Everything Non-Resident Indians need to know about filing US taxes for the 2025 tax year — from determining residency to claiming treaty benefits.
Who must file Form 1040-NR?
If you are not a US citizen, do not hold a green card, and do not meet the Substantial Presence Test, the IRS treats you as a non-resident alien. Non-resident aliens with US-source income generally must file Form 1040-NR.
Common triggers include US wages from a J-1, H-1B (before residency starts), or F-1 OPT position; dividends or capital gains from US brokers; rental income from US property; and ECI (Effectively Connected Income) from a US trade or business.
Determining your residency status
The Substantial Presence Test counts your days in the US: all of the current year, one-third of the prior year, and one-sixth of the year before that. If the total is 183 or more, you are a US tax resident — and file Form 1040, not 1040-NR.
F-1 and J-1 students are exempt from counting days for the first 5 calendar years; J-1 trainees and teachers for the first 2 calendar years. This is the single most common trap we see.
Using the US-India tax treaty
The US-India tax treaty offers meaningful relief for students (Article 21), teachers and researchers (Article 22), and dividends and interest (Articles 10 and 11). Treaty positions must be claimed on Form 8833 when above the disclosure threshold.
Most NRIs miss the treaty position because the W-2 was issued without it. A correctly filed 1040-NR can still claim the benefit and recover the over-withheld amount.
When to engage a preparer
Engage a US tax preparer if you have ECI, rental income, more than one US-source 1099, or any FBAR/FATCA exposure on Indian accounts. The cost of a correct filing is almost always less than the cost of an IRS notice 12 months later.