Tax & Accounting Blog

Foreign Nationals: Resident Alien or Nonresident Alien and Why It Matters: Part 3 – U.S. Tax Return Obligations for Nonresident Aliens

ONESOURCE, Tax Information Reporting, W-8 & W-9 Foreign Reporting, Withholding Management November 12, 2012

Tax return filing obligations for nonresident aliens depend on the type of income that they have during the tax year – ECI, FDAP income, or both. 

Nonresidents with No ECI. Nonresident aliens whose only U.S.-source income is FDAP income on which the correct amount of tax has been withheld (including applicable tax treaty reductions or exemptions) are not required to submit a U.S. tax return. However, if taxes have been withheld and an exemption is available under an applicable tax treaty provision, the taxpayer may submit a Form 1040NR, which must include a U.S. SSN or ITIN to claim a tax refund.

Nonresidents with ECI. Nonresident aliens with ECI must submit a Form 1040NR or simpler Form 1040NR-EZ with one exception. Nonresident aliens whose only U.S.-source income is wages not exceeding the personal exemption amount are relieved of this filing obligation. There is no similar exception for nonresident aliens in F, J, M or Q status whose only U.S.-source income is a scholarship or fellowship grant (such income is deemed by the Code to be ECI). Taxpayers who also have FDAP income must use Form 1040NR.

Form 8843. Nonresident aliens who are exempt individuals must submit a Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition, with their nonresident (or dual-status) tax return, or separately, if they have no tax return filing obligation.

Required Taxpayer Identification Number. Taxpayers lacking a SSN or ITIN must submit their Form 1040NR with a Form W-7 ITIN application along with required documentation of identity to the IRS ITIN Unit. Taxpayers without a TIN are not required to obtain one for a Form 8843 filing obligation when they have no tax return filing obligation.

Form 1040NR/1040NR-EZ Due Date. Nonresident aliens have a due date of June 15 unless they have wages subject to wage withholding, in which case their due date is April 15.