Form 1040-NR
IRS, U.S. Nonresident Alien Income Tax Return
The federal return for people who are not US citizens or residents but have US-source income, a US business or a refund to claim.
What is Form 1040-NR?
Form 1040-NR taxes a nonresident only on US-source income and income connected with a US trade or business, rather than worldwide income. British nationals file it for US rental property, US employment, a share in a US partnership or the sale of US real estate. It is also the return a dual resident uses when claiming UK residence under the treaty.
When a British resident owes a US return
A nonresident's US income falls into two baskets.
Income effectively connected with a US trade or business is taxed at graduated rates after allowable deductions, much as a resident's would be. Fixed or periodic income such as dividends is taxed at a flat rate on the gross amount, usually settled by withholding at source. When withholding at the correct treaty rate covers the liability on that second basket, a return is often not needed for it.
US rental property is the most common reason a UK resident files. Rent is gross passive income by default, which would mean tax on the rent with no deduction for mortgage interest, repairs or depreciation. An election allows the rental to be treated as effectively connected income, so it is taxed on the net profit instead. The election is made with the return and generally stays in place for later years. A sale of the property then brings FIRPTA withholding, which the return reconciles.
The form has limits that surprise people used to Form 1040. Most nonresidents cannot take the standard deduction, cannot file jointly and have a narrower set of credits. Someone who meets the substantial presence test but is a UK resident under the treaty tie-breaker can file Form 1040-NR as a treaty nonresident, attaching Form 8833. Green card holders who do this face a separate question about whether the claim counts as expatriation, which needs checking first.
At a glance
- The IRS
- Filed with
- US-source and effectively connected income only
- Taxes
- 15 April if US wages were received; later otherwise
- Due
- 30%, reduced by treaty where a W-8BEN is on file
- Default withholding on dividends
Figures are for the tax year stated in the official instructions linked below.
How we handle it
- Individual Tax Returns
US federal returns for Americans living in the UK and British nationals with US income, prepared with the UK figures in view.
- Cross-Border Property
US and UK tax on homes and rental property held across the two countries, including sales, currency gains, FIRPTA and UK reporting.
- Treaty Relief
Claims under the US/UK income tax treaty, with Form 8833 disclosure, residence tie-breaker analysis and reduced withholding on US income.
- International Tax
US reporting for owners of UK companies and partnerships, and for UK groups with US entities, including Forms 5471, 8858, 8865 and 5472.
Where people go wrong
The Form 1040-NR errors we correct most often.
Who files it
- British residents who own US rental property directly or through a disregarded LLC
- Nonresidents who worked in the US and received US wages
- Sellers of US real estate reconciling FIRPTA withholding against the actual tax
- Dual residents claiming UK residence under the treaty tie-breaker article
01
Letting a property manager withhold on gross rent without making the net election
02
Filing Form 1040 in error when the filer is a nonresident for the year
03
Claiming treaty nonresidence as a green card holder without weighing the expatriation rules
04
Applying for an ITIN too late to attach the number to the return
Why US UK Tax Returns
Every form is prepared against the official instructions, and every position on it is one we can point to in the Code, the treaty or HMRC's guidance.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
I only have a US brokerage account. Do I need to file a 1040-NR?
Often not. Dividends paid to a UK resident are subject to withholding at 30%, reduced to 15% for portfolio holdings when a valid W-8BEN is on file. If the correct amount was withheld, the liability is usually settled. Capital gains on US shares are generally not taxed for a nonresident who spent little time in the US. A return becomes necessary if too much was withheld or other income exists.
Can my US spouse and I file one joint return if I am the nonresident?
A nonresident cannot file jointly on Form 1040-NR. The couple can, however, elect to treat the nonresident spouse as a US resident for the whole year and file a joint Form 1040. That brings the nonresident's worldwide income into the US return, so it helps only where the numbers support it. The election stays in effect for later years unless it is ended.
What happens to the withholding when I sell my Florida flat?
The buyer generally withholds a share of the gross sale price under FIRPTA and pays it to the IRS. That withholding is a payment on account, not the final tax. The seller files Form 1040-NR for the year of sale, reports the actual gain after basis and costs, and claims back any excess. A withholding certificate can reduce the amount taken at closing, but it must be applied for in advance.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
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