IRS Form 1040-EZ (NR) (2019): Nonresident Alien Individuals

What IRS Form 1040-EZ (NR) (2019) Is For

IRS Form 1040-EZ (NR) (2019) is used by a nonresident alien who must report taxable income earned in the United States for tax purposes. The form helps individuals determine federal income tax owed on effectively connected income and certain types of source income received from a foreign country or within the United States. It allows filers to submit a simplified tax return to the Internal Revenue Service when their income, deductions, and filing requirements meet the limits set for this short-form filing option.

When You’d Use IRS Form 1040-EZ (NR) (2019)

You would use this form in situations where the Internal Revenue Service requires simplified reporting for certain nonresident aliens.

1. Meeting nonresident alien criteria: This form is used when an individual qualifies as a nonresident alien and must file a federal return without meeting the substantial presence test during the three-year period.
   
   
2. Having U.S. source income taxed at graduated rates: A filer uses this form when earning income that is taxed under graduated rates and is not eligible for worldwide income reporting requirements.
   
   
3. Not qualifying as a resident alien under statutory rules: This form applies when a person does not qualify as a resident alien under the green card test or substantial presence test for the current calendar year.
   
   
4. Filing independently without a joint return option: A filer uses this form when unable to file a joint return with a spouse because joint filing is not permitted for most nonresident aliens.
   
   
5. Meeting annual filing requirements for certain temporary visa holders: This form is used by students or employees who must file a return for wages earned in the United States while maintaining nonresident tax status.

Key Rules or Details for IRS Form 1040-EZ (NR) (2019)

Several rules determine how a filer must report income and calculate taxes on this form.

1. Taxation based on effectively connected income: A filer must report only effectively connected income that is tied to a U.S. trade or business when determining taxable income and overall tax liability.
   
   
2. Flat taxation on FDAP income, such as interest and dividends: A filer must pay taxes on FDAP income at fixed rates unless a lower treaty rate applies under an agreement between the United States and the filer’s country.
   
   
3. No standard deduction available for most nonresident aliens: A filer cannot claim the standard deduction except in limited treaty-based circumstances, which affects how deductions are calculated.
   
   
4. Requirement to report U.S. source income only instead of worldwide income: A nonresident filer reports only income sourced within the United States rather than worldwide income, which applies to residents and citizens.
   
   
5. Possibility of treaty-based reduced rates on certain types of income: A filer may apply a lower treaty rate when permitted by an applicable agreement, which can reduce taxes on interest, dividends, capital gains, or other income categories.

Step-by-Step (High Level)

The process for completing IRS Form 1040-EZ (NR) (2019) follows a precise sequence that helps determine proper reporting and tax calculation.

1. Gathering personal information and confirming nonresident status: A filer begins by verifying nonresident status under the Internal Revenue Service rules and collecting identification documents for accurate reporting.
   
   
2. Identifying income subject to U.S. taxation for the current calendar year: A filer reviews wages or other income earned in the United States to determine the specific amounts that are taxable.
   
   
3. Calculating taxable income using the Internal Revenue Service instructions: A filer subtracts allowable adjustments and uses the instructions to calculate taxable income correctly.
   
   
4. Determining tax liability using graduated rates and relevant schedules: A filer uses the IRS tax tables to figure the exact amount of federal income tax owed for the current year.
   
   
5. Reporting withholding and estimating any remaining tax to pay: A filer enters withholding from paychecks and calculates any additional estimated tax payment that may be required.
   
   
6. Submitting the form with accurate dates and confirming filing requirements: A filer submits the completed form by the proper due dates and verifies that all filing requirements for the following year have been met.

Common Mistakes and How to Avoid Them

Many filers make errors that affect the accuracy of their tax return and may lead to penalties.

• Misclassifying tax status as a resident alien instead of a nonresident alien: This mistake can be avoided by reviewing the Internal Revenue Service rules to determine whether the individual was physically present in the United States for a sufficient period to meet the residency tests.
  
  
• Failing to report effectively connected income from U.S. sources: This error can be avoided by confirming that all U.S. source income is included, especially income linked to work or business activities.
  
  
• Ignoring withholding errors that cause underpayment or penalties: This mistake can be avoided by checking pay statements to ensure that the correct amount of income taxes was withheld during the year.
  
  
• Using incorrect deduction assumptions for nonresident aliens: This error can be avoided by following the IRS instructions, which state that most nonresident aliens are not eligible to claim the standard deduction.
  
  
• Missing filing requirements for students or employees on temporary visas: This mistake can be avoided by reviewing the specific rules that apply to students and temporary workers who must still file a return based on income earned in the United States.

What Happens After You File

After the form is submitted, the Internal Revenue Service reviews the information to confirm whether the filer paid the correct amount of taxes for the year. The IRS processes withholding amounts, payments, credits, and any refund that may be owed to the filer. If the filer overpaid, the IRS issues a refund or applies the amount to the following year. If the filer underpaid, the IRS may assess penalties or request additional payment to satisfy the remaining tax balance.

FAQs

Who can file Form 1040-EZ (NR) (2019) instead of Form 1040-NR?

This form can be filed by a nonresident alien who has simple income sources, does not qualify as a resident under the substantial presence test, and meets the limits set by the Internal Revenue Service for this filing category.

Can a nonresident alien claim any deductions or credits on this form?

A filer generally cannot claim the standard deduction and may claim only limited credits that apply to nonresident aliens under Internal Revenue Service rules or treaty provisions.

How does a tax treaty affect the amount of income taxed?

A tax treaty may allow a lower treaty rate on certain types of income, such as interest, dividends, or capital gains, which can reduce the amount taxed when permitted by an agreement between the United States and the filer’s country.

What types of wages or interest payments must be reported?

A filer reports wages, interest, or similar income that is effectively connected with U.S. sources and meets the reporting requirements established for nonresident aliens.