Relocating to the United States is an exciting milestone for many international individuals. Whether you’re arriving as a student, professional, researcher, or temporary worker, one important responsibility is complying with U.S. tax obligations. For foreign nationals, one of the first questions to address is: should I file Form 1040 or Form 1040NR?
Filing the correct tax return is not just about proper compliance. It also ensures that you avoid unnecessary complications with the Internal Revenue Service and with any future immigration matters. We focus on understanding your residency status for tax purposes and how it dictates which form you must use.
Importance of Determining Tax Residency
Before deciding which form to file, it’s essential to determine your tax residency status. In the U.S. tax system, residency is not solely based on immigration classification. Instead, the IRS uses specific rules to determine whether a person is considered a resident alien, nonresident alien, or dual-status alien.
Tax residency determines what type of income must be reported and which benefits or deductions can be claimed. Filing as a resident allows for the reporting of worldwide income and access to various tax credits and standard deductions. Nonresidents, on the other hand, are taxed only on certain U.S.-sourced income and have limited access to tax benefits. Filing the wrong form could mean claiming deductions you’re not eligible for or failing to pay the appropriate tax, which can lead to penalties and complications in the future.
Types of Tax Residency
The IRS recognizes three classifications of individuals for tax purposes:
Resident Alien
A resident alien is someone who meets either the Green Card Test or the Substantial Presence Test. These individuals are treated like U.S. citizens for tax purposes. They must report their entire global income, including both U.S. and non-U.S. income, on Form 1040.
To meet the Green Card Test, you must be a lawful permanent resident of the United States at any time during the calendar year. If you possess a valid green card, even for a single day, you are generally treated as a resident for tax purposes for that year.
Nonresident Alien
A nonresident alien is an individual who does not meet either the Green Card Test or the Substantial Presence Test. These individuals only need to report income that is effectively connected with a U.S. trade or business or that is considered fixed, determinable, annual, or periodic U.S. income (FDAP).
This income is usually subject to specific tax rates, some of which may be reduced by international tax treaties. Nonresidents use Form 1040NR to report their U.S.-sourced income. Filing this form accurately is critical to ensure proper taxation and maintain compliance with U.S. tax law.
Dual-Status Alien
Some individuals may be considered both a resident and a nonresident in the same calendar year. This can happen if, for example, a person arrives or leaves the U.S. mid-year and changes visa status during that period.
Such taxpayers are referred to as dual-status aliens and have to file a dual-status return that includes elements of both Form 1040 and Form 1040NR. The correct form to file depends on whether you were a resident at the beginning or end of the tax year. Dual-status returns require special attention to timing and documentation.
Substantial Presence Test Explained
The Substantial Presence Test is one of the most commonly used methods to determine tax residency. It applies to individuals who are not U.S. citizens or green card holders but have spent time physically present in the U.S.
To meet this test, you must be physically present in the U.S. on at least:
- 31 days during the current year, and
- 183 days during the current year and the two preceding years, using the following formula:
- All the days present in the current year
- One-third of the days present in the first prior year
- One-sixth of the days present in the second prior year
For example, if someone was in the U.S. for 120 days in 2024, 150 days in 2023, and 90 days in 2022, they would meet the test because:
- 120 (2024) + 50 (1/3 of 2023) + 15 (1/6 of 2022) = 185 days
Some days may be excluded from the count, such as days spent in the U.S. on certain visa types, like F, J, M, or Q visas, if specific conditions are met.
Form 1040: The U.S. Resident Tax Return
Form 1040 is the standard income tax return form for U.S. citizens and resident aliens. If you qualify as a resident for tax purposes, you must file this form and report all income regardless of its source, both domestic and foreign.
Filing Form 1040 allows access to a wide range of tax benefits, such as:
- The standard deduction
- Various tax credits, including education credits, the Earned Income Tax Credit, and the Child Tax Credit
- The ability to claim dependents
- Itemized deductions for qualifying expenses
Form 1040 is also compatible with most electronic filing services, and many residents use online platforms or hire tax professionals to assist in filing it. However, residents must also report foreign bank accounts and certain foreign assets under the Foreign Account Tax Compliance Act (FATCA) and the FBAR filing requirements, where applicable.
