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Filing
Requirements
|
Residency
Status
|
The Tax
Return
|
Tax
Treaties
State
Taxation
|
Getting
an ITIN
|
Social
Security
tax |
Employer
Withholding
Foreign
National
Tax Guide
Form 1040NR and Your Filing Status
In this
section:
Your
Filing
Status -
What
Difference
Does It
Make?
Choosing
the
proper
filing
status is
important
because
it is
used to
determine
what tax
rate
schedule
you will
use for
your
effectively
connected
income.
An
explanation
of filing
status is
in
Publication
519 on
page 22.
It is
also
discussed
in the
instructions
to Form
1040NR on
page 5.
If you
are
single on
the last
day of
the tax
year,
check box
1 or 2 on
Form
1040NR
(or box 1
on Form
1040NR-EZ)
in the
space
under
"Filing
Status."
Some
married
persons
who have
dependent
children
and who
did not
live with
their
spouse
for at
least the
last six
months of
the tax
year may
file as
single.
If you
are in
this
category,
and are a
resident
of
Canada,
Mexico,
Japan,
Korea, or
a U.S.
national,
see the
additional
requirements
in the
instructions
to Form
1040NR on
page 5.
If you
are
married
on the
last day
of the
tax year,
and your
spouse is
a
nonresident
alien,
you do
not have
the
option to
file a
return
jointly
with your
spouse if
you are
also a
nonresident
alien. If
you file
Form
1040NR or
Form
1040NR-EZ
you must
file as
married
filing
separately.
Back to
top.
Option to
file as a
U.S.
resident
If your
spouse is
a U.S.
citizen
or
resident
on the
last day
of the
tax year,
you can
choose to
file as a
U.S.
resident,
and file
a joint
return
with your
spouse on
Form
1040,
Form
1040A or
Form
1040-EZ.
This
includes
situations
in which
your
spouse is
a
nonresident
alien at
the
beginning
of the
year, but
a
resident
alien at
the end
of the
year.
Using
this
option
might
reduce
your tax
liability
because
you can
claim
dependency
exemptions
and the
standard
deduction,
but you
will not
be
allowed
to take
advantage
of any
tax
treaty
benefits.
See the
discussion
on how to
make this
choice on
pages 10
and 11 of
Publication
519.
Personal
and
Dependency
Exemptions
An
exemption
is a
statutory
allowance
that
represents
an
individual.
The
exemption
amount is
adjusted
for
inflation
each
year. For
2002 the
amount is
$3,000.
That
means you
can
deduct
$3,000 on
your
return
(line 38
on Form
1040NR or
line 13
on Form
1040NR-EZ)
for each
exemption
you are
allowed.
You can
claim a
personal
exemption
on your
return
for
yourself,
unless
another
taxpayer
who
supports
you can
claim a
dependency
exemption
for you.
You can
claim
dependency
exemptions
for
qualifying
individuals,
over half
of whose
support
was
provided
by you. A
discussion
of
exemptions
begins on
page 23
of
Publication
519.
There is
also
guidance
in the
Form
1040NR
instructions
on page
5.
Generally,
whether
you are
married
or
single,
you
cannot
deduct
dependency
exemptions
as a
nonresident,
even if
you are
supporting
family
members.
That
means
only one
exemption
(your
personal
exemption)
is
typically
allowed
on Form
1040NR.
However,
residents
of Mexico
and
Canada
and
nationals
of the
United
States
are
allowed
to deduct
exemptions
under the
same
rules as
U.S.
residents.
You
cannot
file Form
1040NR-EZ
if you
claim
dependency
exemptions.
Back to
top.
Determining
What
Income is
Taxable
and How
to Report
It
A
nonresident
alien is
subject
to U.S.
income
tax only
on
certain
income
from
sources
within
the
United
States,
and on
certain
income
connected
with the
conduct
of a
trade or
business
in the
United
States.
Generally,
income
from
sources
outside
the
United
States is
not
reported
on the
U.S. tax
return of
a
nonresident.
U. S.
source
income is
divided
into two
general
categories
- income
that is
effectively
connected
with a
U.S.
trade or
business
and
income
that is
not
effectively
connected
with a
U.S.
trade or
business.
Effectively
connected
income
Income
that is
effectively
connected
with a
U.S.
trade or
business
is
reported
on the
first
page of
Form
1040NR or
Form
1040NR-EZ.
It is
subject
to tax at
the same
graduated
rates
that
apply to
residents,
and can
be offset
by
allowable
deductions
and
exemptions.
