First question: are you actually a non-resident?
US tax residency has little to do with immigration status. You are a resident for tax purposes if you hold a green card, or if you meet the substantial presence test — a weighted count of days in the US over three years. Days in the current year count fully, the prior year at one third, and the year before at one sixth; reaching 183 weighted days makes you a resident, provided you were present at least 31 days in the current year.
People are caught out by this constantly. Regular business travel to the US adds up faster than expected, and crossing the threshold moves you from 1040-NR to Form 1040 and from US-source income to worldwide income. Exceptions exist — the closer-connection exception and certain treaty tie-breakers among them — but they must be claimed, on the correct form, on time. They are not automatic.
The two income categories
Effectively connected income (ECI)
Income effectively connected with a US trade or business. It is taxed on a net basis at the same graduated rates residents pay, so business expenses reduce it. Whether an activity rises to a US trade or business is a facts-and-circumstances question, and it is the pivot on which most non-resident planning turns.
Fixed, determinable, annual or periodical income (FDAP)
Passive US-source income — typically dividends, interest, rents, royalties. It is taxed at a flat 30% on the gross amount, with no deductions, and it is normally collected by withholding at source. An applicable treaty often reduces the rate substantially, sometimes to zero.
The same dollar can be taxed very differently depending on which category it lands in. Getting the characterisation right, and documenting it, is most of the work on a well-prepared 1040-NR.
Two deadlines, not one
- If you received wages subject to US withholding, the return is due 15 April.
- If you did not, it is due 15 June.
Either way, a timely extension moves the filing date to 15 October. An extension to file is not an extension to pay — interest runs on unpaid tax from the original date.
Treaty positions and over-withholding
The US has income tax treaties with many countries, and they routinely reduce or eliminate withholding on dividends, interest, royalties and certain services. Claiming a treaty benefit generally requires disclosure on Form 8833, and the position must be stated properly rather than merely asserted.
A large share of the 1040-NR returns we prepare exist for one reason: a payer withheld 30% when a treaty allowed far less. The return is how that money is recovered. If you have received US income with tax withheld at source, it is worth checking whether you are owed a refund — and there is a limited window in which to claim it.
What we need from you
- Every US information return you received: 1042-S, 1099, W-2, K-1
- A day count of your US presence for the last three years
- Your visa type and travel history, if relevant
- Your country of tax residence and any certificate of residence
- Details of US business activity, property, or investments
- Your ITIN, or we begin the W-7 alongside the return
- Prior-year US returns, if any
Key facts at a glance
Frequently asked questions
I only spent a few weeks in the US. Do I need to file?
Possibly, and days are only half the question. Filing is driven by US-source income, not presence. Income with tax withheld at source often means a return is worth filing even when not required, because it is how you recover over-withheld tax.
What is the difference between 1040 and 1040-NR?
Form 1040 is for US tax residents and reports worldwide income. Form 1040-NR is for non-residents and reports US-source income. Which one you file depends on residency tests, not on your visa.
Can I claim the standard deduction?
Generally no. Non-residents are largely denied it, with a narrow exception for certain students and business apprentices from India under that treaty. Itemised deductions are restricted too.
A US payer withheld 30%. Can I get it back?
Often, yes, if a treaty gives a lower rate or the income was mischaracterised. The 1040-NR is the mechanism, and there is a limited window to claim, so it is worth checking sooner rather than later.
I meet the substantial presence test but my life is elsewhere. Any options?
Possibly the closer-connection exception, or a treaty tie-breaker if your country has one. Both must be claimed affirmatively on the right form and on time. Neither applies automatically.
Had US tax withheld at source?
Send us the 1042-S or 1099 and tell us your country of residence. We will tell you whether a treaty rate applies and whether a refund is worth claiming.
We reply within one business day. Getting in touch is not a client engagement until we confirm it in writing.