Introduction
Holding a particular visa, being a non-U.S. citizen, or living in Australia does not decide which U.S. return you file. The IRS decides that through its own residency tests.
A U.S. resident alien generally files Form 1040 and reports worldwide income. A nonresident alien generally files Form 1040-NR and reports qualifying U.S.-source income. Pick the wrong form and you may omit income, miss account reporting, or need an amended return later.
This guide covers how to work out your status, choose the form, gather income records (including Australian income), check foreign account reporting, and spot when dual-status or treaty rules need closer analysis. Amounts below are in U.S. dollars because they come from IRS rules.
Key Takeaways
- File Form 1040 (not 1040-NR) as a resident alien, unless dual-status rules apply.
- Confirm status under the Green Card test or the substantial presence test.
- Report worldwide income on Form 1040, including Australian income.
- Review FBAR, Form 8938, treaties, foreign tax credits and state returns separately.
What Is a 1040 Resident Alien Tax Return?
A resident alien is a non-U.S. citizen or national treated as a U.S. resident for federal income tax. Under IRS Publication 519, that means meeting the Green Card test or the substantial presence test. Immigration status and Australian tax residency are separate questions.
Form 1040 is the main U.S. individual return. It reports income, deductions, credits and payments. Use the current IRS form and instructions for your tax year. The 2025 instructions were updated in February 2026.
Form 1040 versus Form 1040-NR
| Form 1040 (resident alien) | Form 1040-NR (nonresident alien) | |
|---|---|---|
| Income reported | Worldwide | U.S.-source and certain effectively connected income |
| Standard deduction | Generally available | Limited |
| Treaty position | Possible, with disclosure | Common, with disclosure |
Who may need to file?
Typical triggers include:
- Holding a Green Card
- Meeting the substantial presence test
- Becoming a resident part-way through the year
- Carrying a status change over from a prior year
Whether you must file also depends on income, age and filing status. For 2025, a single filer under 65 generally must file at $15,750 of gross income. Married filing separately has a threshold of just $5. Net self-employment earnings of $400 or more also trigger filing.
How to Determine Resident Alien Status for Tax Purposes
Green Card test
You meet the test if you hold lawful permanent resident status at any time during the year. Residency generally starts on your first day in the U.S. as a permanent resident and continues until you abandon that status (including by Form I-407) or it is revoked administratively or judicially. Check the exact dates for the year you arrived or left.
Substantial presence test
You meet the test with at least 31 days in the U.S. this year and 183 weighted days across three years. The formula:
- All days this year
- Plus one-third of days last year
- Plus one-sixth of days the year before
Hypothetical example: A taxpayer spends 120 days in the U.S. in each of three years. The weighted total is 120 + 40 + 20 = 180, which falls short of 183.
Unless another rule treats you as a resident, Form 1040-NR applies. At 130 days a year, the total is 130 + 43.3 + 21.7 = 195, and Form 1040 applies.
Exempt individuals and excluded days
Some days do not count. Categories include:
- Foreign-government-related individuals (A and G visas, with exceptions)
- Teachers and trainees (J and Q)
- Students (F, J, M and Q)
- Regular Canada or Mexico commuters, short transit days, and foreign-vessel crew
- Days you could not leave because of a medical condition that arose in the U.S.
Most people claiming these days file Form 8843. Confirm visa compliance and time limits instead of assuming eligibility.
Closer-connection and treaty considerations
If you meet the day count but spent fewer than 183 days in the U.S. in the current year, you may claim a closer connection to a foreign country on Form 8840. You need a foreign tax home. Green Card holders and certain applicants for permanent status are ineligible.
For people resident in both countries, the U.S.-Australia treaty tie-breaker looks at a permanent home first, then habitual abode, then closer personal and economic relations. A treaty position that reduces tax generally requires Form 8833, with a $1,000 penalty per missed disclosure.
Dual-status taxpayers
If you change status during the year, you split it into resident and nonresident periods.
- Resident on 31 December: file Form 1040 with a nonresident-period statement
- Nonresident on 31 December: file Form 1040-NR with a resident-period statement
Dual-status filers cannot use the standard deduction and generally cannot file jointly, except through a qualifying election.
How Resident Aliens Report Income on Form 1040
Worldwide income
Resident aliens report all income wherever it is earned. That includes wages, self-employment income, interest, dividends, rent, pensions, capital gains and royalties.
Australian-source income and foreign tax
Australian salary, investment returns, business profits, rent and pensions generally must go on your U.S. return once you are a U.S. tax resident. Report in U.S. dollars. The IRS generally uses the rate when the item was received, paid or accrued, and publishes yearly average rates.
A foreign tax credit on Form 1116 may relieve double taxation for qualifying Australian income tax. The tax must be legal, actual and imposed on you. Relief is not automatic, and separate income categories carry limits.
Australian superannuation deserves special care. The US-Australia tax treaty's pension clauses do not support a blanket exemption, so review contributions, fund earnings and distributions individually.
