What is the 1040 NR?

By Ventura Pranas | 15/04/2024

What is the 1040 NR?

This is a non-resident 1040 that is filed in the US only to report incomes arising in the US and not having to report income derived in India or any other country for that matter. Keep in mind US imposes taxes on worldwide income even on deemed residents who are visiting the US and happen to spend more than 183 days. Therefore, it is important to know when you need to file a regular 1040 (resident return) vs a 1040 NR (non-resident return).

What are some scenarios?

There are several scenarios that we come across:

People who move to the US on an H1B previously living outside the US
People previously on some visa in the US returning mid year to India
Students who go to the US on an F1- STEM or Non STEM
Clients who apply for a GC under the EB5 and move to the US for the first time.
Other applicants under the EB1 , J1, L1
B1/B2 visa holders staying in the US for significant periods of time
People who have never gone to the US but derive income by virtue of investments in the US – brokerage or ESOPs in a US parent of their Indian/foreign employer

When should you file 1040 NR?

Does the 1040NR require FATCA filings? One of the big issues that drives compliance and taxpayers to seek professional assistance in the US to file returns is FATCA and the penalties associated with not filing them. If one is eligible to file a 1040NR then usual forms under FATCA normally filed with a 1040 resident return are not required with a 1040NR. Filing them is not wrong but is not required.

Situation: You are on H1B and you moved to India

If you were on H1B and you moved to India? You can very well file a 1040NR for US sources. A close review would have to be made in the year you move to see if you qualify to file a 1040NR or 1040 (per the substantive presence tests) but there are ways you can still qualify either because your employment moved, you are filing as a resident in another country or because you have closer tax ties in an another country. Talk to your advisor because it can make a significant difference in terms of savings on state taxes and potentially even US taxes on foreign sources.

What is the 1040 NR?

Table of Contents