How exactly do you process a tax refund as an NRI in the US?

by Mounica Kota | Feb 5, 2020 | 1040-NR-EZ, Form 1040-NR, tax filing, Tax Refund

How exactly do you process a tax refund as an NRI in the US?

In the US, Do you process a tax refund if you are an NRI then while filing your tax return you would be considered as a Non- resident alien in the country. A non-resident alien is an alien who has not cleared the green card test or has not cleared the substantial presence test. However, in case if you are a nonresident alien at the end of the tax year but your spouse is resident alien, then you can be treated as a ‘Resident alien’ for tax purposes. This can be done by your spouse by filing Form-1040 and using the status ‘Married filing jointly’.

When an NRI must file a tax refund in the US?

You should file a tax return when you are engaged or being considered to be engaged in any trade or business in the US during that particular year.

Even when you are not a part of any trade or business of the US but you have income in the US upon which the tax withheld at the source does not seem to be satisfactory.

You should file a tax refund under the below-mentioned circumstances.

When you are willing to claim a return of any excess withholding or tax overpaid
When you are willing to avail of the benefits of any credits and deductions. For instance, you are not involved in business activities in the US but have income from US property which you are considering as effectively connected income.

Which income needs to be reported?

The income of an NRI which is taxable in the US is mainly classified into two categories.

The US source income is fixed, determinable, annual or periodical.
Income which is effectively connected with either trade or business in the US.

Which forms to be filed by NRIs in the US?

Non-resident aliens are required to file their income tax returns by using the below-mentioned forms.

Form 1040-NR, US Non-resident Alien Income Tax Return or
Form 1040-NR-EZ, US Income Tax Return for Non-resident aliens having no dependents.

You will have to fill Form 1040-NR in case of the below-mentioned circumstances.

You are a non-resident alien who is engaged in any trade or business happening in the US.
You represent a deceased person who needed to file Form 1040-NR.
You represent an estate or a trust which had to file Form 1040-NR

For Form 1040-NR-EZ, you must be having income from the various sources in the US in the form of salaries, wages, tips, scholarship or fellowship grants, refunds from State or local income taxes, etc. Moreover, you must not have any dependents for being able to file Form 1040-NR-EZ.

What is the deadline to file Income Tax Refund by an NRI?

In case you are an employee in the US and you receive wages that are subject to taxes under the US tax laws, then you must file your taxes by the 15th day of the 4th month after the end of the tax year.
In case, you have an office or you have a place of business in the US then you should file your tax refund by the same schedule mentioned above i.e. 15th day of the 4th month after the tax year’s end.

Ideally, if you are filing your tax returns as per the calendar year then you must do it by 15th April of the year.

3. In case, you are not an employee who receives wages or you do not have any office/business in the US then you can file your tax return by the 15th day of the 6th month after the end of the tax year. This means if you are filing your tax return according to the calendar year, you must do it by 15th June.

The Form 1040-NR and 1040-NR-EZ must be sent to the addresses which are mentioned in the instructions of the forms while filing. Suppose, you are not able to file your return by the due date you can request for an automatic extension by filing Form 4868.

Conclusion

Hence, by filing your tax refund on time and in the correct procedure you would be able to avail the benefits on deductions and credit.