Do Non-Residents Get the Standard Deduction on Taxes?

Tax rules can be especially confusing for non-U.S. residents, particularly regarding deductions. The standard deduction helps many taxpayers reduce taxable income, but nonresidents face restrictions that differ from U.S. citizens and resident aliens. Understanding these rules is essential for accurate tax filing.

Nonresident Filing Categories

The U.S. tax system classifies individuals based on residency status, which determines tax obligations. Nonresidents, or nonresident aliens for tax purposes, do not meet the substantial presence test or hold a green card. They file taxes using Form 1040-NR, reporting only U.S.-sourced income rather than worldwide income.

Certain visa holders, such as students and scholars on F, J, M, or Q visas, are considered nonresidents for a specific period. Business professionals and temporary workers may have different tax obligations depending on their visa type and duration of stay.

Standard Deduction Restrictions

Nonresident aliens generally do not qualify for the standard deduction when filing U.S. taxes. The Internal Revenue Code limits this benefit to U.S. citizens and resident aliens, requiring nonresidents to use itemized deductions instead.

An exception applies to certain nonresidents from India under the U.S.-India tax treaty, allowing students and business apprentices to claim the standard deduction under the same conditions as U.S. citizens. Nonresidents from other countries do not receive this benefit.

For those ineligible, itemized deductions such as state and local taxes, charitable contributions, and certain business-related expenses may help lower taxable income. Some deductions, like medical expenses, apply only if they exceed a percentage of adjusted gross income.

Tax Treaty Implications

International tax treaties modify default tax rules, offering benefits such as reduced withholding rates and income exemptions. Each treaty is unique, meaning benefits depend on the specific agreement between the U.S. and an individual’s home country.

Many treaties provide exemptions for personal services income, often based on time spent in the U.S. or earnings thresholds. For instance, the U.S.-U.K. treaty exempts income earned by a U.K. resident if their stay does not exceed 183 days in a 12-month period and their compensation comes from a non-U.S. employer. Treaties with Canada, Germany, and other nations include similar provisions.

Other treaties offer tax-exempt allowances for students, researchers, and trainees. Agreements with China and France, for example, allow individuals in these categories to exclude certain income, such as scholarships and grants, from U.S. taxation for a specified period. Misinterpreting or failing to claim these benefits can lead to unnecessary tax payments.

Potential Itemized Deductions

Without access to the standard deduction, nonresidents must use itemized deductions to reduce taxable income. These deductions depend on income type and whether expenses are linked to U.S. sources.

A common deduction is state and local income taxes paid, which helps offset tax burdens in states that impose income taxes. However, sales tax and other levies do not qualify.

Charitable contributions to qualified U.S. nonprofit organizations may be deductible, but only if they meet IRS requirements. Unlike U.S. citizens, nonresidents cannot deduct donations made to foreign charities.

Mortgage interest on U.S. property may also be deductible if the loan is secured by a qualified residence in the U.S. This applies primarily to nonresidents who own rental or vacation properties, though limitations may apply based on use and income classification.

Filing and Documentation

Nonresidents must carefully follow IRS requirements to ensure compliance and avoid penalties. The primary tax form for nonresidents is Form 1040-NR, which details income, deductions, and any applicable treaty benefits. Claiming a tax treaty exemption or reduction may require filing Form 8833 to disclose the specific treaty provision. Failure to do so can result in lost benefits and increased tax liability.

Supporting documents are essential. Nonresidents earning wages from a U.S. employer typically receive Form W-2, while those with investment income may receive Form 1042-S if withholding was applied. Claiming deductions requires keeping receipts, bank statements, or donation acknowledgments in case of an audit.

Individuals needing an Individual Taxpayer Identification Number (ITIN) must submit Form W-7 with their tax return, as nonresidents without a Social Security number cannot file without one.