It can
also be
partially
or fully
excluded
from your
income by
treaty
provisions
between
the
United
States
and your
home
country.
See
"Where to
Find
Treaty
Information"
under
Tax
Treaties.
If you
are in
the
United
States on
an F, J,
M or Q
visa, you
are
considered
engaged
in
business
in the
United
States.
That
means any
U.S.
source
income
that is
taxable
to you in
connection
with your
scholarly
activities,
such as
wages or
scholarship
and
fellowship
grants,
is
included
in this
category.
Also, any
other
income
from
personal
services
performed
in the
United
States is
generally
considered
effectively
connected
income.
Not
effectively
connected
income
U.S.
source
income
that is
not
effectively
connected
with a
U.S.
trade or
business
is
reported
on page 4
of Form
1040NR
(you
cannot
use Form
1040NR-EZ
if you
have this
type of
income).
It is
generally
taxed at
a flat
30% rate
and
cannot be
reduced
by
deductions
and
exemptions.
Treaty
provisions
between
your home
country
and the
United
States
might
provide
for a
lower
rate of
tax. See
"Where to
Find
Treaty
Information"
under
Tax
Treaties.
Income
that is
typical
of this
category
is
dividends,
capital
gains in
excess of
capital
losses,
prizes,
awards
and
certain
gambling
winnings.
If you
are a
nonresident
alien,
capital
gains on
stocks,
securities
and other
personal
property
are
taxable
to you
only if
you are
present
in the
U.S. for
at least
183 days
during
the tax
year.
Generally,
you
cannot
offset
gambling
winnings
with
gambling
losses.
However,
if you
happen to
be a
resident
of
Canada,
you can
claim
gambling
losses to
the
extent of
gambling
winnings
under the
U.S./Canada
treaty.
(See the
instructions
for Form
1040NR,
page 16.)
Note that
bank
interest
received
by
nonresident
aliens is
not
taxable.
Back to
top.
Wages
Nonresident
aliens
are
generally
subject
to tax on
wages for
services
performed
in the
United
States as
effectively
connected
income.
The
general
rules on
personal
service
income
are in
Chapter
Two of
Publication
519 (page
11).
There are
exceptions
to this
general
rule,
however.
First,
note in
Chapter
Three of
Publication
519 (page
13) that
nonresident
visitors
on F, J,
M and Q
visas can
exclude
pay
received
from a
foreign
employer,
other
than a
foreign
government.
Second,
any wages
you
receive
might be
exempt
from U.S.
tax under
a treaty
between
your
country
and the
United
States.
See
Publication
901 and
Tax
Treaties
to learn
about
treaty
benefits.
If you
received
taxable
wages
during
the year,
you
should
receive a
Form W-2
from your
employer
within 30
days
after the
end of
the year.
If any of
your
wages are
exempt
from
income
tax under
a tax
treaty,
you
should
receive a
Form
1042-S
rather
than a
W-2.
Record
your
taxable
wages on
line 8 of
Form
1040NR or
line 3 of
Form
1040NR-EZ.
Do not
include
any
amount
exempt by
treaty
on these
lines.
The
Federal
income
tax
withheld
is
recorded
on line
54 of
Form
1040NR or
line 19
of Form
1040NR-EZ.
Any wages
exempt by
treaty
are
reported
on line
22 of
Form
1040NR
and on
page 5,
Item M.
On Form
1040NR-EZ
they are
reported
on line 6
and on
page 2,
Item J.
Attach
one copy
of any
Form W-2
or Form
1042-S
you
received
from your
employer
to the
front of
the
return.
Back to
top.
Scholarships
and
fellowships
Any
scholarship
or
fellowship
grant
that is
taxable
to you is
considered
effectively
connected
income
and is
subject
to
graduated
rates. It
is
reported
on line
12 of
Form
1040NR
and on
line 5 of
Form
1040NR-EZ.
There are
three
ways,
described
below, in
which
part or
all or
your
scholarship
or
fellowship
grant can
be
excluded
from
income.
Foreign
source.
If you
receive a
grant
from a
foreign
payer, it
is
considered
foreign
source
income
and is
not
taxable.
Generally,
the
source of
a
scholarship
or
fellowship
grant is
the
source of
the
payer,
regardless
of who
actually
disburses
the
funds.
Foreign
source
payments
should
not be
reported
on your
tax
return.
Qualified
scholarship.
If you
are a
candidate
for a
degree,
you can
exclude
amounts
received
as a
scholarship
or
fellowship
grant
that you
use for
1)
tuition
and other
fees you
pay to
the
university
to attend
class,
and 2)
fees,
books,
supplies
and
equipment
that are
purchased
because
of course
requirements.
The
amounts
you used
for
expenses
other
than
tuition
and
course-related
expenses
(such as
room,
board and
travel)
are
generally
taxable.
Also, any
part of a
scholarship
or grant
that is
compensation
for
services
cannot be
excluded
as a
qualified
scholarship.
Report
the
amounts
excluded
on lines
12 and 29
on Form
1040NR,
and on
lines 5
and 8 on
Form
1040NR-EZ.
Attach
one copy
of any
Form W-2
or Form
1042-S
you
received
from the
payor to
the front
of the
return.
Beginning
in 2001,
schools
are no
longer
required
to report
qualified
scholarships
you
receive
in the
form of
tuition
benefits,
so Form
1042-S
will no
longer
show
these
amounts
and they
need not
be
reported
on your
return.
You are
supposed
to attach
a
statement
to your
return if
you
exclude
qualified
scholarship
payments that
are
reported
on a Form
1042-S.
(See the
instructions
to Form
1040NR or
Form
1040NR-EZ.)
The
statement
should
show 1)
the
amount of
the
grant, 2)
the dates
it
covers,
3) the
grantor's
name, 4)
expenses
the grant
covers
and
conditions
of the
grant,
and 5)
how much
is
taxable
and tax
exempt.
Here is a
fill-in
scholarship
statement
form in
PDF
format
that you
can fill
in on the
screen
and print
out for
this
purpose.
Back to
top.
Treaty
exempt
scholarships.
If there
is a tax
treaty
between
the
United
States
and your
home
country,
it might
contain a
provision
excluding
scholarship
payments.
See
Publication
901and
Tax
Treaties to
learn
about
treaty
benefits.
On Form
1040NR,
put the
excluded
amount on
line 22
(but not
on line
12) and
complete
Item M on
page 5.
On Form
1040NR-EZ,
put the
excluded
amount on
line 6
(but not
on line
5) and
complete
Item J on
page 2.
Attach
one copy
of any
Form W-2
or Form
1042-S
you
received
from the
payor to
the front
of the
return.
Investment
income
Reporting
interest,
dividend
and
capital
gain
income is
a little
confusing.
There are
spaces
provided
to show
it on
page 1 of
Form
1040NR,
and on
page 4 as
income
not
effectively
connected
with a
U.S.
trade or
business.
Reporting
it on
page 1
means it
is
effectively
connected
to a U.S.
trade or
business.
To be
effectively
connected,
the
investment
income
must have
a direct
economic
relationship
to your
United
States
trade or
business.
As a
student
or
scholar,
your
trade or
business
in the
United
States is
studying,
teaching,
or doing
research.
Therefore,
it is
very
unlikely
you have
effectively
connected
investment
income.
Report
your
investment
income on
page 4 of
Form
1040NR
(you
cannot
use Form
1040NR-EZ
if you
have this
type of
income).
The tax
rate is a
flat 30%
unless a
treaty
provision
between
the
United
States
and your
home
country
reduces
the rate.
See
Publication
901,
Table 1
(page 26)
to see if
a lower
treaty
rate
applies.
Show the
income on
page 4
and any
U.S. tax
withheld
on the
income,
and
compute
the tax.
Report
the tax
computed
on page 4
on page
2, line
44, and
show any
U.S. tax
withheld
on line
56a.
Exempt
interest.
Interest
paid on
deposits
with
banks, on
accounts
or
deposits
with
certain
financial
institutions,
or on
certain
amounts
held by
insurance
companies,
are
exempt
from U.S.
tax even
though
they are
U.S.
source
income.
If you
file Form
1040NR,
do not
report
this
interest
on page
1or 4.
Instead,
answer
"yes" to
Question
L on page
5 and
provide
the
information
requested
there. If
you file
Form
1040NR-EZ,
do not
report
this
interest
on page
1, but
complete
Question
J on page
2.
Back to
top.
Allowable
Deductions
and
Credits
Deductions
and
credits
are
generally
less
available
for
nonresident
aliens
than for
residents.
First,
deductions
and
credits
can only
offset
effectively
connected
income;
income
that is
not
effectively
connected
to a U.S.
trade or
business
cannot be
reduced
by
deductions
and
credits.
