Requirement for Nonresident Alien to File a Return
1. General requirement to file
The requirement for a nonresident alien INDIVIDUAL to file a 1040-NR return appears in 26 U.S.C. §6012 and 26 C.F.R. §1.6012-1. Since the regulation is in Part 1, then it definitely applies to the income tax and is one of the few OBLIGATIONS actually attached to BEING a “nonresident alien individual”. They NEVER say precisely HOW one transitions from a non-person to an “individual” who is therefore a person. Click here for more details on that.
26 CFR § 1.6012-1 – Individuals required to make returns of income.
(b) Return of nonresident alien individual—
(1) Requirement of return—
(i) In general.
Except as otherwise provided in subparagraph (2) of this paragraph, every nonresident alien individual (other than one treated as a resident under section 6013 (g) or (h)) who is engaged in trade or business in the United States at any time during the taxable year or who has income which is subject to taxation under subtitle A of the Code shall make a return on Form 1040NR. For this purpose it is immaterial that the gross income for the taxable year is less than the minimum amount specified in section 6012(a) for making a return. Thus, a nonresident alien individual who is engaged in a trade or business in the United States at any time during the taxable year is required to file a return on Form 1040 NR even though (a) he has no income which is effectively connected with the conduct of a trade or business in the United States, (b) he has no income from sources within the United States, or (c) his income is exempt from income tax by reason of an income tax convention or any section of the Code. However, if the nonresident alien individual has no gross income for the taxable year, he is not required to complete the return schedules but must attach a statement to the return indicating the nature of any exclusions claimed and the amount of such exclusions to the extent such amounts are readily determinable.
(ii) Treaty income.
If the gross income of a nonresident alien individual includes treaty income, as defined in paragraph (b)(1) of § 1.871-12, a statement shall be attached to the return on Form 1040NR showing with respect to that income:
(a) The amounts of tax withheld,
(b) The names and post office addresses of withholding agents, and
(c) Such other information as may be required by the return form, or by the instructions issued with respect to the form, to show the taxpayer‘s entitlement to the reduced rate of tax under the tax convention.
(2) Exceptions—
(i) Return not required when tax is fully paid at source.
A nonresident alien individual (other than one treated as a resident under section 6013 (g) or (h)) who at no time during the taxable year is engaged in a trade or business in the United States is not required to make a return for the taxable year if his tax liability for the taxable year is fully satisfied by the withholding of tax at source under chapter 3 of the Code. This subdivision does not apply to a nonresident alien individual who has income for the taxable year which is treated under section 871 (c) or (d) and § 1.871-9 (relating to students or trainees) or § 1.871-10 (relating to real property income) as income which is effectively connected for the taxable year with the conduct of a trade or business in the United States by that individual, or to a nonresident alien individual making a claim under § 301.6402-3 of this chapter (Procedure and Administration Regulations) for the refund of an overpayment of tax for the taxable year. In addition, this subdivision does not apply to a nonresident alien individual who has income for the taxable year that is treated under section 871(b)(1) as effectively connected with the conduct of a trade or business within the United States by reason of the operation of section 897. For purposes of this subdivision, some of the items of income from sources within the United States upon which the tax liability will not have been fully satisfied by the withholding of tax at source under chapter 3 of the Code are:
(a) Interest upon so-called tax-free covenant bonds upon which, in accordance with section 1451 and § 1.1451-1, a tax of only 2 percent is required to be withheld at the source,
(b) In the case of bonds or other evidences of indebtedness issued after September 28, 1965, amounts described in section 871(a)(1)(C),
(c) Capital gains described in section 871(a)(2) and paragraph (d) of § 1.871-7, and
(d) Accrued interest received in connection with the sale of bonds between interest dates, which, in accordance with paragraph (h) of § 1.1441-4, is not subject to withholding of tax at the source.
(ii) Return of individual for taxable year of change of U.S. citizenship or residence—
(a) If an alien individual becomes a citizen or resident of the United States during the taxable year and is a citizen or resident of the United States on the last day of such year, he must make a return on Form 1040 for the taxable year. However, a separate schedule is required to be attached to this return to show the income tax computation for the part of the taxable year during which the alien was neither a citizen nor resident of the United States, unless an election under section 6013 (g) or (h) is in effect for the alien. A Form 1040NR, clearly marked “Statement” across the top, may be used as such a separate schedule.
(b) If an individual abandons his U.S. citizenship or residence during the taxable year and is not a citizen or resident of the United States on the last day of such year, he must make a return on Form 1040NR for the taxable year, even if an election under section 6013(g) was in effect for the taxable year preceding the year of abandonment. However, a separate schedule is required to be attached to this return to show the income tax computation for the part of the taxable year during which the individual was a citizen or resident of the United States. A Form 1040, clearly marked “Statement” across the top, may be used as such a separate schedule.
(c) A return is required under this subdivision (ii) only if the individual is otherwise required to make a return for the taxable year.
(iii) Beneficiaries of estates or trusts.
A nonresident alien individual who is a beneficiary of an estate or trust which is engaged in trade or business in the United States is not required to make a return for the taxable year merely because he is deemed to be engaged in trade or business within the United States under section 875(2). However, such nonresident alien beneficiary will be required to make a return if he otherwise satisfies the conditions of subparagraph (1)(i) of this paragraph for making a return.
