A nonresident alien with $60,000 of effectively connected income asks why her tax software refuses the $15,750 standard deduction. The answer shapes every deduction line on her return.
A nonresident alien is a noncitizen who is not a U.S. resident for tax purposes. A nonresident alien files Form 1040-NR and generally cannot claim the standard deduction. Under IRC 63(c)(6)(B), the standard deduction is unavailable to them, so itemizing is the only way to get a deduction from effectively connected income.
Three basic rules shape every itemized deduction on Form 1040-NR:
- Deductions can only reduce effectively connected income (ECI), which is income connected with a U.S. trade or business (IRC 873(a)).
- Income taxed at the flat 30% rate gets no deductions at all. That flat-rate income is called fixed, determinable, annual or periodical income.
- A nonresident reports itemized deductions on Schedule A (Form 1040-NR). It's a shorter schedule than the Form 1040 Schedule A, so several familiar deductions are missing.
KEY: There is one exception. A student or business apprentice from India may claim the standard deduction under the U.S.-India treaty, Article 21(2). No other treaty grants it.
Common mistakes
- Claiming the standard deduction on Form 1040-NR. Only a student or business apprentice from India qualifies, under the U.S.-India treaty. Every other nonresident either itemizes or deducts nothing from ECI.
- Deducting medical expenses or sales tax. Neither one has a place on Schedule A (Form 1040-NR). Candidates used to Form 1040 often enter them out of habit.
- Applying the SALT cap as $10,000. For 2025 the cap is $40,000 ($20,000 MFS). It phases down by 30% of modified adjusted gross income (MAGI) above $500,000, but never below a $10,000 floor. So $10,000 is the lowest the cap can go, not the standard cap.
Bottom line
- Form 1040-NR filers cannot claim the standard deduction; the sole exception is a student or business apprentice from India under the treaty.
- Schedule A (Form 1040-NR) allows only state and local income taxes, gifts to U.S. charities, U.S.-property casualty losses, and limited other deductions.
- Deductions reach only effectively connected income; the flat 30% tax on fixed, determinable, annual, or periodic (FDAP) income allows none.
- The QBI deduction is 20% of QBI, capped by 20% of taxable income less net capital gain.
Exam shortcut
Work the QBI question in a fixed order: find taxable income before the deduction, compare it to $197,300 or $394,600, and only then decide whether wage limits and the SSTB haircut matter. Below the threshold, skip every wage and UBIA number in the stem; they are planted distractors. Above the top, an SSTB answer is zero before you compute anything.
The full lesson (about 2,915 words, 19 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- 1
- 2
Browse all free EA Part 1 lessons or jump into free EA Part 1 practice questions.