Nonresident aliens who were involved in business in the U.S. during the tax year or otherwise earned income from U.S. sources throughout the year must use Form 1040-NR to file their income tax return. This form is also required for representatives of a deceased person who would have filed it during the tax year and for some estates or trusts.

Like the regular Form 1040, those who are required to fill out Form 1040-NR may owe more money or be entitled to a refund.

Who’s considered a nonresident alien?

Typically, you’re considered a nonresident alien if you’re not a U.S. citizen and you do not meet either the “green card” test or the “substantial presence” test for the year in question.

The substantial presence test requires you to meet specific residency goals; it bases your residency status on the length of your stay in the U.S. during the tax year in question and the preceding two years. To pass the green card test and be considered a resident alien, you must be a lawful permanent resident of the U.S. at any time during the tax year.

If you’re a nonresident who plans to reenter the U.S., it’s essential to complete Form 1040-NR because you’ll likely need to show that you submitted any required tax forms to modify your visa terms.

How do I know if I need to use Form 1040-NR?

You’ll need to use Form 1040-NR if:

  • You were a nonresident alien involved in a trade or business in the U.S. during the tax year. You’ll still be required to fill out the form even if you didn’t receive income from that trade or business.
  • You were not involved in a trade or business in the U.S., but still generated income from U.S. sources that appear on Schedule NEC, lines 1 through 12, and some of the tax you owe wasn’t withheld from that income.
  • You owe special taxes, such as the alternative minimum tax or household employment tax.
  • You received distributions from:
    • A health savings account
    • An Archer medical savings account
    • A Medicare Advantage medical savings account
  • Your net earnings from self-employment totaled at least $400 and you live in a country that has a Social Security agreement with the U.S.
  • You’re a personal representative for a deceased person who would have had to file the form when he or she was alive.
  • You represent an estate or trust that is required to file Form 1040-NR.

You may be eligible to file the shorter version of the form (Form 1040-NR-EZ) if your only U.S. income comes from wages, salaries, tips, refunds of state and local taxes, scholarships or fellowship grants, and nontaxable interest or dividends. However, you cannot use the EZ form if you intend to claim the qualified business deduction or have received taxable interest or dividend income.

In addition, you may have to file both Form 1040 and Form 1040-NR if your residency status changes during the year.

This is just an overview of tax return requirements for nonresident aliens; there are many more provisions that could affect your filing. The rules are complex, so it’s important to work with a qualified tax professional, especially because laws and tax regulations can change with little notice. Make sure you’re keeping records throughout the year, and reach out to a tax expert at Shea Labagh Dobberstein should you need any assistance.