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Everything You Need to Know About Filing a US Nonresident Tax Return

26 Feb 2021

The following guest article is by Sprintax.

The IRS tax filing deadline is right around the corner and if you are earning an income in the US as a nonresident you are required to file a tax return.

Many nonresidents are daunted by the prospect of filing their documents and are unsure of what they need to do to stay tax-compliant.

So, with that in mind, the IGDA has partnered with Sprintax – the only online solution for nonresident Federal and State Tax Returns – to create this handy guide to everything you need to know before the 15 April deadline.

First thing’s first, how do I know if I am resident or nonresident for tax purposes?

Before you file your tax return, it’s vital to properly determine your US tax residency status as this can have a big effect on how you are taxed in the US.

In short, you will be considered a nonresident in the US if you do not have a Green Card and you can’t pass the Substantial Presence Test.

You can easily determine your US tax residency status for FREE with Sprintax. And the best part? It only takes a couple of minutes! Determine your US tax residency status here.

Who is required to file tax documents in the US?

Every nonresident in the US is required to file tax documents to account for their time in the US.

If you earned an income from US sources, you should file a form 1040-NR (Federal Tax Return) before the 15 April deadline.

What’s more, you may also be required to file a State Tax Return, depending on the state in which you lived and worked.

Wait! I work directly for a US company but I am working remotely from my home country. Do I still have to file a tax return?

Unlike US citizens and residents, nonresident aliens are only subject to tax on income that is considered ‘US sourced’.

Generally speaking, if you earn income while outside the US, the IRS will consider this income to be ‘foreign sourced’. In other words, even if you start a new job in the US and leave to continue the same work for the same employer in a different country, the income earned while outside the US will be considered foreign sourced.

If your only source of income is foreign sourced (and you do not have any US source income), you will not have a US tax-filing requirement. However, you may have a tax filing requirement in your home country.

It’s also important to note that if you return to the US to work, your income will once again be taxable and reportable in the US. You will also be required to complete all of the relevant income forms (such as a W-4 and W-8BEN – more on these below).

When is the tax filing deadline?

If you do have a US tax-filing requirement, you must file your tax return before the 15 April deadline.

If you miss the deadline, you may incur fines or penalties from the IRS. You may also jeopardise your future US visa applications.

Do I really have to file as a nonresident? What will happen if I file as a resident?

Filing as a resident is the most common mistake that nonresidents make with their taxes each year.

In short, if you file as a resident when you should have filed as a nonresident, you will not be compliant with the IRS. As a result, you may incur fines or penalties for filing incorrectly.

It’s important to keep in mind that many tax filing solutions – including TurboTax – are for US residents only and do not cater to nonresidents.

What tax documents will I need to file my tax return?

When you sit down to file your US tax return, be sure to have the below documents close at hand:

  1. Your Tax Identification Number (TIN)

The most common TIN is the Social Security Number (SSN). If you are not eligible for an SSN, you will need to apply for an Individual Taxpayer Identification Number (ITIN).

  1. Your Passport

You will need to have your passport and the exact details of all of your visits to the US during the tax year. If you are unsure of your entry and exit dates, you can check them on the US Customs and Border Protection (USCBP) website.

  1. W-2 Form

If you worked in the US, you’ll get a W-2 form from your employer by the end of January. This form includes important details regarding your total gross earnings (such as: wages, tips and taxable fringe benefits) and the Federal and State tax that is withheld.

  1. 1042-S Form

If you received any of the below types of income from your employer, you will receive a 1042-S by 15 March.

  • Scholarship
  • Fellowship
  • Grant
  • Teaching or research income (where exempt under a tax treaty)
  • Compensation during study and training (exempt by tax treaty)
  • Investment income
  • Deposit interest on US bank account
  1. 1099 Form
  2. Your visa immigration status information

If you are in the US on a J visa, you will need your DS-2019. Alternatively, if you are in the US on an F visa, you will need your Form I-20 when filing.

 

Can I claim any tax treaty benefits?

The US has signed tax treaty agreements with more than 60 countries. If you are entitled to claim tax treaty benefits, you may be exempt (or at least partly-exempt) from paying tax in the US.

To claim this reduced rate, you must complete a 8233 form for exemption on personal services and a W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding). The purpose of these forms is to confirm the country you live in, that you are not a resident in the United States and to provide information about the tax treaty article you want to claim.

Sprintax TDS can help you with all of the income documents you need when you start working in the US. Find out more here.

Will I be entitled to a tax refund?

Probably! Every year thousands of nonresidents in the US are entitled to claim a tax refund. In fact, the average tax refund a Sprintax user receives is $1,153! Do you really want to leave that kind of money behind? Of course not! You can claim your refund by filing your tax documents before the deadline.

About Sprintax

The IGDA has partnered with Sprintax to help you file your US taxes easily online.

Sprintax is the only online self-preparation software for nonresident federal and state tax returns.

To file your tax return today, simply create your Sprintax account and complete their easy online questionnaire. You will then be able to download your completed tax documents.

 

Why file with Sprintax?

  • All-in-one tax solution
  • Automatic generation of competed Federal, State & FICA tax returns, form 8843, ITIN applications and more
  • IRS compliance guaranteed
  • You will receive your maximum US tax refund

Sprintax also offers ‘round the clock tax support. If you are having trouble completing your return, you can contact their Live Chat 24/7.

Learn more about Sprintax.

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