Income forms and supporting records
The documents depend on your income. Common documents include:
- Forms W-2, 1099 and 1042-S
- Brokerage statements
- Rental and business records
- Australian payslips and ATO income statements
- ATO notices of assessment
- Exchange-rate records
Foreign accounts and assets
Form 1040 does not replace separate reporting. Two separate filing regimes still apply:
- FBAR (FinCEN Form 114): required when foreign accounts total more than $10,000 at any time in the year. Due April 15, automatically extended to October 15.
- Form 8938 (FATCA): for a resident alien living abroad, thresholds start at $200,000 at year-end or $300,000 at any time for unmarried filers. Inside the U.S., unmarried filers start at $50,000 and $75,000.
Failing to file Form 8938 can cost $10,000 or more. A TIGTA audit found the IRS identified 405 Form 8938 nonfilers in one campaign and examined only 12.
Withholding, estimated tax and payments
Resident aliens follow estimated-tax rules. For 2026, payments are generally required when expected tax after withholding is at least $1,000. Reconcile W-2 and 1042-S withholding, foreign tax paid and any estimates before checking the balance due.
How to Prepare and File a Form 1040 Resident Alien Return
Gather identity and residency information
Collect:
- SSN or ITIN (Form W-7 if you cannot get an SSN)
- Green Card and immigration records where relevant
- U.S. entry and exit dates
- Spouse and dependant details
- Prior-year returns
Organise worldwide income and foreign tax documents
Build a checklist covering:
- U.S. and Australian income records
- Bank and investment statements
- Foreign tax paid
- Rental or business expenses
- Charitable gifts, education costs and records for any credit you claim
Select the correct forms and schedules
Form 1040 is the base. Add schedules or forms as needed for:
- Self-employment, investments or rental property
- Foreign tax credit (Form 1116)
- Foreign assets (Form 8938)
- Dependants, education or treaty positions
Check the current IRS set each year.
Review deductions, credits and calculations
Filing status, deductions, credits, withholding and estimated payments all feed the final figure. Eligibility shifts for dual-status filers and anyone making special elections.
File, pay and retain records
- Deadline: April 15 for calendar-year filers. Resident aliens abroad may get an automatic extension to June 15 with a statement, but interest runs from April 15.
- Extension: File Form 4868 by June 15 to extend the filing deadline to October 15.
- E-filing: A return cannot be e-filed with an ITIN in its assignment year. Later years can.
- State returns: Rules vary. California, for example, uses Form 540NR for nonresidents with California-source income.
- Amendments: Form 1040-X corrects filing 1040-NR instead of 1040, or the reverse. File one per year.
- Records: Keep them 3 years generally, or 6 years if income was understated by over 25%.
Deductions, Credits and Common Issues for Australian Taxpayers
Deductions and credits for resident aliens
Resident aliens generally use the same framework as citizens. Standard deductions are $15,750 single and $31,500 married filing jointly for 2025, rising to $16,100 and $32,200 for 2026.
Common credits include:
- Child Tax Credit: up to $2,200 per child for 2025, with SSN requirements
- Education credits: generally unavailable if you were a nonresident for part of the year, unless you elect resident treatment
- Foreign tax credit for qualifying foreign income tax
Tax treaties and potential double taxation
The U.S.-Australia treaty caps source-country tax on some income. Dividends are generally limited to 15%, and interest to 10%. Past-employment pensions are generally taxed only in the recipient's country of residence. Wages are generally taxed where the work is done.
These limits do not remove a resident alien's worldwide reporting duty. Check both countries' rules, and file Form 8833 where a treaty position applies.
Common filing mistakes
- Filing Form 1040-NR when you are a resident alien
- Leaving out Australian income
- Treating visa status as tax status
- Using the wrong exchange rate
- Missing FBAR or Form 8938
- Claiming an unsupported treaty position
- Failing to separate dual-status periods
When professional cross-border support may help
VJM Global supports US individual returns on Forms 1040 and 1040-NR. Its team of CPAs, Chartered Accountants and U.S.-compliant professionals works with Australia-connected taxpayers, NRIs, OCIs, foreign investors and multinational businesses. The firm has served 250+ Australian businesses and also offers DTAA advisory.
No tax result can be guaranteed, but a second review of residency, treaty and foreign-account questions is often worth it before filing.
Frequently Asked Questions
Do I qualify as a nonresident alien?
Only if you meet neither the Green Card test nor the substantial presence test. Review exempt-individual rules, the closer-connection exception and any treaty position first.
Do US residents pay tax on foreign income?
Resident aliens generally report worldwide income. Foreign tax credits, treaty relief and separate foreign-account reporting may apply.
What tax form does a resident alien file?
Generally Form 1040. Dual-status taxpayers, or anyone who is a nonresident at year-end, may need Form 1040-NR with additional statements.
How is resident alien status determined for tax purposes?
Through the Green Card test or the substantial presence test. Visa exemptions, closer-connection rules, treaties and status changes can alter the result.
Can a resident alien claim a foreign tax credit?
Often yes, for qualifying foreign income taxes. Limits apply based on income category, documentation and treaty rules.
