Sticking to the US from a foreign country presents both joys and challenges to each nonresident. Among the more common difficulties nonresidents confront is submitting their tax return. In this article, we’ll be talking forms 1040, 1040NR, 1040NR-EZ, and how they apply to every individual’s situation.
Form 1040 (NR & NR-EZ) figures out that the whole taxable income of the citizen and also decides just how much of a refund that the individual could be expected.
Thus, without further ado, let us examine how to determine which form applies to you personally!
Deciding your residency status for Taxation purposes
This is almost always an integral part of figuring out which forms you want to file to your US tax return, and how much tax you may pay.
Among the most common mistakes nonresidents create is submitting their own taxes as a resident. If a nonresident documents as a resident they could claim benefits and get refunds they’re not entitled to.
There are 3 sorts of residency for tax purposes: resident for taxation purposes, nonresident for tax functions, and double resident.
Should you file Form 1040, 1040NR, or even 1040NR-EZ?
If you make an income from US sources, then you have to submit a tax return.
Filing the incorrect form may cause complications if applying for a prospective US visa or to get a Green Card, or perhaps penalties and fines.
If you document the incorrect form, you need to amend your tax return as not to lead to difficulties with the IRS after in this year.
The difference between 1040NR and 1040NR-EZ
Basically, Form 1040NR-EZ can be utilized if your only income from U.S. resources is wages, tips, salary, prices of state and local income taxation, or fellowship scholarship and grants.
Most international students will record Form 1040NR-EZ. This is only because it satisfies the standards of the majority of nonresident person’s circumstances.
As previously mentioned, it is dependent upon the person’s circumstances. You need to file 1040NR-EZ rather than Form 1040-NR if some of those below sound just like you:
- Your taxable income is less than $100,000
- Your sole US source income was from wages, salary, tips, refunds of state and local income taxation, scholarship or fellowship grants, and non-taxable dividends or interest.
Note: In case you had taxable interest or dividend income, then you should use Form 1040NR.
- The only taxes you owe are:
- The tax in the Tax Table.
- Unreported social security and Medicare tax from Form 4137 or 8919.
- The only itemized deduction you may claim is for local and state income taxation.
- You Don’t claim any tax Credits.
- The sole exclusion you can assert is that the exception for scholarship and fellowship grants, and the only alteration to cash you can consider is your student loan interest deduction
- You Don’t maintain a kid or child care costs tax credits
- You Don’t claim any dependents
- If you expatriated or terminated your US residency, or else You’re subject to the expatriation tax, then you should use Form 1040NR if You’re required to file that sort.
- You cannot claim any deduction Aside from the student loan interest deduction and the itemized deduction for state and local income taxes (or, in case a resident of India who was a student or business apprentice, the standard deduction)
- You cannot be claimed as a dependent on another person’s US tax return (such as your parent’s return)
Below you may see the 1040NR-EZ form, together with instructions outlining what you will have to have to be able to finish the document.
As you can see, the form will ask you for some personal info, for example:
- Your name, address, and TIN.
- Information of your salary, salary, tips, etc. Your employer will give you a Form W-2 (Wage and Tax Statement) by early February, and you’ll discover this document very helpful once you’re submitting your end of year tax return. The form includes significant details about your overall gross earnings including salary, tips, taxable fringe benefits, along with the Federal and State tax That’s withheld.
- Information of your scholarship and fellowship grants, if applicable.
- Information of treaty-exempt earnings – If You’re entitled to avail of tax treaty benefits, you need to report All of Your income That’s exempt in your form 1040NR-EZ.
Who Should Complete Form 1040NR?
This is called the ‘complex’ of those 2 forms. It’s a five page form used for reporting revenue like self-employment reimbursement, investments, in addition to the forms of revenue.
It’s generally for nonresidents who made investment earnings, sold or purchased a home, or self-employment income, or other revenue.
In addition, it can be used by nonresidents that qualify for a tax treaty and desire to claim a tax refund for employment taxes which were withheld before the taxation treaty was allowed.
Which tax form should I document if I’m a dual-status alien?
Nonresident aliens at the start of the tax season and resident aliens in the close of the tax season should file Form 1040 branded “Dual-Status Yield” with Form 1040NR connected as a program and branded”Dual-Status Statement.”
Taxpayers who had been resident aliens at the start of the tax season and nonresident aliens in the close of the tax season should rather file Form 1040NR branded “Dual-Status Yield” with Form 1040 connected as an agenda and labeled”Double Reputation Statement.”
What form should I fill out if I did not get any income?
If you didn’t obtain any US sourced income throughout your stay from the States, you must file a Form 8843.
Form 8843 isn’t an income tax return. On the contrary, it’s a statement you document to your US Government if you’re a particular sort of nonresident alien for tax purposes.
But in the event that you earned money from the US you have to submit a tax return – Form 1040NR/Form 1040 NR-EZ – in addition to Form 8843.
Could I document my 1040NR or even 1040NR-EZ online?
The IRS let e-filing of all 1040NR forms. Additionally, but we are the only tax planning program for nonresident aliens in the United States and also the nonresident tax associate of Turbotax! There are now no nonresident tax homework alternatives that provide e-filing services.
As soon as you’ve prepared your form, you need to register it, and send it to the closest IRS processing center at the country that you were in during your stay.