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Why does filing Form 1040NR cost more than filing Form 1040?
Why does filing Form 1040NR cost more than filing Form 1040?
Kirsten Simmons avatar
Written by Kirsten Simmons
Updated over a week ago

Filing non-resident tax returns is more complex compared to resident returns, even when the reported income is minimal:

  • Different treatment of Effectively Connected Income: Income connected with a trade or business in the United States must be treated differently than other income.

  • Different treatment of Fixed, Determinable, Annual, and Periodical Income: These income types must be treated differently than Incidental Income which includes earnings or gains that arise from services performed for another or in self-employment, occasional freelance work, sporadic sales of personal items, or isolated transactions that are not part of the taxpayer's usual business operations, etc.

  • Assessment of preferential tax rate eligibility: We must ascertain whether your income qualifies for favorable tax rates according to a tax treaty.

For instance, reporting $10,000 of U.S. income using Form 1040NR might lead to tax dues ranging from $0 to $3,000, depending on the income characteristics listed above.

The additional fee associated with filing a non-resident return goes towards an analysis of these income characteristics. This scrutiny ensures that non-resident aliens are taxed with precision, aiming to minimize penalties. Our meticulous approach strives to achieve accurate taxation for non-residents, reflecting their unique financial circumstances.

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