Filing US Income Tax Form 1040NR as a Foreign National / Expat

As a typical salaried worker in Canada, my jump into the US Real Estate Market investing in rental properties back in 2010 has me earning US Income. The positives of earning additional income introduce the negatives of having to file a US Tax Return as a foreign national.

The first year I earned income, I had a professional accountant take care of my return and then analyzed it the following year to see if I could attempt to do it myself. I am the type of person who likes doing things independently (a fault, I know) and often doubt the work of others because there is no impact on their own lives if a tax refund is not maximized.

When I first started, I did quite a bit of reading on the Internal Revenue Service (IRS) website. This is a good start, but I find the wording to be difficult to follow for someone without a background in taxation.

The forms that I found important for my situation were:

U.S. Nonresident Alien Income Tax Return

You can grab the instructions for both forms here: 1040-NR and 1040-NR-EZ

For my situation with passive income via rental properties, I also complete Schedule E to form 1040 – Supplemental Loss and Income.

Supplemental Income and Loss – Form 1040 (Schedule E)

Passive Activity Deduction Worksheet

You will also need to create a Form 1040 Passive Activity Deduction Worksheet. Check out the templates and exemplars below:



Form 8582 – Passive Activity Loss Limitations

When an accountant filed my US income tax the first year I owned my US Rental Properties, she filed form 8582. However, I don’t really see many others suggesting it is needed. I will continue to file, but note that you should do some due diligence here by reading the instructions (below) to see whether it applies to you (OR ME!).

The instructions for Form 8582 can be found here.

As I have stated before, I am just feeling my way through this process and by no means am I a professional accountant or US Taxation expert. Canada Buy South is simply an outlet for me to share any information I can provide to make the transition to investing in US real estate easier. Definitely consult a professional if you are unsure moving forward.

It is probably also a good idea to head to the IRS website to find all possible forms and worksheets on the IRS Forms page.