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Efiling for Form 1040NR, Finally!

IRS Brings Nonresident Returns to the Modern Age

Over the last 30 years the IRS has transformed the tax return filing process from one that relied entirely on paper forms to a system that is primarily paperless. Paper tax forms are no longer available at the local post office, and the large crowds of frantic procrastinators that once flocked to Post Offices all over the country on April 15 are a thing of the past. Yet, a small group of stamp lickers remains. Although the IRS e-file system surpassed a landmark 1 billion individual Form 1040 tax filings by 2016, the system remained unavailable for Form 1040NR filers until the 2017 filing season. That means students, scholars and cultural exchange visitors as F, J, M or Q visa holders, as well as most other foreign nationals in their year of arrival, were forced to submit paper tax returns.

The e-file system offers several advantages over paper filing:

  • Security - The IRS uses the latest encryption technology to protect your information.
  • Refunds through direct deposit - Your refund can arrive in as few as 10 days compared to weeks or months with paper checks.
  • Greater accuracy - E-filed returns have an error rate of 1 percent compared to 20 percent for paper returns. If an e-filed return is rejected because of an error, the system will send a detailed message describing how to fix the error so you can resend the return.
  • Quick receipt - You get an email acknowledgment within minutes that your return was received and accepted.
  • Paperless filing - This increases efficiency and reduces costs, with the additional benefit of saving trees.

Introduction of Form 1040NR Through the Modernized e-File System

Electronic filing for Form 1040NR was introduced for 2016 returns as the latest phase of an e-file modernizing program that was started in 2004. This is the next generation of electronic filing, as described in IRS Publication 1436:

The Modernized e-File (MeF) system is a replacement of IRS tax return filing technology with a modernized, Internet based electronic filing platform. MeF uses the widely accepted Extensible Markup Language (XML) format. This is an industry standard used when identifying, storing and transmitting data rather than the proprietary data transmission formats used by older e-File programs. MeF is successfully processing electronically filed tax returns for individuals, corporations, partnerships, excise tax filers, and exempt organizations.

Limitations for Form 1040NR

Most of the forms and schedules that are required with Form 1040NR can be e-filed with the return. However, since 2017 was the first filing season for Form 1040NR in the e-file system, there are still a few limitations and restrictions. For example, Form 1040NR-ez and dual-status returns are still not available. Also, returns with treaty claims or income reported on Form 1042-S are not authorized. Additionally, almost half the states do not yet allow e-filing when attached to Form 1040NR. These states are Alabama, Arkansas, California, Delaware, district of Columbia, Georgia, Idaho, Indiana, Iowa, Kentucky, Maine, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, Virginia, and Wisconsin.

Hopefully these gaps will get filled soon. But still, only a small group of tax software firms have spent the time and money to qualify their software to e-file Form 1040NR, so most authorized IRS e-file providers still do not have this capability.

We do!

 

 

 

About Gary W. Carter, PhD, MT, CPA