Form 1040NR: For Nonresident Taxpayers
Form 1040NR is the official income tax return form for nonresident aliens with U.S. source income. This form must be filed by individuals who are not tax residents but have earned income in the U.S. that is subject to federal tax.
Common situations requiring a nonresident to file Form 1040NR include:
- Earning wages from a U.S. employer
- Receiving a taxable scholarship or fellowship
- Earning interest or dividends from U.S. financial institutions
- Receiving rental income from U.S. property
- Working temporarily in the U.S. on an employment or exchange visa
Unlike residents, nonresidents are not eligible for the standard deduction unless a specific tax treaty allows it. Instead, only limited itemized deductions are permitted, such as state and local income taxes, charitable contributions to U.S. charities, and certain professional expenses.
Limited Access to Credits and Deductions
Nonresident aliens generally cannot claim the majority of tax credits available to residents. For example, they cannot usually claim the Earned Income Tax Credit, education credits, or the Child and Dependent Care Credit. However, some individuals may benefit from tax treaty provisions, which vary by country and must be supported by filing Form 8833.
Some countries have negotiated treaties with the U.S. that allow their citizens to claim the standard deduction or exclude specific types of income. Residents of India, for example, may be able to claim the standard deduction under Article 21(2) of the U.S.–India tax treaty if they are students or business apprentices.
Discontinued Form 1040NR-EZ
Until 2019, individuals with very simple tax situations could file Form 1040NR-EZ, a shorter version of the full 1040NR. It was commonly used by international students or exchange visitors with limited income from wages or scholarships.
Eligibility for Form 1040NR-EZ included:
- Income less than $100,000
- Income sources limited to wages, state tax refunds, and scholarship/fellowship grants
- No dependents
- No adjustments to income other than student loan interest
- No itemized deductions other than state and local income taxes
The IRS officially discontinued Form 1040NR-EZ starting with the 2020 tax year. All nonresident filers must now use the full Form 1040NR, even if their situation would have previously qualified them to use the EZ version.
Filing Requirements for Nonresidents
Nonresident aliens must file Form 1040NR if they have income connected with U.S. business or employment activities. The deadline to file this form for tax year 2024 is April 15, 2025. If the taxpayer did not receive wages subject to withholding, the deadline is extended to June 15.
Required documents to file Form 1040NR may include:
- Form W-2 (for employees)
- Form 1042-S (for scholarship recipients or independent contractors)
- A U.S. Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN)
- Form 8843 for individuals on F, J, M, or Q visas
Failing to file Form 1040NR when required can result in penalties, loss of future visa opportunities, or difficulties adjusting immigration status.
What to Do If You Filed the Wrong Form
Filing the wrong tax form—such as Form 1040 instead of Form 1040NR—can result in ineligible deductions or credits, underreported income, or overclaimed refunds. Such errors can be costly and may raise issues with the IRS or immigration authorities.
To fix this, an amended return must be submitted. This involves filing Form 1040-X along with a correctly completed Form 1040NR and documentation supporting the changes. The IRS may also require an explanation of why the wrong form was filed and how the taxpayer determined their correct status.
When You Are a Dual-Status Alien
A dual-status alien is someone who is both a resident and a nonresident in the same tax year. This usually occurs in the year someone arrives in or departs from the United States or changes immigration status in a way that affects tax residency.
To determine if you are a dual-status alien, you need to look at whether you passed the substantial presence test or held a green card for part of the year but not the entire year. If so, your income tax return must reflect both periods of residency and nonresidency.
Filing a Dual-Status Return
The IRS requires dual-status individuals to file a return that accounts for both periods during the tax year. The form combination and order depend on whether you were a resident at the beginning or end of the year.
If you were a nonresident at the start of the year and became a resident by the end of the year, then Form 1040 is used as the primary form and Form 1040NR is attached as a supporting statement.
