Form 1040-ES(NR) - Estimated Tax for Nonresident Alien Individuals

Federal Form 1040-ES(NR) is used by nonresident alien individuals to make estimated tax payments on income earned in the United States that is not subject to withholding. Nonresident aliens typically use this form when they expect to owe tax of $1,000 or more for the year after subtracting any withholding and refundable credits.

Here’s a breakdown of the key aspects of Form 1040-ES(NR):

1. Who Should Use This Form:

   • Nonresident Aliens with U.S. Income: Nonresident aliens who earn income in the U.S. that is not automatically subject to tax withholding should use this form. This includes income from self-employment, rental properties, investments, or other sources.
   • Nonresident Aliens with Insufficient Withholding: If the amount withheld from a nonresident alien's income is not enough to cover their tax liability, they should use this form to pay the difference.

2. Purpose:

   • Pay Estimated Taxes: The form allows nonresident aliens to calculate and pay estimated taxes on income that is not subject to withholding. This helps them avoid underpayment penalties and large tax bills at the end of the year.
   • Quarterly Payments: Payments are typically made quarterly, with deadlines on April 15th, June 15th, September 15th, and January 15th of the following year.

3. Types of Income Covered:

   • Self-Employment Income: Nonresident aliens who are self-employed in the U.S. need to make estimated tax payments on their earnings.
   • Rental Income: Income from U.S. rental properties may require estimated tax payments if no tax is withheld.
   • Investment Income: Interest, dividends, and capital gains earned from U.S. sources may need to be included in estimated tax payments.
   • Other Income: Any other types of U.S.-sourced income not subject to withholding, such as alimony received, prizes, and awards.

4. How to Calculate Estimated Tax:

   • The form includes worksheets to help calculate the estimated tax based on expected income, deductions, credits, and other factors specific to nonresident aliens.

5. Avoiding Penalties:

   • Making timely estimated tax payments using Form 1040-ES(NR) helps nonresident aliens avoid penalties for underpayment of taxes.

In summary, Form 1040-ES(NR) is an important tool for nonresident aliens with U.S. income that isn’t subject to withholding. It helps them manage their tax obligations by allowing them to make estimated payments throughout the year.