Data Notice: Tax figures and rules cited in “Tax Guide for Non-Resident Aliens (Form 1040-NR)” are projected 2026 values based on IRS guidance and current legislation. Tax law changes frequently through legislation, regulation, and inflation adjustments. Verify all figures with IRS.gov and consult a qualified tax professional. [tax-guide-nonresident-aliens]

Tax Guide for Non-Resident Aliens (Form 1040-NR)

Q: Can I claim the Earned Income Tax Credit?

No. The EITC(/earned-income-tax-credit-guide-2026) is not available to nonresident aliens. You must be a US citizen or resident alien with a valid SSN to claim this credit. --- This tax guide nonresident aliens article on taxo.com (tax-guide-nonresident-aliens) is general educational content only — not personalized tax, legal, or financial advice — and readers should consult a qualified CPA, enrolled agent, or tax attorney regarding their individual circumstances before acting on any infor

This tax guide nonresident aliens article on taxo.com (tax-guide-nonresident-aliens) is general educational content only — not personalized tax, legal, or financial advice — and readers should consult a qualified CPA, enrolled agent, or tax attorney regarding their individual circumstances before acting on any information presented here, as tax law changes frequently through legislation, IRS regulation, and annual inflation adjustments.

If you are a non-resident alien (NRA) who earns income from US sources, the IRS has a set of rules specifically for you — and they differ substantially from what US citizens and resident aliens follow. You file a different form, you are taxed only on US-source income, and the withholding rates on certain income types can be surprisingly steep at 30% unless a treaty reduces them.

This guide explains who qualifies as an NRA, how US-source income is categorized and taxed, the critical distinction between effectively connected income and FDAP income, how to apply for an ITIN, and how tax treaties can dramatically change your tax picture.

Who Is a Non-Resident Alien?

You are a non-resident alien for tax purposes if you are not a US citizen and you do not meet either the Green Card Test or the Substantial Presence Test.

The Substantial Presence Test

You are a resident alien if you were present in the US for:

At least 31 days during the current year, AND
At least 183 days over the 3-year period using the weighted formula:
- Current year: count all days
- Prior year: count 1/3 of days
- Year before that: count 1/6 of days

If you do not meet this test (and do not hold a green card), you are an NRA.

Exempt Individuals

Certain visa categories are exempt from the Substantial Presence Test counting:

F-1 students: Exempt for first 5 calendar years
J-1 students/scholars: Exempt for 2 of last 6 calendar years
Foreign government diplomats (A/G visas)
Teachers and trainees under J-1 (2 of last 6 years)

Even if you are physically present for more than 183 weighted days, being an exempt individual keeps you classified as an NRA during the exempt period.

Two Categories of US Income for NRAs

The US divides NRA income into two categories, each taxed differently:

1. Effectively Connected Income (ECI)

Income that is effectively connected with a US trade or business is taxed at the same graduated rates that apply to US citizens. The current tax brackets apply to ECI.

ECI includes:

Wages earned for services performed in the US
Business income from a US trade or business
Certain gains from the sale of US real property (FIRPTA)
Partner’s distributive share from a US partnership

How ECI is reported: On Form 1040-NR, using the same tax table as Form 1040. You can claim deductions that are connected with earning this income.

2. FDAP Income (Fixed, Determinable, Annual, Periodical)

FDAP income from US sources is taxed at a flat 30% rate (or lower treaty rate) with no deductions allowed against it.

FDAP includes:

Interest (from US sources, with exceptions for bank deposit interest)
Dividends from US corporations
Rents from US property (unless you elect to treat as ECI)
Royalties from US-source intellectual property
Certain pensions and annuities
Prizes, awards, and gambling winnings

Income Category	Tax Rate	Deductions Allowed?	Form
ECI	Graduated rates (10%–37%)	Yes, connected deductions	1040-NR (page 1)
FDAP	Flat 30% (or treaty rate)	No	1040-NR (page 4)

NRA Withholding: The 30% Default

Payers of US-source FDAP income to NRAs must withhold 30% federal income tax at the source. This means 30% is taken out before you receive the payment. The withholding agent (employer, bank, broker, etc.) remits the withheld amount to the IRS and reports it on:

Form 1042-S: Reports amounts paid to NRAs subject to withholding
Form W-2: Reports wages (ECI) subject to regular withholding

Reducing or Eliminating Withholding

You can reduce the 30% withholding rate by:

Claiming a tax treaty benefit: Submit Form W-8BEN (for individuals) to the withholding agent before payment. The form certifies your country of residence and the applicable treaty rate.
Claiming the FDAP income is ECI: Submit Form W-8ECI if the income is effectively connected with a US trade or business (taxed at graduated rates instead of flat 30%).

Common Treaty-Reduced Withholding Rates

Country	Dividends	Interest	Royalties
United Kingdom	15%	0%	0%
Canada	15%	0%	0-10%
Germany	15%	0%	0%
Japan	10%	10%	0%
Australia	15%	10%	5%
India	25%	15%	15%
China	10%	10%	10%
France	15%	0%	0%

No treaty? If your country does not have a tax treaty with the US, the full 30% rate applies to FDAP income with no reduction.