In contrast, if you were a resident at the beginning of the year but became a nonresident by the end of the year, then Form 1040NR is the primary form, and Form 1040 becomes the supporting statement.
On both forms, the supporting statement must be labeled “Dual-Status Statement,” and the main form must be labeled “Dual-Status Return.” These forms must be mailed, as electronic filing is generally not available for dual-status filers.
Income Reporting Rules for Dual-Status Filers
Income earned during the resident period is reported the same way it would be for a U.S. citizen or resident alien. This includes global income from foreign and U.S. sources, subject to the full range of deductions and credits available to residents.
Income earned during the nonresident period is subject only to U.S. source rules. This includes wages from U.S. employers, taxable scholarships, and investment income from U.S. financial institutions. Income from foreign sources during this period is generally not taxable.
Dual-status filers must be careful to separate income and deductions according to each period. For example, a deduction or credit can be claimed only if it applies to the relevant period. You cannot claim the standard deduction during a dual-status year unless you qualify under a specific treaty exception.
Common Deductions and Credits for Dual-Status Taxpayers
Deductions for state and local taxes, charitable contributions, and certain business-related expenses are permitted if they were incurred during the resident period. Student loan interest and educator expenses may also be claimed for the resident portion of the year.
Tax credits that are typically available to residents, such as the Child Tax Credit or the American Opportunity Credit, may only be claimed for the portion of the year you were a resident. However, nonresidents cannot claim most tax credits, so it’s essential to allocate them accurately. Certain treaty benefits may extend credits or deductions during the nonresident portion of the year, but these must be clearly documented.
Required Attachments for Dual-Status Returns
In addition to the main return and supporting statement, dual-status filers should include the following:
- A detailed breakdown of income earned during each period
- Any Forms W-2 or 1042-S reflecting income and withholding
- A cover letter identifying the return as dual-status
- Treaty-based disclosure forms (if claiming treaty benefits)
Keeping clear records and organizing the return correctly helps reduce the risk of processing delays or IRS inquiries.
What to Do If You Filed the Wrong Form
Mistakenly filing the wrong tax form is more common than many realize. This is particularly true for international students, interns, exchange visitors, and foreign professionals who are unfamiliar with U.S. tax rules.
If you filed Form 1040 when you should have filed Form 1040NR, it’s important to correct the mistake promptly. Filing as a resident when you were actually a nonresident can lead to inaccurate claims of deductions and credits, potentially triggering audits or penalties.
How to Amend a Return
To correct a tax return after submitting the wrong form, you must file Form 1040-X, Amended U.S. Individual Income Tax Return. In this case, the amendment will include the correct Form 1040NR (or the reverse, if you filed 1040NR in error and should have used Form 1040).
The amended return must:
- Include the corrected form (1040 or 1040NR)
- Provide an explanation of the changes in Part III of Form 1040-X
- Attach all supporting documents, including W-2s and 1042-S forms
- Be signed and mailed to the appropriate IRS address for your location
There is generally a three-year window from the original filing date to amend a return and claim a refund. However, if the correction involves underpayment or misreporting of income, it’s better to file sooner to minimize penalties and interest.
Immigration Consequences of Filing the Wrong Form
Beyond IRS penalties, filing the wrong form can have immigration-related implications. The U.S. Citizenship and Immigration Services (USCIS) may review tax records when considering applications for visa renewals, permanent residency, or naturalization.
A foreign national who filed as a resident and claimed benefits like the Earned Income Tax Credit or Child Tax Credit while not being eligible could face questions about the integrity of their application. Likewise, underreporting income or failing to file altogether could jeopardize legal status. To protect your immigration history, it’s important to ensure that your tax filing accurately reflects your residency and income.
Filing Form 8843 Without Income
Not all nonresidents are required to file a full tax return. In certain cases, individuals present in the U.S. under nonimmigrant visa categories, such as F, J, M, or Q, may be required to file only Form 8843, even if they had no income.
Form 8843 is not a tax return. Instead, it is a statement that provides information to the IRS about your visa status and presence in the U.S. It is often used to claim an exemption from the Substantial Presence Test, which could otherwise classify the person as a resident for tax purposes.
