We’re here to help you handle your Form 1040-NR filing the right way. It’s the US tax form for nonresidents earning US income. What most people don’t realize: they may overpay thousands in taxes even though treaties stop double taxation. In fact, more than 40% of nonresidents, like Canadians with rentals, F-1 students or others, miss valuable tax treaty benefits.
In this 1040-NR tax guide, our team at SAL accounting will walk you through who needs to file, how to file 1040-NR, and easy ways to grab treaty savings. Stay with us to skip penalties and keep more of your money.
Quick Takeaways
- Form 1040-NR reports only U.S. income for nonresident aliens in 2025.
- File by April 15 or June 15, 2025, to avoid costly penalties.
- Use Schedule OI to claim treaty benefits and cut tax bills.
- Track W-2, 1042-S, or 1099 forms for accurate Form 1040-NR filing.
- File Form 1040-NR to recover over-withheld taxes on rentals or scholarships.
What Is Form 1040-NR for Nonresident Aliens?
Form 1040-NR is your go-to US tax form if you’re a nonresident alien. It tracks money you make in the US, like wages, scholarships, or rent. You’re a nonresident if you don’t have a green card or don’t stay in the US long enough. This US tax return for nonresident aliens covers only your US income, not everything you earn globally (IRS Form Guide). Consult our cross-border tax accountant and fill out the form with no worries. Check the form header:
Who Must File Form 1040-NR in 2025?
Nonresident aliens with US income file Form 1040-NR. You need it if you don’t have a green card or don’t spend enough time in the US (183 weighted days over three years). Certain groups use this form. They include:
- Students on F, J, M, or Q visas with US scholarships or stipends.
- Canadians with US rental income. Learn about the tax implications of US rental income.
- Freelancers or contractors paid by US companies. Also, see how to file Form 1099-K for e-commerce to gain more info.
- Scholars on J-1 visas with US grants.
- Investors with US dividends or royalties.
Example: A Canadian earning $15,000 from US rentals files Form 1040-NR to report that US rental income for nonresidents. Or, a freelancer with a $20,000 US contract files to report 1099 income.
Pro Tip: Double-check your visa status to ensure you’re a nonresident before filing.
Form 1040-NR vs 1040: Key Differences Explained
Form 1040-NR and Form 1040 are different. Form 1040-NR helps nonresident aliens file their US tax return, like Canadians who report their income on the US tax return. Form 1040 is for US citizens and residents. It covers all their money, from anywhere. Here’s what sets them apart:
- Money Reported: Form 1040-NR counts only US cash. Form 1040 counts worldwide cash.
- Filing Options: Form 1040-NR has a few choices, like single or married nonresident. Form 1040 has more, like head of household.
- Deductions/Credits: Form 1040-NR limits deductions and credits. Form 1040 gives more options.
| Feature | Form 1040-NR | Form 1040 |
| Money Reported | U.S. cash only | All cash, worldwide |
| Filing Options | Single, married nonresident | Single, married, head of household |
| Deductions/Credits | Few, like treaty benefits | More, like standard deduction |
Example: A J-1 student filing Form 1040 by mistake might report non-U.S. money and get audited.
- Read More: “US–Canada Dual Citizenship Taxes: Filing Requirements and Tax Implications Explained (2025)”
How to File Form 1040-NR: Step-by-Step Guide
Below are easy steps to file Form 1040-NR in 2025. This form tracks your US cash for nonresident aliens. Use these steps to stay on top and dodge IRS trouble.
Step 1: Get an ID Number
You need an ID for Form 1040-NR. Grab your SSN if you have it. Get an ITIN if you don’t. Check how to get your ITIN as a Canadian. Fill out Form W-7 and send it with your return. This shows the IRS who you are.
Pro Tip: Kick off your ITIN application early. It can take 7 weeks.