Filing Form 1040-NR

Who Must File

You must file Form 1040-NR if you are an NRA and:

You were engaged in a US trade or business during the year (even if you had no income from it or if the income is exempt under a treaty)
You have US-source income on which the tax was not fully satisfied by withholding
You want to claim a refund of over-withheld taxes
You want to claim a treaty benefit that requires filing a return
You are a representative or agent for an NRA who must file

Key Form 1040-NR Differences from Form 1040

Feature	Form 1040-NR	Form 1040
Income taxed	US-source only	Worldwide
Standard deduction	Not available (rare exceptions)	Available
Filing jointly	Not available	Available
Head of Household	Not available	Available
Itemized deductions	Limited to connected deductions	Full range
Tax credits	Limited	Full range
Earned Income Tax Credit	Not available	Available

Connected Deductions for NRAs

NRAs can claim itemized deductions, but only those connected with ECI:

State and local income taxes on ECI
Business expenses related to US trade or business
Charitable contributions to US organizations (subject to treaty provisions)
Student loan interest (for certain qualifying NRAs)
Moving expenses for active-duty military only

You cannot claim the standard deduction on Form 1040-NR, with the exception of students/business apprentices from India under the US-India tax treaty.

ITIN: Getting a Tax ID as an NRA

If you need to file a US tax return but are not eligible for a Social Security Number, you must apply for an Individual Taxpayer Identification Number (ITIN).

How to Apply

Complete Form W-7 (Application for IRS Individual Taxpayer Identification Number)
Attach your completed tax return (Form 1040-NR)
Provide identification documents — your passport is the only stand-alone document accepted; otherwise, you need two from the IRS’s approved list
Submit by mail to the IRS ITIN Operation in Austin, TX, or apply in person through a Certifying Acceptance Agent (CAA) or at an IRS Taxpayer Assistance Center

Key ITIN Details

Detail	Information
Processing time (mail)	~7–11 weeks
Format	9XX-XX-XXXX (always starts with 9)
Expiration	Expires after 3 years of non-use
Renewal	Required if middle digits are 70–88 (rolling expiration)
Can be used for employment?	No — ITINs are for tax filing only
Social Security eligibility?	No — ITINs do not confer immigration status or work authorization

Tax Treaties: Your Most Powerful Tool

Tax treaties between the US and foreign countries can significantly reduce or eliminate US tax on NRA income. Over 65 countries have income tax treaties with the US.

How to Claim Treaty Benefits

Before payment: File Form W-8BEN with the withholding agent (employer, bank, broker) to reduce withholding at the source
On your return: Report treaty-exempt income on Form 1040-NR and attach Form 8833 (Treaty-Based Return Position Disclosure)
For employment: File Form 8233 with your employer to claim exemption from withholding on compensation

Common Treaty Provisions for NRAs

Reduced withholding rates on dividends, interest, royalties (see table above)
Student/trainee exemptions: Many treaties exempt scholarship income and limited amounts of earned income for students
Independent personal services: Some treaties exempt income from professional services performed in the US if presence is limited (usually under 183 days and income is paid by a foreign entity)
Dependent personal services (employment): Some treaties exempt wages if present fewer than 183 days and paid by a non-US employer

For a broader understanding of how international provisions interact with US tax rules, review the expat tax guide.

FIRPTA: Selling US Real Estate as an NRA

If you sell US real property as an NRA, the Foreign Investment in Real Property Tax Act (FIRPTA) requires the buyer to withhold 15% of the gross sales price and remit it to the IRS.

FIRPTA Withholding Rules

Sale Price	Withholding Rate
Up to ~$300,000 (buyer will use as residence)	0%
$300,001–$1,000,000 (buyer will use as residence)	10%
Over $1,000,000 or non-residence use	15%

The withheld amount is not the tax — it is a credit applied against your actual tax liability. You file Form 1040-NR to report the sale, calculate the actual gain, and claim a refund of any excess withholding.

You can apply for a withholding certificate (Form 8288-B) before closing to reduce withholding if your actual tax will be less than the default amount.

Self-Employment Tax for NRAs

Generally, NRAs are not subject to US self-employment tax unless they are self-employed in the US and either:

Their country does not have a totalization agreement with the US, or
The totalization agreement does not cover their situation

If US SE tax applies, report it on Schedule SE along with your Schedule C business income. If you receive a 1099-NEC for US-source services, consult a tax professional to determine whether SE tax applies.

Frequently Asked Questions

Do I need to file a US tax return if I only earned interest from a US bank?

Generally no. Interest on deposits with US banks, savings institutions, and insurance companies is not considered US-source income for NRAs and is exempt from US tax. However, interest on bonds, notes, and certain other obligations is US-source FDAP and may require filing.

Can I get a refund if too much tax was withheld?

Yes. File Form 1040-NR to calculate your actual tax liability. If withholding (reported on Form 1042-S or W-2) exceeded your actual tax, you will receive a refund.

What is my tax filing deadline?

If you received wages subject to US withholding, your deadline is April 15. If you did not receive US wages, the deadline is June 15. Extensions are available using Form 4868.

Do I need to report foreign bank accounts?

No. NRAs are generally not subject to FBAR or FATCA (Form 8938) reporting. These requirements apply to US persons (citizens, resident aliens, and domestic entities).

What if I had income from multiple states?

You may need to file nonresident state tax returns in each state where you earned income. State rules for NRAs vary significantly — some follow federal treaty provisions, others do not.

Can I claim the Earned Income Tax Credit?

No. The EITC is not available to nonresident aliens. You must be a US citizen or resident alien with a valid SSN to claim this credit.