A nonresident alien client runs a U.S. consulting LLC and itemizes state tax, charitable gifts, and a casualty loss from a federally declared disaster. She also wants the 20% QBI deduction. Two questions: which Schedule A items survive on Form 1040-NR, and does she qualify for §199A at all?
Form 1040-NR has its own Schedule A. It is shorter than the Schedule A used with Form 1040 because most personal-itemized categories are off-limits to nonresident aliens.
- State and local income taxes tied to effectively connected income (ECI). Real-estate tax and personal property tax are NOT deductible on 1040-NR. The $40,000 SALT cap still applies ($20,000 MFS).
- Gifts to U.S. charities. Contributions to qualified §170(c) U.S. organizations are deductible, with the same AGI percentage limits as citizens (60% cash to public charities, 30% appreciated long-term capital-gain property...
- Casualty and theft losses attributable to a federally declared disaster, deductible only if the property is located in the United States (§873(b)(1)). That U.S.-property condition is the nonresident-specific piece.
Common mistakes
- Claiming the $15,750 standard deduction on Form 1040-NR for a non-India-treaty NRA. Disallowed except under U.S.-India treaty Article 21(2) for students and business apprentices.
- Deducting real-estate tax or home mortgage interest on 1040-NR Schedule A. Only state and local income tax qualifies; the rest is barred.
- Treating guaranteed payments to a partner or reasonable comp to an S-corp owner as QBI. Both are excluded by statute.
Bottom line
- NRAs cannot claim the standard deduction, except students and business apprentices from India under the U.S.-India treaty Article 21(2).
- Schedule A (Form 1040-NR) allows only state and local income tax ($40,000 SALT cap), gifts to U.S. charities, and federally declared U.S. disaster casualty losses. No mortgage interest, medical, or real-estate tax.
- QBI deduction (§199A) gives up to 20% of qualified business income from a domestic trade or business to citizens, resident aliens, and NRAs with effectively connected income.
- 2025 §199A thresholds: $197,300 single and $394,600 MFJ, with phase-in windows of $50,000 single and $100,000 MFJ above the threshold.
Exam shortcut
NR Schedule A reflex: if the item is "real estate tax", "mortgage interest", or "medical", the 1040-NR answer is $0. If it is "state income tax" or "U.S. charity", deduct it. §199A threshold memory: $197,300 single doubles to $394,600 MFJ; phase-in window $50k doubles to $100k. Above the window, SSTBs are out, non-SSTBs are fully wage-tested.
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Learning objectives
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