Nonresident With a US Business: Filing Your Form 1040-NR

When does a nonresident business owner file Form 1040-NR?

A nonresident individual who was engaged in a US trade or business generally files Form 1040-NR, even if the business had no profit, no US-source income, or income exempt under a treaty. The return reports the individual's income and tax; forming an LLC does not replace it. IRS filing rules.

Include Schedule OI with Form 1040-NR to report nonresident details such as your country of residence. Add the schedules that fit your income, as explained below. IRS instructions.

The IRS lists narrow exceptions, including certain F, J, M, or Q visa holders with no income subject to tax under section 871. IRS filing exceptions.

If limited US activity or a treaty leaves you unsure whether income is taxable, a protective Form 1040-NR filed within 16 months of the original due date can preserve deductions if the IRS later finds effectively connected income. Explain why it is protective; for treaty relief, complete Schedule OI, item L. IRS Publication 519.

This page starts after you have determined that the business income is taxable in the US. Whether income is effectively connected with a US trade or business depends on the activity, income source, and any treaty. A visa label alone does not settle tax residency: if your days in the US or green card changed your status, see your first year as a US tax resident. A treaty tie-breaker can instead make a domestic US resident file Form 1040-NR with Form 8833. IRS treaty guidance.

Withholding is a payment toward tax, not necessarily the final tax. File to reconcile it and to claim an overpayment. The IRS also requires a timely, accurate return to claim many deductions and credits against effectively connected income. IRS Publication 519.

Does my single-owner LLC's income go on my Form 1040-NR?

Yes, if your single-owner LLC has not elected corporate tax treatment, the IRS generally treats it as part of its owner for income tax. A nonresident individual reports the LLC's taxable business activity on their own Form 1040-NR; the LLC's EIN does not take the place of the owner's tax ID. IRS LLC rules; Form 1040-NR instructions.

Report the business's taxable income under its tax accounting method, not just cash you withdrew from the LLC. You personally owe income tax on the disregarded LLC's profit; keep owner transfers separate from sales and expenses. IRS LLC rules; IRS Publication 334.

What if I own a partnership instead?

A nonresident partner reports their share of effectively connected partnership income from Schedule K-1 on Form 1040-NR, generally through Schedule E and Schedule 1, using Schedule K-3 when supplied to identify the source and character of items. The partnership gives the partner Form 8805 when it pays section 1446 tax for them, or uses a permitted reduction that requires the form even if no tax was paid. Form 8805 shows allocable effectively connected taxable income and any withholding. Claim that withholding on the return and attach Form 8805. IRS Form 1040-NR instructions; IRS K-3 instructions; IRS Form 8805 instructions.

Under sections 701 and 702, the partner owes income tax on their share, even if the partnership distributes no cash. US Code.

The partnership owes section 1446 withholding on allocable effectively connected taxable income even without a payout. An eligible foreign partner can give it Form 8804-C to certify partner-level deductions or losses that may reduce withholding. Submit it before the partnership files Form 8804; the partnership may decline to use it. Calculate your own tax and claim any withholding credit. See foreign partners and withholding. IRS partnership withholding; Form 8804-C instructions.

Do not add the same income twice if the partnership also sent Form 1042-S: the IRS says effectively connected income reported on Schedule K-1 is reported from that schedule. How the partnership calculates and deposits withholding belongs in foreign partners and withholding. IRS Schedule E instructions.

Which business expenses can I deduct, and what should I keep?

For Schedule C income, common deductible costs include business supplies, advertising, professional fees, and qualifying travel. Equipment may need to be deducted over time. Claim only costs tied to effectively connected income, not personal spending or costs of exempt or non-effectively connected income; allocate shared costs on a supportable basis. IRS Form 1040-NR instructions; IRS Schedule C instructions.

Eligible effectively connected business profit may also qualify for a separate qualified business income deduction on Form 1040-NR, line 13a. See lowering your business tax for the eligibility rules. IRS instructions.

Most nonresidents cannot claim the standard deduction. Students and business apprentices eligible under the US–India treaty may claim it on Form 1040-NR, line 12, instead of itemizing. IRS instructions.

Keep books that show income and expenses, invoices and receipts, bank and payment records, travel or work-location records, and a calculation for any expense split between US business and other activity. The IRS requires records sufficient to support return entries. Also keep documents showing why each receipt is US-source or effectively connected, particularly when you work in more than one country. IRS recordkeeping guidance; IRS sourcing rules.

Late filing can put deductions at risk. Check each missed year's filing deadline before treating old expenses as available. IRS Publication 519.

Do nonresidents pay US self-employment tax?

Generally, a person who is neither a US citizen nor a US tax resident does not owe US self-employment tax on self-employment income, even when US income tax applies. An international Social Security agreement can instead assign coverage to the US and make self-employment tax apply. IRS self-employment rule; IRS Social Security agreement guidance.

Check the agreement for your country and retain any coverage certificate. If you became a US tax resident during the year, the result can change. Wages have separate Social Security and Medicare rules; do not apply this self-employment rule to payroll. IRS guidance.

Do I need an ITIN, and can Form W-7 go with my first return?

If you need an individual US tax ID and cannot get a Social Security number, apply for an ITIN on Form W-7. You can submit Form W-7 with your completed first Form 1040-NR and the required identity and foreign-status documents. Leave the return's Social Security number field blank for the applicant; the IRS assigns the ITIN and forwards the return for processing. IRS ITIN application steps.

An LLC's EIN identifies the LLC for its own purposes. It does not identify you on your personal return. The IRS lists mailing and in-person options for the W-7 package, including acceptance agents outside the US. IRS ITIN application steps.

Can I e-file Form 1040-NR from abroad, and when is it due?