Step 2: Gather Your Papers
Grab your tax papers first. Pick up W-2 for wages or 1042-S for scholarships. Knowing instructions on Form 1042-S for reporting US income and claiming refunds may be helpful. Snag 1099 forms for US rental income or royalties. Include Schedule K-1 for partnerships. These list your US cash.
Pro Tip: Save copies of every paper. The IRS might want them later.
Step 3: Report Your Cash
Put your US cash on the form. List wages or business money (ECI) on page 1. Add dividends or interest (FDAP) on Schedule NEC. Use Schedule E for rental income if it’s ECI.
Pro Tip: See if your cash is ECI. It usually gets lower tax rates.
Step 4: Add Schedules
Tack on schedules to your form. Use Schedule OI for treaty benefits and residency info. Include Schedule NEC for non-ECI-like interest. Add Schedule A if you itemize deductions. You can check the forms below:
Pro Tip: Check your country’s treaty rules. Mess-ups can spark IRS audits.
Step 5: Check Deadlines
Know when to file. Send by April 15, 2025, for wages. Use June 15, 2025, for FDAP income only. Get more time with Form 4868 if needed.
Pro Tip: File on time to avoid penalties. Late filing adds 5% per month on unpaid taxes.
Step 6: Send Your Form
Pick how to send your return. E-file for quick processing if you can. Mail paper forms to the IRS Austin Service Center if you can’t e-file. Include payments, but don’t staple.
Pro Tip: Use certified mail for paper forms. It proves you sent them on time.
Tax Treaty Benefits with Form 1040-NR
Tax treaties lower your taxes on Form 1040-NR. They stop double taxation on your US income as a nonresident. The US has deals to cut or skip taxes on some income. Schedule OI lets you claim treaty benefits on Form 1040-NR. List your country’s tax deal. Your country and income type decide eligibility. Common benefits include:
- Canada: 0% tax on royalties and certain rental income from US properties, if not business-related. Learn more about how the US-Canada tax treaty works.
- India: No tax on stipends or scholarships for students on F or J visas.
- UK: Reduced tax rates on dividends and interest from US investments.
Pro Tip: File Form 8833 to claim specific treaty exemptions, like reduced rates or exclusions for certain income types.
How to Avoid Penalties with Form 1040-NR
You can avoid penalties by filing Form 1040-NR correctly. Messing up deadlines or reports costs you cash. File smart to keep the IRS happy.
Deadlines:
- April 15, 2025, for wages or business income.
- June 15, 2025, for rentals or dividends only.
- Extend to October 15, 2025, with Form 4868.
Penalties:
- Late filing: 5% per month, up to $10,000.
- Interest on unpaid taxes: ~8% in 2025.
- Wrong income reports risk audits or fines.
Withholdings:
- IRS takes 30% from rentals or scholarships. Have a look at the guide on FRITA tax for property sellers in the US.
- Over-withholding happens without treaty claims.
- File Form 1040-NR to get excess taxes back.
Pro Tip: File even if you owe nothing to grab withheld taxes back.
Common Mistakes When Filing Form 1040-NR
Below are common mistakes to avoid when filing Form 1040-NR in 2025. These errors can cost you cash or spark IRS trouble for nonresidents.
1. Late Filing
Late filing hurts. Missing April 15 or June 15, 2025, adds 5% monthly penalties, up to $10,000. File on time to save cash.
2. Wrong Form
Form 1040 is wrong. Form 1040-NR is for nonresident aliens. The wrong form risks audits or delays.
3. Missed Treaty Benefits
Skipped treaty benefits cost you. Use Schedule OI to lower taxes. Canadians might overpay for nonresidents’ US rental income.
4. Untracked Forms
Forgotten Form 1042-S or 1099 forms mess up. These track your US cash. Missing them ruins your return.
5. Skipped Form 8843
No, Form 8843 is a mistake. Nonresidents with no income but a visa need it. Skipping it risks IRS notices.
