Form 1040-NR: U.S. Nonresident Alien Income Tax Return Explained

What Is Form 1040-NR: U.S. Nonresident Alien Income Tax Return?

Form 1040-NR is a version of the IRS income tax return that nonresident aliens may have to file if they engaged in business in the United States during the tax year or otherwise earned income from U.S. sources throughout the year. The form must also be filed by representatives of a deceased person who would have needed to file the 1040-NR and by representatives of an estate or trust that needs to file the form.

While some nonresident aliens may end up owing taxes as a result of completing Form 1040-NR, many receive a refund, because the amount of tax withheld when they were paid exceeds their liability.

Completing Form 1040-NR is especially important for nonresidents who plan to reenter the United States. If you wish to modify your visa terms, you will likely have to show that you submitted any required tax forms.

Who Needs Form 1040-NR: U.S. Nonresident Alien Income Tax Return?

You need to file a Form 1040-NR if any of the following applies to you:

• You were a nonresident alien engaged in a trade or business in the United States during the tax year (even if you have no income from that trade or business).
• You were a nonresident alien not engaged in a trade or business in the United States during the tax year who nevertheless generated income from U.S. sources that appears on Schedule NEC, lines 1 through 12, and some of the U.S. tax you owe was not withheld from that income.
• You owe special taxes, such as the alternative minimum tax (AMT) or household employment taxes.
• You received distributions from a health savings account (HSA), an Archer medical savings account (MSA), or a Medicare Advantage MSA.
• Your net earnings from self-employment totaled at least $400 and you live in a country with which the United States has a Social Security agreement.
• You are serving as the personal representative for a deceased person who would have been required to file the form. 
• You represent an estate or trust that has to file Form 1040-NR.

Who Is Considered a Nonresident Alien?

Generally, people who are not U.S. citizens are considered nonresident aliens if they fail to meet either the green card test or the substantial presence test for the tax year in question.

Green Card Test

You pass the green card test—and constitute a resident alien—if you were a lawful permanent resident of the United States at any point during the tax year. Typically, you are a lawful permanent resident if you were issued an alien registration card (i.e., a green card) by the U.S. Citizenship and Immigration Services (USCIS) or its predecessor organization, the Immigration and Naturalization Service (INS). You are considered to have resident status unless that designation is revoked by the USCIS or has been abandoned through an administrative or judicial process.

Substantial Presence Test

The substantial presence test bases your residency status on the length of your stay in the United States during the tax year in question and the preceding two years.

To pass the test, noncitizens must pass both the 31-day and 183-day tests to be considered a resident alien.

• You meet the 31-day test if you were present in the United States for at least 31 days during the tax year.
• You meet the 183-day test if the answers to lines 1, 2, and 3 below add up to at least 183.

1. Tax year days in the U.S. x 1 = _____ days
2. First preceding year days in United States x 1/3 =_____days
3. Second preceding year days in United States x 1/6 =_____days

There are certain limited exceptions in which you may meet one of these two tests and still remain a nonresident alien. That would be the case, for example, if you qualify as the resident of a country that has an income tax treaty with the United States and claim a lower U.S. tax liability as a result of that treaty.