1040-NR Explained: Why Nonresidents Sometimes Owe Federal Taxes

1040-NR Explained: Why Nonresidents Sometimes Owe Federal Taxes

📅 January 23, 2025 – ⏱ 4 minute read

💰 Don’t panic — it’s normal for nonresidents to owe federal taxes

If you’re a nonresident alien (NRA) who lived or worked in the U.S., you have tax responsibilities, even if you didn’t earn income.

In fact, every nonresident must file taxes each year.

And if you find out that you owe money to the IRS when you file your return — don’t worry. It’s actually very common among nonresidents.

This guide explains why you might owe federal tax and what to do about it.

📚 Table of Contents

1️⃣ Do nonresidents have to file taxes?
2️⃣ Federal tax rates for 2024
3️⃣ What is Form 1040-NR?
4️⃣ Reasons you may owe the IRS money
5️⃣ Interest and late-filing penalties
6️⃣ Deductions and tax treaty benefits
7️⃣ Federal vs. state tax differences
8️⃣ Filing deadlines and final tips

1️⃣ Do nonresidents have to file taxes?

Yes.
While U.S. citizens and residents are taxed on their worldwide income, nonresident aliens are taxed only on income from U.S. sources.

You must file Form 1040-NR (U.S. Nonresident Alien Income Tax Return) if you received any taxable U.S. income, such as:

• Wages or salaries

• Tips

• Scholarship or fellowship grants

• Dividends or investment income

If you were in the U.S. on an F, M, J, or Q visa and had no income, you must still file Form 8843.

2️⃣ 📊 Federal tax rates for income earned in 2024

These are the same rates that apply to U.S. residents.
Your personal rate depends on your income level, visa type, and whether your home country has a tax treaty with the U.S.

3️⃣ 🧾 What is Form 1040-NR?

Form 1040-NR is the federal tax return that nonresidents use to report their U.S. income and pay any taxes owed.

You must include all income from U.S. sources — wages, scholarships, stipends, and more.

💡 Filing a 1040-NR can be confusing if you’re new to U.S. tax rules, so understanding your obligations ahead of time is key.

4️⃣ 💸 Why do I owe money to the IRS?

Each spring, many nonresidents ask the same question:

“Why do I owe federal taxes this year?” 🤔

Here are the most common reasons:

⚖️ 1. Not enough federal tax was withheld

If your employer didn’t withhold enough from your paycheck throughout the year, you’ll need to pay the difference when filing your return.

📉 2. Changes in your deductions or status

If your filing status changed or certain deductions no longer apply, you may owe additional tax.

📈 3. Additional income or investments

Income from stocks, crypto, or other investments is also taxable — and often not covered by standard withholding.

💼 4. Job change or higher salary

If you earned more at a new job and entered a higher tax bracket, you’ll pay a higher percentage of your income in federal tax.

5️⃣ ⏰ Why do I owe interest or penalties?

If you don’t file or pay on time, the IRS can charge interest and penalties.

• 💰 Late-filing penalty: 5% of the unpaid tax per month (up to a maximum of 25%).

• 🕒 The longer you wait, the more you owe — and unpaid taxes can affect future visa or Green Card applications.

6️⃣ 🧮 Deductions and tax treaty benefits

Tax treaties between the U.S. and many other countries can reduce or eliminate certain taxes for nonresidents.

Depending on your treaty, you may qualify for:
✅ Lower tax rates on specific income types
✅ Tax credits or deductions
✅ Full or partial exemptions

To claim treaty benefits:

• Complete Form W-8BEN or Form 8233 when you start your job

• Identify the treaty article that applies to your situation

• Ensure the forms are correctly filed with your employer

Even if you didn’t claim treaty benefits earlier, you can still claim them when filing your 1040-NR.

💡 These forms help your employer withhold the correct tax amount — potentially saving you money at year-end.

7️⃣ ⚖️ Federal vs. state taxes — why do they differ?

U.S. taxes are split into federal and state levels, and the amounts owed often differ.

💵 Owe federal tax but get a state refund?

This usually means your employer withheld too much at the state level but too little at the federal level.

💸 Owe state tax but get a federal refund?

The opposite — your federal taxes were overpaid, but you underpaid state taxes.

Both situations are common for nonresidents working across different states or employers.

8️⃣ 📅 When should I file my 1040-NR?

You must file your 2024 federal tax return by April 15, 2025.

If you had no income and are filing only Form 8843, your deadline is June 15, 2025.

Filing early helps avoid interest, penalties, and delays in any refund you might be owed.

🎯 Final thoughts

Owing money on your 1040-NR doesn’t mean you did anything wrong — it’s simply how the U.S. tax system works for nonresidents.

✅ Check your paycheck withholdings regularly
✅ Use tax treaty benefits if available
✅ File before the April 15 deadline
✅ Keep your visa record clean by staying tax compliant

With the right preparation, you’ll stay compliant, avoid IRS penalties, and maybe even secure a refund next year. 💼🇺🇸