6. Non-U.S. Cash Reporting
Non-U.S. cash reports are a slip-up. Form 1040-NR covers only US money. Wrong reports trigger fines. Connect with our US Canada tax accountant for a consultation and stay free of mistakes. This table shows mistakes and fixes:
| Mistake | What Goes Wrong | Impact | Fix It |
| Late Filing | Miss April 15/June 15, 2025 | 5% monthly penalty, max $10,000 | File by deadlines |
| Wrong Form | Use Form 1040, not Form 1040-NR | Audits, delays | Use Form 1040-NR |
| Missed Treaty Benefits | Skip Schedule OI for U.S. rental income nonresidents | Overpay taxes | Add Schedule OI; see treaty benefits |
| Untracked Forms | Forget 1042-S/1099 | Ruins return | Track U.S. cash forms |
| Skipped Form 8843 | No Form 8843 despite visa, no income | IRS notices | Submit Form 8843 |
| Non-U.S. Cash Reporting | List non-U.S. money | Fines | Report only U.S. money |
Case Study: A Canadian Investor’s Form 1040-NR Mix-Ups*
Problem: Sarah, a Canadian, rents a US condo for $20,000. She files Form 1040-NR late, missing the June 15 deadline. She skips treaty benefits and forgets 1099 forms. The IRS keeps 30% ($6,000) of her money. A 5% penalty ($1,000) hits. An IRS notice comes for missing forms.
What We Do: Our team files Form 1040-NR on time. We add treaty benefits and track 1099s. We ask to cancel the penalty.
The Result: Sarah gets back $6,000. The penalty goes away. Her filing is now right, no IRS trouble.
Key Advice for Filing Form 1040-NR
Here’s key advice for filing Form 1040-NR. These tips help nonresidents save money and file right:
- Timely filing hits April 15 or June 15, 2025, deadlines.
- Correct form picks Form 1040-NR for nonresidents only.
- Treaty benefits on Schedule OI cut taxes for Canadians on US rental income.
- Tracked forms save 1042-S and 1099 for US money.
- Form 8843 submission covers nonresidents with no money but a visa.
- Residency check confirms you’re a nonresident for the right form.
Pro Tip: Use IRS Free File for fast, free e-filing if you can. It makes Form 1040-NR easy and saves time. Our bookkeepers in Toronto are here if you need more help.
Case Study: A Canadian Freelancer’s Form 1040-NR Win*
Problem: Liam, a Canadian, makes $30,000 from US jobs. He’s confused about Form 1040-NR and treaty benefits. The IRS takes 30% ($9,000) of his money, risking a big tax loss.
What We Do: Our team checks Liam’s nonresident status. We file Form 1040-NR by April 15 with IRS Free File. We track 1099s and add treaty benefits for US rental income nonresidents. We file Form 8833.
The Result: Liam saves $6,000 in taxes. He gets all the withheld money back. His filing is clean, no IRS issues.
Final Thoughts
Form 1040-NR helps nonresidents save money and stay compliant. You can skip penalties by filing on time and claiming treaty benefits. This US tax return for nonresident aliens ensures you keep more cash in 2025. Follow our steps to file right and avoid errors.
If you need help with Form 1040-NR or US tax rules, contact us at SAL Accounting and make compliance easy and boost your savings.
*Hypothetical scenario
FAQs on Form 1040-NR
Yes, if you’re a U.S. citizen living in Canada or a Canadian with U.S.-sourced income, you are required to file a U.S. tax return.
Report U.S. income on your Canadian tax return, then use CRA’s foreign tax credits to offset Canadian taxes paid on the same income.
Yes, as a U.S. citizen or green card holder, you must file taxes annually regardless of where you live.
Utilize the U.S.-Canada Tax Treaty, the Foreign Earned Income Exclusion, and the Foreign Tax Credit to eliminate double taxation.
If your foreign bank account balances exceed $10,000 at any time during the year, you must file an FBAR (Form 114).
Yes, unless you file Form 8891 to defer taxation.
Yes, you may be able to deduct Canadian health care premiums as medical expenses on Schedule A if you itemize deductions on your U.S. tax return.