Form 1040-NR can be filed electronically, including by a person living abroad, if the filing method supports the return and its attachments. If applying for your first ITIN, submit Form W-7 with a paper return by the return's due date using the IRS's ITIN instructions or an acceptance agent; you cannot e-file that return. An ITIN assigned this year cannot be used to e-file until the next calendar year. Check whether your filing method supports every required attachment. IRS Form 1040-NR instructions; IRS Form W-7 instructions.

A timely Form 4868 generally extends those 2026 return filing deadlines to October 15 or December 15, 2027, respectively; it does not extend the time to pay. If a deadline falls on a weekend or legal holiday, the next business day applies. Confirm the filing year's instructions before submitting because addresses and electronic filing support can change. IRS Publication 519; IRS instructions.

Must I make estimated federal income tax payments?

You may need estimated payments when withholding, including partnership withholding, will not cover enough of your federal tax. For the page's tax year, the IRS Form 1040-ES (NR) generally requires payments when both tests below apply.

If you did not file a prior-year return, a zero-tax prior year does not by itself excuse payments: the IRS's no-tax exception requires that you were a US citizen or resident for the whole prior year. A filed return covering all 12 months and showing zero tax may instead qualify under the prior-year payment test. If prior-year adjusted gross income exceeded $150,000 ($75,000 when filing separately), the prior-year target becomes 110%; farmers and fishers have different rules. IRS Form 1040-ES (NR).

The payment calendar also changes with wages. If you had wages subject to US withholding, the 2026 form allows four installments beginning April 15, 2026. Without those wages, it allows half by June 15, 2026, one-quarter by September 15, 2026, and one-quarter by January 15, 2027. If income arrived unevenly, the annualized-income schedule on Form 2210, attached to your return, may reduce an underpayment penalty. Form 2210 also requests a waiver for a casualty, disaster, or unusual circumstance, or for reasonable-cause underpayment after retirement at age 62 or disability in 2025 or 2026; attach it with an explanation to the return. IRS Form 1040-ES (NR); Form 2210 instructions.

Could I also owe a state nonresident return?

Yes. A federal Form 1040-NR does not decide state filing. Check every state where the business has customers, property, workers, or activity, using that state's sourcing and filing rules. Federal and state income can be sourced differently.

California illustrates the difference: its tax agency says a nonresident independent contractor's service income is sourced by where the customer receives the benefit, rather than where the contractor worked. A nonresident with California-source income may need Form 540NR if the state's filing requirements are met. Employee compensation follows a different work-location rule. California Franchise Tax Board. For broader multistate business filing, see business income tax in other states.

What if I missed past Form 1040-NR returns?

Work year by year: determine your tax residency and US business activity, obtain the LLC books or partnership Schedules K-1 and Forms 8805, identify withholding and payments, then prepare the missing personal returns. A missing required return leaves the IRS assessment period open under section 6501(c)(3); after assessment, collection generally has a 10-year limit under section 6502, subject to extensions and suspensions. US Code: assessment; US Code: collection.

Late filing generally costs 5% of unpaid tax per month or part-month; late payment adds 0.5% monthly. Each penalty is capped at 25%, and the filing penalty is reduced when both apply. For a 2026 return filed over 60 days after its deadline, including extensions, the minimum filing penalty is the lesser of $535 or the tax required to be shown. IRS penalties; 2027 inflation adjustment.

Eligible original returns due in 2027 can receive automatic failure-to-file and failure-to-pay penalty relief based on the prior three years' compliance. For earlier returns, ask the IRS about First Time Abate, which covers one tax period; reasonable-cause relief may also apply. Tax and interest remain due. IRS penalty relief.

To claim many deductions and credits, the IRS generally requires a true, accurate return within 16 months of its original due date. If you missed the preceding required return and this is not your first required year, an IRS notice can end that window sooner. Withheld-tax credits are not subject to this timing rule. Review each year before assuming old expenses can offset income. If a prior Form 1040 was filed as a resident instead, see correcting a resident return. IRS Publication 519.

Example

Illustrative US dollars; no tax is computed. A nonresident living abroad performs consulting work in the US through a disregarded US LLC. Assume the resulting receipts are effectively connected income after checking any treaty (IRS personal-service sourcing rule). The LLC has $100,000 of taxable receipts and $30,000 of supported expenses for the year. The owner's Schedule C shows $70,000 of net business income, which flows to Form 1040-NR even if the owner leaves the cash in the LLC.

The owner has no employee wages subject to US withholding. The usual Form 1040-NR filing deadline is June 15 after year-end. If withholding is insufficient, the owner checks Form 1040-ES (NR) for estimated payments; if there was no such wage withholding, its first scheduled payment is June 15 during the tax year. US self-employment tax generally does not apply while the owner remains a nonresident, subject to any applicable Social Security agreement. State filing is checked separately.

Different for you?

• You have not established whether the income is taxable in the US: start with when foreign owners owe US tax.
• Your single-owner LLC has separate reporting: see foreign-owned single-member LLC filing.
• Your partnership needs to calculate foreign-partner withholding: see foreign partners and withholding.
• Your spouse is a US citizen or resident: both spouses can elect resident income-tax treatment under section 6013(g) with a signed statement on a joint Form 1040. An amended Form 1040-X election is generally due within three years of filing or two years of payment, whichever is later. See married to a nonresident. IRS spouse election.
• Your US residency changed during the year: see your first year as a US tax resident; dual-status returns need individual review through individual tax.
• Your visa may restrict business activity: see starting an LLC on a visa.
• You filed Form 1040 as a resident by mistake: see correcting a resident return.
• You missed several years, claim treaty relief, or report income in two countries: gather travel dates, prior returns, books, Schedules K-1, Forms 8805, and withholding slips for an individual tax review.