Non-residents and US Tax

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By JP, EA 


This is general information regarding non-US residents and U.S. taxes based on current tax laws, 2024. It is important that you consult with your tax professional on your own personal tax situation. 


A nonresident for tax purposes is someone who:

  • Is not a U.S Citizen,
  • Is not a Green Card Holder
  • Does not meet the substantial presence test. 
There are certain visas that may exempt individuals from the substantial presence test as long as they meet certain requirements, for example J-1 and F-1 visas. These individuals are considered exempt individuals for counting the US days for the substantial presence test, but are not exempt from US tax. It is important to note that Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition may be required to be filed when filing Form 1040-NR. 

If the immigration status changes while holding these types of visas, there could be US tax implications depending on the situation. For additional information regarding this please refer to IRS Publication 519. 

What is substantial presence test?

The substantial presence test is based on the days you have been present in the United States. Generally, this is if you are present in the United States for 183 days for the calendar year or accumulated during a 3 year period, you are considered resident for tax purposes regardless of your immigration status. 

Once you determine your residence status based on the above. Keep in mind the following information. 

  • U.S. residents (U.S. citizens, Green Card Holders and individuals who meet the substantial presence test) are taxed on their worldwide income, regardless where they live. US citizens living abroad are taxed on their worldwide income.


  • Non-U.S. residents are generally taxed only on U.S. source income effectively connected income (ECI) 


US source income and effectively connected income ?


Non- US residents are generally taxed only on the U.S. effectively connected income. There are two categories of income for Non-US residents that are subject to U.S. tax:


  • Fixed or determinable or periodical income taxed on a gross basis at rate of 30%, please refer to IRC section 871(a).


  • Effectively connected income  tax on the net basis, refer to IRC Section 871(b)


When are you required to file Form 1040NR?


  1. When you are a nonresident and you are engaged in US Trade or Business even if there is no income or even if there is an applicable tax treaty that exempt from U.S. tax (wages or business income)

  2.  US source income, not in US trade or Business, but tax is not satisfied by withholdings 

  3. A fiduciary of an estate or trust of a nonresident 

  4. Nonresident claiming the benefit of any deduction purpose of refund 


Due date of the 1040-NR: Generally, the 1040-NR is due on June 15th, but if the non US resident receives wages subject to certain withholdings, the return is due on April 15th. 


There is a 6-month automatic extension by filing form 4868 by the due date of the return.

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