Who Must File Form 8843?
The form must be filed by any individual who:
- Was present in the U.S. during the tax year under an F, J, M, or Q visa
- Is considered a nonresident alien for tax purposes
- Wishes to exclude days of presence for the Substantial Presence Test
Even if you have no U.S. income and are not required to file Form 1040NR, you still must submit Form 8843 if you meet the criteria above. Individuals on employment or immigrant visas (such as H1B, H2B, or L visas) generally do not qualify to file Form 8843 alone and must follow regular tax filing requirements.
When to File Form 8843
Form 8843 is typically due on the same date as Form 1040NR, which is April 15 following the end of the tax year. If you are not required to file a tax return, Form 8843 can be sent by itself to the IRS address listed in the form instructions.
If you are filing Form 1040NR in addition to Form 8843, you should include both forms in the same envelope. Failing to file Form 8843 could result in the IRS counting days of presence toward the Substantial Presence Test, possibly classifying you as a resident when you are not.
Supporting Documents for Form 8843
Although Form 8843 is short, it should be filled out accurately and completely. You will need:
- Your full name and taxpayer identification number
- Your current U.S. address and foreign address
- Visa type and entry dates
- Information about your institution or employer
- Dates of presence in the U.S. for the current and prior years
Students, scholars, and researchers may also need to include details about their academic program or the purpose of their visit.
Filing Taxes for Past Years Without Income
If you were present in the U.S. during previous tax years under a qualifying visa but did not earn income, you may still be required to file Form 8843 retroactively. The IRS generally expects that form to be filed for every year you were present, regardless of whether income was earned.
Although the IRS may not penalize failure to file this form when no tax is owed, consistent and timely filing of Form 8843 demonstrates compliance and may be important for immigration or visa recordkeeping. Some academic institutions may also request copies of previously filed forms as part of their compliance audits.
What Types of Income Are Taxable for Nonresident Aliens
Nonresident aliens are subject to U.S. tax only on income that is effectively connected with a trade or business in the United States or that is fixed, determinable, annual, or periodic income from U.S. sources. This means their tax obligations are more limited compared to residents, who must report worldwide income.
Two categories of income apply to nonresidents:
- Effectively connected income (ECI)
- Fixed or determinable annual or periodic (FDAP) income
Effectively Connected Income (ECI)
ECI includes income earned from a U.S. trade or business and is subject to graduated tax rates, similar to the rates applied to residents. Common examples include:
- Wages and salaries from U.S. employers
- Business or self-employment income generated in the U.S.
- Rental income if actively managed and treated as a business
- Certain scholarship or fellowship grants if services are performed
- Tips or commissions for services rendered in the U.S.
This income must be reported on Form 1040NR, and allowable deductions related to the income—such as business expenses or state income taxes—may be claimed.
Fixed or Determinable Annual or Periodic (FDAP) Income
FDAP income includes passive income from U.S. sources that is not connected to a trade or business. It is generally taxed at a flat 30 percent rate unless reduced or eliminated by a tax treaty. Examples include:
- Interest from U.S. banks (tax-exempt in many cases)
- Dividends from U.S. corporations
- Royalties from intellectual property use in the U.S.
- Rental income from real estate, unless treated as business income
- Pensions or annuities from U.S. retirement plans
This income does not allow deductions and must be reported separately on Form 1040NR. Tax is often withheld at the source by the payer.
Taxation of Scholarships and Fellowships
Scholarships or fellowships received by nonresidents may be partially or fully taxable depending on the terms of the award. If the grant includes funding for services such as teaching, research, or other work performed in the U.S., the income is considered ECI and must be reported.
On the other hand, scholarship amounts used exclusively for tuition, books, or required fees may be exempt. Treaties may also provide specific exclusions for scholarship recipients, which must be cited when filing.
