and you have no other reason to file (such as claiming a refund or credits), you may not be required to file. However, you should file if you want a refund of overwithheld taxes. Most nonresident aliens benefit from filing because they can recover excess withholding. If you had income effectively connected with a U.S. trade or business, the filing requirement generally applies regardless of the amount.
How do I know if I'm a resident alien or nonresident alien?
You're a resident alien for tax purposes if you held a green card (lawful permanent resident status) at any time during the year or if you meet the substantial presence test—physically present in the U.S. for at least 31 days during 2017 and a total of 183 days over 2015–2017 using a weighted formula (count all 2017 days, one-third of 2016 days, and one-sixth of 2015 days). If you don't meet either test, you're generally a nonresident alien. However, some people can choose to be treated as nonresidents by claiming a closer connection to a foreign country or treaty benefits.
Can I claim my spouse and children as dependents?
Generally, no—nonresident aliens cannot claim dependents unless they're residents of Canada, Mexico, or South Korea, or if they're U.S. nationals. There's also an exception for students and business apprentices from India under the U.S.-India tax treaty. If your spouse and children don't meet these criteria, you typically cannot claim exemptions for them, even if they rely on you for support.
What's the difference between effectively connected income and income that's not effectively connected?
Effectively connected income is income you earn from operating a trade or business in the United States or that you elect to treat as connected to U.S. business activities (such as rental income from U.S. real estate). This includes wages from a U.S. employer, business profits, and similar income. It's taxed using the same graduated rates that apply to U.S. citizens (10% to 39.6% for 2017), and you can claim deductions against it. Income not effectively connected is typically passive investment income—interest, dividends, royalties—from U.S. sources that isn't related to a U.S. business. This income is taxed at a flat 30% rate on the gross amount with no deductions, unless a tax treaty provides a lower rate or exemption.
How do I claim a tax treaty benefit?
First, verify that a treaty exists between your country of residence and the United States and that you qualify under its terms—you must generally be a treaty-country resident and not have a permanent establishment in the U.S. Review the specific treaty article that applies to your type of income (such as dividends, interest, or personal services). Report treaty-exempt income on line 22 of Form 1040-NR and complete Schedule OI, Item L, providing the country name, treaty article, number of months in prior years you claimed the benefit, and the exempt amount. For income taxed at a reduced treaty rate, report it on Schedule NEC in the appropriate rate column. If the treaty overrides U.S. tax law in a way that reduces your tax, you may also need to file Form 8833 disclosing your treaty-based position.
What if I discover a mistake after I've already filed?
File Form 1040X (Amended U.S. Individual Income Tax Return) to correct the error. You generally have three years from the date you filed the original return or two years from when you paid the tax (whichever is later) to file an amendment. Include an explanation of what you're changing and why. Attach any new or corrected forms and schedules. If the amendment results in additional tax owed, pay it when you file the amended return to minimize interest charges. You can track your amended return's status using the ""Where's My Amended Return"" tool at IRS.gov after about three weeks.
Can I e-file Form 1040-NR?
Yes, electronic filing is available for Form 1040-NR, though not all tax software programs support it. E-filing is faster, more accurate, and provides quicker refunds—typically within 21 days if you choose direct deposit. You'll receive an electronic acknowledgment that the IRS received your return. Check IRS.gov/Form1040NR for approved e-file providers or ask a tax professional who handles nonresident returns. If your software doesn't support e-filing for nonresidents, you'll need to mail a paper return.
Sources: All information in this summary is drawn exclusively from official IRS publications:
