Form 1040NR: the US non-resident return, explained
If you are not a US citizen, are a nonresident for US tax purposes, and the filing rules require a US return, this is usually the form you file instead of the standard 1040.
Last reviewed by US Tax Professionals, a cross-border tax practice in Winnipeg.
Who files it
US citizens generally use Form 1040 when a return is required. For people who are not US citizens, the green-card and substantial-presence tests help determine resident or nonresident status. Exceptions, elections and treaty rules can change the result. Form 1040NR applies when the nonresident filing rules require it, which depends on the type of US income, such as wages for work done in the US, and whether the right tax was already withheld.
What it changes
Nonresidents are generally taxed on US-source income and income connected with a US trade or business, rather than on worldwide income. Most nonresidents cannot claim the standard deduction, and some credits are not available. Getting the status wrong in either direction can mean overpaying US tax or creating a compliance problem.
Where it interacts with your Canadian return
US tax paid on this return can be the basis for a foreign tax credit on your Canadian T1, which is why the two returns need to be prepared together rather than separately.
Not sure how this applies to your situation?
This guide is general information, not individualized advice. Request a consultation to see how 1040NR fits your actual filing.
Who this usually applies to