Income That Is Not Taxable for Nonresidents
Certain categories of income are generally not subject to U.S. taxation for nonresident aliens:
- Capital gains from the sale of personal property, including stocks, unless present in the U.S. for 183 days or more during the tax year
- Interest from U.S. banks or savings institutions, provided it does not relate to a U.S. trade or business
- Foreign-source income, such as foreign wages, foreign dividends, or business income generated outside the U.S.
While not taxable, some of this income may still be required to be disclosed, especially if it impacts eligibility for treaty benefits or residency determinations.
Understanding U.S. Tax Treaties
The United States has income tax treaties with many countries to avoid double taxation and provide relief from specific tax obligations. These treaties often reduce or eliminate taxes on certain types of income, including wages, interest, dividends, pensions, and scholarships.
To claim treaty benefits, a nonresident must determine:
- Whether their country has a treaty with the U.S.
- What article of the treaty applies to their type of income
- Whether they meet the specific conditions in the treaty, such as duration of stay or income limits
Common Treaty Provisions That Affect Form 1040NR Filers
Some of the most widely used treaty provisions for nonresident filers include:
- Student and trainee exemptions: Certain treaties exempt students or trainees from tax on income up to a set limit if they are in the U.S. temporarily and primarily for education or training.
- Short-term employment exemptions: In some cases, income earned for services performed in the U.S. for fewer than 183 days may be tax-exempt if certain criteria are met.
- Pension exemptions: Treaties may exempt all or part of a foreign pension from U.S. taxation.
- Reduced withholding rates: Interest, dividends, and royalties may be subject to lower rates under treaty rules.
Each treaty is different, and the IRS requires specific documentation to substantiate the claim.
How to Claim Treaty Benefits
To apply treaty provisions on your tax return, you must include Form 8833, Treaty-Based Return Position Disclosure, in cases where the benefit is not automatically granted or where the provision is unusual or complex.
In other cases, treaty benefits may be claimed directly on Form 1040NR without filing Form 8833, especially for common exclusions involving students and short-term workers. Regardless, the relevant treaty article must be cited, and proof of eligibility should be kept with your records. Failing to properly claim treaty benefits can lead to overpayment or unnecessary withholding, which may require future refund claims.
Documentation Required to Support Treaty Claims
To substantiate a treaty claim, the following may be needed:
- A valid passport showing country of origin
- U.S. visa or immigration documents confirming visa category and entry dates
- Form W-8BEN submitted to withholding agents (such as employers or banks)
- Employment contracts or scholarship award letters
- A written explanation if filing Form 8833
In the event of an IRS inquiry or audit, these documents provide critical support for treaty-related tax positions.
Real-Life Scenarios: Which Form Should You Use?
Determining whether to file Form 1040 or 1040NR can sometimes be unclear. The following real-life examples illustrate how different residency and income combinations affect the tax filing decision.
Scenario 1: Full-Year F-1 Student With No U.S. Income
Maria is a student from Brazil studying in the U.S. on an F-1 visa. She was present in the country the entire calendar year but had no income. She is considered a nonresident and must file Form 8843 but does not need to file Form 1040NR.
Scenario 2: Internship Wages with Treaty Exemption
Ali, from Pakistan, entered the U.S. on a J-1 visa for a short-term internship and earned $6,000 in wages during the summer. His country’s tax treaty exempts short-term trainees from taxation on this income. Ali must file Form 1040NR and cite the treaty article. He may not owe tax, but he still needs to report the income and exemption.
Scenario 3: Postdoctoral Researcher with Dual-Status Year
Elena, from Spain, completed her PhD in May and started working under an H-1B visa in June. She is a dual-status alien, being a nonresident for the first five months and a resident for the remaining seven. She must file Form 1040 as her main form, with Form 1040NR as a statement, and report her worldwide income starting in June.
Scenario 4: Real Estate Investment Without Residency
Kenji, a Japanese investor, owns a rental property in New York. He does not live in the U.S. and visits only occasionally. His rental income is considered ECI because it is actively managed through a local agent. He must file Form 1040NR and report the net rental income after expenses.
Scenario 5: U.S. Green Card Holder Moving Abroad
Zara, originally from the UK, had a green card until August 2024, when she surrendered it and moved back to London. For the year, she is considered a dual-status alien. She must file Form 1040NR as her main return and include Form 1040 as a statement covering her resident income from January to August.
Consequences of Filing the Wrong Form in These Scenarios
Choosing the incorrect form, such as filing Form 1040 when you are still a nonresident, can result in:
- Ineligibility for deductions and credits claimed
- IRS penalties for misrepresentation or underpayment
- Loss of treaty benefits if not properly claimed
- Risk to immigration status, particularly if audited
In cases of error, an amended return should be submitted as soon as possible to correct the mistake and reduce further risk.
Filing Past Returns or Retroactive Claims
If you discover that you filed incorrectly in previous years, you can amend your return using Form 1040-X and the appropriate prior-year Form 1040 or 1040NR. Treaty claims can also be made retroactively in some cases, though the IRS may require clear justification for late claims.
The time limit for refunds is generally three years from the date you filed the original return or two years from the date you paid the tax, whichever is later.
Special Considerations for Mixed-Source Income
If your income includes both U.S. and foreign sources, such as remote work performed outside the United States while on a U.S. contract, determining which portion is taxable can be challenging. The IRS generally considers where the services were performed, not where the employer is located.
Documentation showing the location of your work, such as time logs, visas, or employer statements, can help prove whether income is taxable. Partial year residency may further affect reporting obligations and treaty eligibility.
Conclusion
Filing taxes in the United States can be particularly complex for nonresident aliens, international students, temporary workers, and recent immigrants. Choosing the correct tax form whether Form 1040, Form 1040NR, or in older cases, Form 1040NR-EZ is not just a matter of paperwork. It directly influences your legal tax obligations, determines whether you are taxed correctly on your income, and can affect your immigration status, access to tax treaty benefits, and long-term compliance record with the IRS.
The cornerstone of accurate filing is understanding your residency status for tax purposes, which may differ from your immigration classification. Nonresidents generally file Form 1040NR, while resident aliens file Form 1040. Dual-status individuals, whose residency changes within the year, must navigate a hybrid approach by combining both forms according to the period of residency and nonresidency.
As explored in the series, nonresident aliens are taxed only on U.S.-sourced income. This includes both effectively connected income such as wages from U.S. employment and certain fixed or determinable annual or periodic income, like dividends and royalties. Understanding the distinctions between taxable and non-taxable income, and how the IRS views your activities and source of earnings, is crucial.
Additionally, the existence of U.S. tax treaties with dozens of countries can significantly reduce tax burdens or eliminate them altogether for certain types of income. These treaties provide unique advantages for students, teachers, short-term workers, and investors if claimed correctly. However, failing to cite treaty benefits properly or filing the wrong form may disqualify you from these exemptions and create complications.
Real-world scenarios, such as F-1 students without income, J-1 interns with treaty exemptions, H-1B holders undergoing residency transitions, or foreign investors receiving rental income, highlight how nuanced and fact-dependent tax filing in the U.S. can be. In each of these situations, accurate classification and documentation are key.
Incorrectly filing Form 1040 when you are a nonresident can lead to ineligible credits, improper deductions, and potentially serious consequences. These may include penalties, refund denials, or even jeopardizing your future visa or immigration applications. If a mistake occurs, it is essential to amend the return promptly using the appropriate IRS process to minimize further issues. For those filing retroactively, the discontinued Form 1040NR-EZ may still be valid for tax years prior to 2020, provided eligibility requirements are met. However, for all current and future filings, Form 1040NR is the definitive tax return for nonresidents with U.S.-source income.
Whether you’re a new international student, a foreign employee on assignment, or a nonresident investor, filing correctly starts with identifying your status, understanding your income sources, and knowing how U.S. tax laws and treaties apply to you. With the right form, appropriate documentation, and informed decisions, you can fulfill your tax obligations accurately and avoid costly mistakes. In summary, filing the right form is more than just a procedural step, it’s a foundation for compliance, financial clarity, and peace of mind during your time in the United States.