What to Do Now That the 1040-NR-EZ Form Is Discontinued

Starting with the 2020 tax year, the Internal Revenue Service (IRS) discontinued Form 1040-NR-EZ, a simplified tax return for certain nonresidents. This form offered a streamlined filing process for individuals with straightforward U.S. tax situations. Its elimination means all nonresident aliens required to file a U.S. tax return must now use the more comprehensive Form 1040-NR, which requires navigating a more detailed document.

Historical Eligibility for Form 1040-NR-EZ

Previously, a nonresident alien could use Form 1040-NR-EZ only if they met a strict set of criteria. The main condition was that their U.S. source income consisted solely of wages, salaries, tips, taxable refunds of state and local income taxes, or scholarship and fellowship grants. Any other U.S. income, such as taxable interest or dividend income, disqualified them from using the form.

Other restrictions included not being able to claim any dependents and having a total taxable income under $100,000. Using Form 1040-NR-EZ also meant forgoing the ability to claim tax credits and most adjustments to income. The only permitted tax liabilities were the main income tax and any unreported Social Security and Medicare taxes.

The Current Filing Requirement Form 1040-NR

Form 1040-NR, U.S. Nonresident Alien Income Tax Return, is now the standard document for all nonresident aliens with a U.S. filing obligation. It accommodates a broader array of financial situations, allowing for the reporting of various types of income. Filers can also claim eligible deductions and apply for tax credits, which were not possible on the discontinued form.

The form separates income into categories, such as income effectively connected with a U.S. trade or business and income that is not. This distinction is important because effectively connected income is taxed at the same graduated rates as that of U.S. citizens. Other U.S. source income is taxed at a flat 30% rate, unless a lower tax treaty rate applies.

Information Needed to Complete Form 1040-NR

To complete Form 1040-NR, a filer must gather personal and financial documents. This includes the filer’s full name, current address, and a valid U.S. Taxpayer Identification Number. This can be a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).

You must determine the correct filing status, as the options for nonresident aliens are more limited. Income documentation is also a requirement, such as Form W-2 for wages and Form 1042-S for other types of income and withholding. Depending on the circumstances, various versions of Form 1099 may also be necessary.

For those eligible for tax treaty benefits, identifying the specific treaty article that applies to their income is necessary to claim a reduced tax rate or an exemption. You must also have information to support any claimed deductions. Common itemized deductions for nonresidents include state and local income taxes and contributions to qualified U.S. charities.

How to File Form 1040-NR

The filing deadline for Form 1040-NR depends on the filer’s circumstances. For a nonresident alien employee who receives wages subject to U.S. income tax withholding, the return is due by April 15. For any other nonresident alien, the deadline is June 15.

The IRS specifies different mailing addresses based on whether a payment is included with the return, so check the form instructions for the correct address. If taxes are owed, payment can be made through methods like IRS Direct Pay, check, or money order.

After filing, individuals can track the status of their refund using the “Where’s My Refund?” tool on the IRS website. This tool becomes available a few weeks after the return has been received.