Who should file a CY-2020 tax return sing form 1040-NR?
- All those on F, J, Q, M visas and have earned income or effectively connected income (ECI) from a US-based Tarde or business.
- All F1 visa (from India) holders > $12,400 income (unless they need to get a refund).
- All nonresident partners in a business who have income in US business activities.
F Visa – Student, Academic
J Visa – Exchange Visitor
Q Visa – International cultural exchange visitor
M Visa – Vocational or other recognized nonacademic institution
Who is a Non-Resident Alien?
All students for the first five years.
All those who do not meet the following two tests:
◦ A. Green Card test
◦ B. Substantial Presence test
◦ NRA – Non-Resident Alien
A. Green Card Test
All those persons who have been issued a permanent resident visa or Green Card by USCIS are considered a resident of the US for tax purposes.
They do not use the nonresident tax return form (1040-NR); They need to use the regular applicable tax (1040) form(s).
B – Substantial presence test to be a resident for the tax purpose
The person must be in the US for more than 183 days in the past three years based on the formula:
# of days in 2020 – must be more than or equal to 31 days
plus 1/3 of the days stayed in the US in 0219
plus 1/6 of the days stayed in the US in 2018
If a person does not satisfy the above condition, that person must file a nonresident tax return.
What forms should you receive?
1. Must have ITIN or social security # to file
Individual Taxpayer Identification Number (ITIN) is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN).
2. W2 from the employer
3. 1099-NEC if worked as an independent contractor
4. Interest, dividend, capital gain, Sch-K1 from business or partnership return
5. Students mainly get W2, and1042-S.
What form do you need to complete and send to IRS?
1. W7 form to get ITIN if a nonresident does not have SSN #
2. Every student along with their dependents must file form – 8843 separately.
3. Every student and nonresident must file 1040-NR if they have taxable earned income
How can a nonresident get ITIN?
By submitting a W7 form to the address (with all required documents as outlined in the instructions).
Internal Revenue Service.
ITIN Operation.
P.O. Box 149342.
Austin, TX 78714-9342
No Income – Should I need to file any form?
All students must file form 8843
Others don’t need to file any other form.
Nonresident spouse and children?
A non-resident person can only file with the following three status:
1. Single
2. Married filing separately
3. Qualified widower QW
So, the spouse must file separately if he/she has earned income (ECI).
A student from India may be able to get limited credit for children/dependent under the US-India treaty. The children/dependent must have ITINs.
Do nonresidents need to file a state tax return?
Yes! All nonresidents need to file the state tax returns if required by the state.
Do nonresidents have to file local tax returns?
Yes. Nonresidents including students need to file local tax returns in PA.
They may get a special lesser nonresident tax rate than resident rates.
Do nonresidents have to pay social security and Medicare taxes?
No. However, if an employer has deducted it, you should file the following forms to get a refund:
1. For social security: Form 8316
2. For Medicare taxes: Form 843
Can nonresidents E-File the tax return?
Yes. Starting 2020, the 1040-NR form must be filed electronically.
Paper forms must be mailed to:
1. Without Payment: Dept. of the Treasury, Internal Revenue Service, Austin, TX 73301-0215, U.S.A.
2. With Payment: Internal Revenue Service, P.O. 1303, Charlotte, NC 28201-1303, U.S.A.
What is the deadline for filing a nonresident tax return:
May 17, 2021
You can get six months extension (October 15th) by filing Form 4868 https://www.irs.gov/pub/irs-pdf/f4868.pdf
NOTE: All unpaid taxes must be paid by May 17th, otherwise you may have to pay penalties and interest.
Please note that the IRS website is www.IRS.gov.
www.IRS.com is a privately-owned website that is not affiliated with any government agencies.
Do students on OPT or CPT file as nonresidents?
Yes.
They are still considered students on OPT and CPT.
However, if they have completed 5 years, they are not nonresidents.
Can non-residents get stimulus payments?
No.
Stimulus payments under Cares Act are only for permanent residents and citizens of the United States.
Nonresidents cannot get it.
References
Source of Income
Exclusions From Income
Real Property
Figuring Your Tax
1040 NR Instructions
Tax Treaties
The Taxation of Capital Gains of Nonresident Alien Students, Scholars and Employees of Foreign Governments
Taxpayer Identification Numbers (TIN)
Some Nonresidents with the U.S. Assets Must File Estate Tax Returns