(iv) Certain alien residents of Puerto Rico.
This paragraph does not apply to a nonresident alien individual who is a bona fide resident of Puerto Rico during the taxable year. See section 876 and paragraph (a)(1)(iii) of this section.
(3) Representative or agent for nonresident alien individual—
(i) Cases where power of attorney is not required.
The responsible representative or agent within the United States of a nonresident alien individual shall make on behalf of his nonresident alien principal a return of, and shall pay the tax on, all income coming within his control as representative or agent which is subject to the income tax under subtitle A of the Code. The agency appointment will determine how completely the agent is substituted for the principal for tax purposes. Any person who collects interest or dividends on deposited securities of a nonresident alien individual, executes ownership certificates in connection therewith, or sells such securities under special instructions shall not be deemed merely by reason of such acts to be the responsible representative or agent of the nonresident alien individual. If the responsible representative or agent does not have a specific power of attorney from the nonresident alien individual to file a return in his behalf, the return shall be accompanied by a statement to the effect that the representative or agent does not possess specific power of attorney to file a return for such individual but that the return is being filed in accordance with the provisions of this subdivision.
(ii) Cases where power of attorney is required.
Whenever a return of income of a nonresident alien individual is made by an agent acting under a duly authorized power of attorney for that purpose, the return shall be accompanied by the power of attorney in proper form, or a copy thereof, specifically authorizing him to represent his principal in making, executing, and filing the income tax return. Form 2848 may be used for this purpose. The agent, as well as the taxpayer, may incur liability for the penalties provided for erroneous, false, or fraudulent returns. For the requirements regarding signing of returns, see § 1.6061-1. The rules of paragraph (e) of § 601.504 of this chapter (Statement of Procedural Rules) shall apply under this subparagraph in determining whether a copy of a power of attorney must be certified.
(iii) Limitation.
A return of income shall be required under this subparagraph only if the nonresident alien individual is otherwise required to make a return in accordance with this paragraph.
(4) Disallowance of deductions and credits.
For provisions disallowing deductions and credits when a return of income has not been filed by or on behalf of a nonresident alien individual, see section 874(a) and the regulations thereunder.
(5) Effective date.
This paragraph shall apply for taxable years beginning after December 31, 1966, except that it shall not be applied to require (i) the filing of a return for any taxable year ending before January 1, 1974, which, pursuant to instructions applicable to the return, is not required to be filed or (ii) the amendment of a return for such a taxable year which, pursuant to such instructions, is required to be filed. For corresponding rules applicable to taxable years beginning before January 1, 1967, see 26 CFR 1.6012-1(b) (Revised as of January 1, 1967).
2. Statements
The “statement” they are referring to above is:
IRS Form 8275: Disclosure statement
https://www.irs.gov/forms-pubs/about-form-8275
IRS Form 8275 is used to document and explain specific attempts to comply with the above. Multiple 8275 forms can be attached to the 1040-NR return for specific purposes. Each has a sequence number on it. Write digits after the “92” below to add the sequence number.
IRS Form 8275‘s can be prepared in advance for specific purposes and chained together by adding the sequence number when needed to each one in the sequence. Or, you can include your own home made Statement that combines all the statements into one piece of paper. An example of that is:
1040-NR Attachment, Form #09.077 (OFFSITE LINK)-SEDM
https://sedm.org/Forms/09-Procs/1040NR-Attachment.pdf
3. Filing Mandatory or voluntary?
The requirement to file the return are:
- MANDATORY:
1.1. Engaged in a “trade or business” even if no “income”. 26 C.F.R. §1.6012-1(b)-1(i).
1.2. Alien abandons citizenship during year. 26 C.F.R. §1.6012-1(a)-2(ii)(b) - RETURN NOT REQUIRED: Tax paid in full by withholding. 26 C.F.R. §1.6012-1(b)-2(i).
4. Schedules: Yes or No?
The nonresident alien need not attach any schedules, including the Schedule OI, if they have no gross income. 26 C.F.R. §1.6012-1(b)-1(i).
5. Identifying number
The identifying number can be an:
- Social Security Number (SSN)
- International Taxpayer Identification Number (ITIN) held by an ALIEN.
https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin - Employer Identification Number (EIN) in the case of a trust or estate. They can file 1040-NR’s.
https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers - An Adoption Taxpayer Identification Number (ATIN).
https://www.irs.gov/individuals/adoption-taxpayer-identification-number
An SSN is presumed on the 1040-NR form as the identifying number. Under 26 C.F.R. §1.6109-1(g)(1), the number is PRESUMED to belong to a U.S. citizen. Filing a 1040 solidifies the DOMESTIC status for the year. But filing a 1040-NR flips the status of the NUMBER and the filer to FOREIGN for the tax year only.
More on government identifying numbers at:
About SSNs and TINs on Government Forms and Correspondence, Form #05.012 (OFFSITE LINK)-SEDM
https://sedm.org/Forms/05-MemLaw/AboutSSNsAndTINs.pdf
6. 1040-NR Instructions
You can read the IRS’ 1040-NR instructions at: