How to File Form 1040-NR as a Nonresident Alien in 2026: Complete Guide

How to file Form 1040-NR as a nonresident alien was the question Alex Rivera faced when his colleague Diego a Spanish national on a J-1 research visa asked him for help during tax season. Diego had U.S.-source income, no green card, and had not been in the country long enough to meet the substantial presence test. He was a nonresident alien. Form 1040-NR was his form. But he had no idea what that meant, what income to report, or what he could deduct.

This guide answers every question Diego had using the official 2025 IRS instructions for Form 1040-NR and Publication 519.

Not sure if you are a resident alien or nonresident alien? Read this first: How to File U.S. Taxes with an ITIN — What Every Immigrant Needs to Know Don’t have an ITIN yet? Start here: How to Apply for an ITIN in 2026

What Is a Nonresident Alien?

You are a nonresident alien for U.S. tax purposes if you are not a U.S. citizen and do not meet either of the two residency tests:

Green Card Test: You did not hold a U.S. green card at any point during 2025.

Substantial Presence Test: You were not physically present in the U.S. for at least 31 days in 2025 AND at least 183 days using the weighted three-year formula (all days in 2025, plus 1/3 of days in 2024, plus 1/6 of days in 2023).

If you meet neither test, you are a nonresident alien and Form 1040-NR is your return not Form 1040.

Diego had been in the U.S. for 8 months on a J-1 visa. J-1 visa holders are exempt individuals their days do not count toward the substantial presence test for the first two calendar years. Diego was a nonresident alien regardless of how many days he spent in the U.S.

How to File Form 1040-NR as a Nonresident Alien: Who Must File in 2026

You must file Form 1040-NR for tax year 2025 if any of the following apply:

You were engaged in a U.S. trade or business during 2025. This includes performing personal services in the U.S. even if you had no income from that activity, even if all income was exempt under a tax treaty. If you had no gross income, you still file attach Schedule OI and a list of treaty exclusions.

You were not engaged in a U.S. trade or business but received U.S.-source income and not all tax owed was withheld at source. For example, you received U.S. dividends or royalties and the withholding on those payments did not cover your full tax liability.

You owe special taxes Alternative Minimum Tax, household employment taxes, additional taxes on IRAs or qualified retirement plans, Social Security or Medicare tax on unreported tips.

You received HSA, Archer MSA, or Medicare Advantage MSA distributions.

You had net self-employment earnings of at least $400 and are a resident of a country with a U.S. totalization agreement.

You received advance payments of the premium tax credit (Form 1095-A).

You are a personal representative for a deceased nonresident alien required to file, or a fiduciary for a nonresident alien estate or trust.

You held a qualified investment in a Qualified Opportunity Fund (attach Form 8997).

File even if not required above if you are due a refund of overwithheld tax from Forms W-2, 1042-S, 8805, or 8288-A.

Exceptions generally no filing required:

• Nonresident alien students, teachers, or trainees on F, J, M, or Q visas with no taxable U.S.-source income
• Eligible U.S.-India treaty (Article 21(2)) students and business apprentices with gross income at or below $15,750 (single) or $31,500 (qualifying surviving spouse) in 2025

The Two Types of Income Nonresident Aliens Pay Tax On

This is the most important concept in the entire guide. Nonresident aliens are taxed only on U.S.-source income but that income falls into two completely different categories, taxed at completely different rates.

Effectively Connected Income (ECI)

ECI is income connected with a U.S. trade or business. This includes:

• Wages for services performed in the U.S.
• U.S. business profits
• Gains from U.S. real property interests
• Certain foreign-source income attributable to a U.S. fixed place of business

How it is taxed: At graduated rates the same rates that apply to U.S. citizens and residents. Deductions are allowed against ECI. Reported on page 1 of Form 1040-NR.

FDAP Income Fixed, Determinable, Annual, or Periodical

FDAP is passive U.S.-source income not connected to a U.S. business. This includes:

• Dividends
• Interest (except portfolio interest)
• Rents and royalties
• Pensions and annuities
• Gambling winnings
• 85% of U.S. Social Security benefits

How it is taxed: At a flat 30% rate on the gross amount no deductions allowed. A lower rate may apply under a tax treaty. Reported on Schedule NEC of Form 1040-NR.

Summary table

Diego’s J-1 stipend from his U.S. university was ECI services performed in the U.S. It was taxed at graduated rates. Any U.S. bank interest he earned was FDAP taxed at 30% on the gross amount with no deductions.

Key Sections of Form 1040-NR What Goes Where

Page 1 (Income): All ECI. Wages on lines 1a–1z. Treaty-exempt ECI on line 1k. Total ECI on line 9. Adjusted gross income on line 11a. Tax on FDAP from Schedule NEC flows to line 23a.

Schedule NEC: All FDAP income not effectively connected. Dividends, interest, royalties, rents, pensions not elected as ECI, Social Security, gambling winnings. Tax computed here at 30% or treaty rate.

Schedule A (Form 1040-NR): Itemized deductions but only those allocable to ECI. State and local taxes on ECI, charitable contributions to U.S. organizations, casualty and theft losses from federally declared disasters, gambling losses up to the amount of ECI gambling winnings.

Schedule OI (Form 1040-NR): Other information including treaty claims. Item L is where you report the treaty country, article number, months claimed in prior years, and the exempt or reduced amount.

Schedule 1 (Form 1040): Additional ECI income and adjustments business income, rental income if ECI, educator expenses, self-employed health insurance, IRA contributions if based on ECI compensation, student loan interest.

What Deductions Nonresident Aliens Can and Cannot Claim

This is where most nonresident aliens make expensive mistakes either overclaiming deductions they are not entitled to or underclaiming ones they are.

Deductions you CAN claim (ECI-connected only):

Business expenses: Ordinary and necessary expenses from operating your U.S. trade or business.

Adjustments to income (Schedule 1):

• Educator expenses up to $300
• Deductible portion of self-employment tax
• Self-employed health insurance and retirement plan contributions if based on ECI
• IRA contributions if you have ECI compensation
• Student loan interest up to $2,500 (not available if married filing separately)

Itemized deductions (Schedule A):

• State and local income taxes paid on ECI up to $10,000 ($5,000 if married filing separately)
• Charitable contributions to qualified U.S. religious, charitable, or educational organizations
• Casualty and theft losses from federally declared disasters
• Gambling losses up to the amount of gambling winnings

Deductions you CANNOT claim:

• Standard deduction not available to nonresident aliens (exception: eligible U.S.-India treaty students and business apprentices)
• Personal exemptions eliminated since 2018
• Any deduction against FDAP income FDAP is always taxed on gross
• Alimony paid under post-2018 agreements

New 2025 deductions from the One Big Beautiful Bill Act:

The no-tax-on-tips, no-tax-on-overtime, and enhanced senior deduction provisions are potentially available to nonresident aliens if the income is ECI and the eligibility requirements are met. The qualified passenger vehicle loan interest deduction is generally not available to nonresident aliens.

Credits Nonresident Aliens Can and Cannot Claim

Can claim:

• Foreign tax credit (Form 1116) only on ECI
• Credit for Other Dependents if dependent has valid SSN or ITIN issued by return due date
• Child Tax Credit only for U.S. nationals or residents of Canada or Mexico; limited for South Korea and India treaty students
• Adoption credit (Form 8839) up to $17,280 with $5,000 refundable portion in 2025 under eligibility limits
• Retirement savings contributions credit (Form 8880)
• Premium tax credit if Form 1095-A was issued

Cannot claim:

• Earned Income Credit requires valid SSN; nonresident aliens are ineligible
• American Opportunity Credit and most education credits
• Child and dependent care credit (except narrow cases)
• Head of household filing status

How to Claim Tax Treaty Benefits on Form 1040-NR

The U.S. has tax treaties with dozens of countries that reduce or eliminate U.S. tax on certain types of income. If your home country has a treaty with the U.S., you may owe less than the standard 30% FDAP rate.

How to claim:

Step 1: Report the exempt or reduced-rate income on Form 1040-NR line 1k (for ECI) or in the appropriate columns of Schedule NEC (for FDAP).

Step 2: Complete Schedule OI, Item L. Enter your treaty country, the specific article number, the number of months you claimed benefits in prior years, and the exempt or reduced amount.

Step 3: Attach Form 8833 if required. Form 8833 is generally required when your treaty-based position overrides an IRC rule or when the tax reduction exceeds $10,000. Common FDAP withholding reductions (interest, dividends, rents, royalties) and personal services income under $10,000 are usually exempt from the Form 8833 requirement.

2025-2026 treaty updates to know:

• Russia: U.S.-Russia treaty partially suspended effective August 2024. Standard 30% withholding now applies to previously reduced income.
• Belarus: U.S.-USSR/Belarus treaty suspended December 2024 through December 2026. 30% rate applies.
• Hungary: U.S.-Hungary treaty terminated January 2024. 30% rate applies.

If you are from Russia, Belarus, or Hungary, do not assume treaty rates still apply. They do not.

Dual-Status Aliens Who It Applies to and How to Handle It

You are a dual-status alien if you were both a nonresident alien and a resident alien during the same tax year. This commonly happens in two situations: the year you arrived in the U.S. and became a resident, or the year you left the U.S. and stopped being a resident.

How to file as a dual-status alien:

If you were a resident alien at the end of 2025: File Form 1040. Write “Dual-Status Return” at the top. Attach a dual-status statement a completed Form 1040-NR marked “Dual-Status Statement” across the top showing your income during the nonresident period.