Second,
while
residents
can claim
the
standard
deduction
in lieu
of
itemized
deductions,
nonresidents
(other
than
students
and
business
apprentices
from
India)
are not
allowed
to claim
the
standard
deduction.
Third,
while
most
nonresidents
must
itemize
their
deductions,
the
deductions
available
to
itemize
are
limited.
Following
are brief
descriptions
of some
of the
more
common
deductions
and
credits
that
might be
available
to you.
For more
information
see
Publication
519,
beginning
on page
20.
Moving
expenses
If you
moved to
the
United
States,
or from
one city
to
another
during
the year,
you can
deduct
moving
expenses
if you
work
full-time
for at
least 39
weeks
during
the 12
months
right
after you
moved.
You will
need Form
3903
(instructions
included),
which you
can
download
from the
Treasury's
Forms and
Publications
page. If
you want
more
information
on moving
expenses,
you can
also
download
Publication
521,
Moving
Expenses.
If you
claim
moving
expenses
you must
file Form
1040NR;
you are
not
eligible
to file
the
shorter
Form
1040NR-EZ.
The
deduction
for
moving
expenses
is shown
on line
25 of
Form
1040NR.
Itemized
deductions
Itemized
deductions
are a
special
category
of
deductions
listed on
Schedule
A (page
3) of
Form
1040NR.
Nonresidents
from
India can
elect to
claim the
greater
of their
itemized
deductions
or the
standard
deduction
(described
below).
If you
are a
nonresident
from a
country
other
than
India,
you
cannot
claim the
standard
deduction;
you are
only
allowed
to claim
itemized
deductions
that you
paid
during
the year.
Look
through
the types
of
allowable
itemized
deductions
on
Schedule
A. Also
see
descriptions
of the
individual
deductions
beginning
on page
22 of
Publication
519. The
deductions
are
totaled
on
Schedule
A, then
reported
on line
33 of
Form
1040NR.
State
income
taxes.
If you
had state
and/or
local
income
tax
withheld
from your
wages
during
the year,
you can
claim the
amount
withheld
on line 1
of
Schedule
A (the
amount is
shown on
your
W-2).
This is
typically
the only
itemized
deduction
nonresident
alien
students
have. If
this is
the only
itemized
deduction
you have,
you can
file Form
1040NR-EZ
if you
otherwise
qualify.
The
amount
goes on
line 10.
If you
have
additional
itemized
deductions,
you must
file Form
1040NR.
Back to
top.
The
standard
deduction
The
standard
deduction
is a
statutory
allowance
available
to all
residents.
It is
also
available
to
nonresident
students
and
business
apprentices
from
India
under
Article
21(2) of
the
United
States -
India tax
treaty.
Those
taxpayers
who claim
the
standard
deduction
cannot
also
claim
itemized
deductions.
Also, if
you are
married
filing
separately,
and your
spouse
itemizes
deductions,
you
cannot
claim the
standard
deduction.
The
standard
deduction
for a
single
taxpayer
for 2002
is
$4,700;
for
married
taxpayers
filing
separately
it is
$3,925.
If you
qualify
for the
standard
deduction,
see page
24 of
Publication
519 for
reporting
requirements.
Credit
for child
and
dependent
care
expenses
Although
this
credit
has a
line on
Form
1040NR,
it is
very
unlikely
you will
qualify
for it.
If you
are
married,
you must
file a
joint
return
with your
spouse to
claim the
credit.
But as
you will
see under
Filing
Status,
you are
not
allowed
to file a
joint
return as
a
nonresident
alien. If
you are
single,
you must
be able
to claim
a
dependency
exemption
for a
"qualifying
individual"
to get
the
credit. A
qualifying
individual
is a
dependent
under the
age of 13
or a
disabled
dependent.
As you
will find
under
Personal
and
Dependency
Exemptions,
dependency
exemptions
are
typically
not
allowed
to
nonresident
aliens.
For more
information
on this
credit,
see
Publication
519, page
25.
The
foreign
tax
credit
If you
receive
foreign
source
income
that you
also pay
U.S. tax
on, you
can claim
a foreign
tax
credit.
However,
since you
generally
do not
pay U.S.
tax on
foreign
source
income,
the
credit is
typically
not
available
to you on
foreign
source
income.
Also, you
cannot
take any
credit
for taxes
imposed
by a
foreign
country
on your
U.S.
source
income if
those
taxes
were
imposed
because
you are a
citizen
or
resident
of the
foreign
country.
See page
26 of
Publication
519.
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