If you were a nonresident alien at the end of 2025: File Form 1040-NR. Write “Dual-Status Return” at the top. Attach a dual-status statement a completed Form 1040 marked “Dual-Status Statement” showing your worldwide income during the resident period.

Important restrictions for dual-status filers:

• Cannot e-file must paper file
• Cannot file a joint return unless you elect to treat your nonresident spouse as a resident for the full year
• Cannot claim the standard deduction for either period

2026 Deadlines for Form 1040-NR Filers

Critical rule: Filing an extension extends your time to file not your time to pay. If you owe tax, pay by your original deadline to avoid penalties and interest.

Refunds from Forms 1042-S, 8805, or 8288-A may take up to six months to process.

Where to mail: The mailing address for Form 1040-NR is in the instructions. Most individual nonresident alien returns go to Austin, TX or Charlotte, NC depending on your situation. Verify the current address in the instructions before mailing.

Diego’s Filing Situation What He Actually Did

Diego was a J-1 researcher. His days in the U.S. did not count toward the substantial presence test for his first two years. He was a nonresident alien.

His income was his J-1 stipend from the university ECI, taxed at graduated rates. He had no FDAP income. He filed Form 1040-NR, reported his stipend on page 1, checked Schedule OI to confirm whether the U.S.-Spain tax treaty reduced his rate (it did, for certain scholarship income), and completed Schedule OI Item L with the treaty details.

He could not claim the standard deduction. He claimed the student loan interest deduction as an adjustment to income his loans were tied to his ECI compensation. He could not claim the Earned Income Credit.

His refund arrived nine weeks after filing. He paper filed because he was simultaneously renewing his ITIN.

Pre-Filing Checklist for Form 1040-NR

• Confirmed nonresident alien status did not meet green card test or substantial presence test
• Identified all U.S.-source income separated ECI from FDAP
• Checked whether home country has a U.S. tax treaty that reduces rates
• Gathered all income documents W-2, 1042-S, 1099 forms
• Confirmed ITIN is active and not expired
• Completed Schedule NEC for all FDAP income
• Completed Schedule OI Item L if claiming treaty benefits
• Attached Form 8833 if required for treaty position
• If dual-status: prepared both Form 1040-NR and dual-status statement
• Mailing address confirmed from current IRS instructions
• Extension filed by original deadline if more time needed tax paid by original deadline regardless

Frequently Asked Questions

Can I e-file Form 1040-NR?
Yes, if your ITIN is active and you are not simultaneously applying for or renewing an ITIN. Dual-status returns cannot be e-filed paper only.

What is a 1042-S form?
Form 1042-S is issued by U.S. withholding agents universities, employers, banks to report U.S.-source income paid to nonresident aliens and the tax withheld. You will receive this instead of or in addition to a W-2 depending on the nature of your income.

Can I claim the Child Tax Credit as a nonresident alien?
Only if you are a U.S. national or a resident of Canada or Mexico. For most other nonresident aliens, the Child Tax Credit is not available. The Credit for Other Dependents ($500) may be available if the dependent has a valid SSN or ITIN issued by the return due date.

My country’s treaty was suspended. What do I do?
Apply the standard 30% rate to all FDAP income that was previously covered by the treaty. Do not claim treaty rates that no longer apply this will trigger an IRS notice and possible penalties.

What if I was both a student and had part-time U.S. wages?
Your wages are ECI taxed at graduated rates. Your stipend or scholarship may be partially or fully exempt under a treaty verify against your specific treaty and complete Schedule OI. Both can exist on the same return.

Is Social Security income taxable for nonresident aliens?
Yes. 85% of U.S. Social Security benefits are treated as FDAP income and taxed at 30% or at a lower treaty rate if applicable.

Conclusion

Form 1040-NR is not complicated once you understand the fundamental split: ECI is taxed at graduated rates with deductions allowed, FDAP is taxed at 30% on the gross with no deductions. Everything else which form sections to use, what credits are available, how to claim treaty benefits flows from that distinction.

Diego filed his first Form 1040-NR in under two hours once he understood those two categories. You can do the same.

Download the current Form 1040-NR and instructions directly from IRS.gov. Verify your treaty status. File by your correct deadline.

Sources

• IRS Instructions for Form 1040-NR (2025): https://www.irs.gov/pub/irs-pdf/i1040nr.pdf
• IRS Publication 519, U.S. Tax Guide for Aliens (2025): https://www.irs.gov/pub/irs-pdf/p519.pdf
• IRS Taxation of Nonresident Aliens: https://www.irs.gov/individuals/international-taxpayers/taxation-of-nonresident-aliens
• IRS Tax Treaties: https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z
• IRS Publication 901, U.S. Tax Treaties: https://www.irs.gov/pub/irs-pdf/p901.pdf

Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax rules change frequently. Consult a qualified tax professional for advice specific to your situation.