Form 1040-NR for Indians on F-1, OPT and first-year H-1B (2026)

Who files Form 1040-NR?

Form 1040-NR is the US income tax return for nonresident aliens. In the Indian in the US context, the common filers are:

• F-1 students in their first five calendar years in the US (including during OPT and STEM OPT, if still within the five-year window).
• J-1 students in their first five calendar years and J-1 scholars/teachers/researchers in their first two calendar years.
• M-1 trainees.
• H-1B, L-1 and other work-visa holders who arrived mid-year and have not yet met the Substantial Presence Test by December 31 of that year.

The core residency rule for US tax is in section 7701(b) and summarised by the IRS: you are a resident alien if you meet the green card test or the Substantial Presence Test; otherwise you are a nonresident alien and file 1040-NR (IRS Substantial Presence Test). See Substantial Presence Test for how the day count works and resident alien vs nonresident alien for which return applies.

The common decision for Indians in the US is picking the right return for the right year. The table below groups the most common cases.

F-1 students: exempt individual days and Form 8843

F-visa students are "exempt individuals" under the Substantial Presence Test. The IRS: "A student temporarily present in the U.S. under an 'F,' 'J,' 'M,' or 'Q' visa, who substantially complies with the requirements of the visa" is an exempt individual whose days of presence are not counted (IRS Substantial Presence Test).

The exemption runs for the first five calendar years in F-1, J-1 or M-1 student status: "Foreign students temporarily present in the U.S. in F-1, J-1, or M-1 status for less than 5 calendar years are generally nonresident aliens (NRA) under residency rules of Internal Revenue Code (IRC) 7701(b)" (IRS).

Being an exempt individual is not automatic — you have to file Form 8843. The IRS warns: "If you do not timely file Form 8843, you cannot exclude the days you were present in the U.S. as an exempt individual or because of a medical condition that arose while you were in the U.S." (IRS). If you have no US income to report, Form 8843 is still filed by itself to the address in its instructions.

The India Article 21(2) standard deduction on Form 1040-NR

This is the single biggest gap between what Indian F-1/OPT filers claim and what they are allowed to claim. Nonresident aliens generally cannot take the standard deduction. But the 1040-NR instructions carve out a specific exception for Indian students: "Students or business apprentices may be able to take the standard deduction on Form 1040-NR, line 12, instead of their itemized deductions if they are eligible for benefits under Article 21(2) of the United States–India Income Tax Treaty. They will enter, on Form 1040-NR, line 12, the standard deduction amount found for their filing status on Form 1040 or 1040-SR" (Instructions for Form 1040-NR).

For 2025, the Form 1040 standard deduction for single filers is $15,750 — this is the amount a single Indian F-1/OPT filer eligible under Article 21(2) can claim on 1040-NR line 12. The 1040-NR instructions reference the same $15,750 threshold when discussing the no-filing-requirement test for Article 21(2) students: "You were a student or business apprentice who was eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty, you are single or a qualifying surviving spouse, and your gross income for 2025 was less than or equal to $15,750 if single ($31,500 if a qualifying surviving spouse)" (IRS).

A few traps to be aware of:

• Article 21(2) applies to students and business apprentices, not to F-1 visitors who are not pursuing a course of study. OPT and STEM OPT work undertaken as part of F-1 status is generally covered; H-1B status is not.
• Married Indian F-1 students filing 1040-NR cannot take the married-filing-jointly standard deduction; Article 21(2) benefits are claimed on individual returns.
• The standard deduction is in place of itemized deductions, not on top of them.

Dependents on Form 1040-NR for Indian students

Residents of Canada, Mexico, South Korea, US nationals, and students/business apprentices from India under Article 21(2) can claim dependents on 1040-NR under limited terms. The IRS: "Only U.S. nationals and residents of Canada and Mexico can claim a dependent on the same terms as U.S. citizens. Residents of South Korea and students or business apprentices from India who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty may claim dependents on the more limited terms described in chapter 5 of Pub. 519. No other person filing a Form 1040-NR can claim a qualifying dependent" (Instructions for Form 1040-NR).

For the child tax credit and credit for other dependents, the limit is narrower: "To claim the child tax credit or the credit for other dependents on Form 1040-NR in full, you must be a U.S. national or a resident of Canada or Mexico. Residents of South Korea and India can claim the credits on Form 1040-NR to the extent described in chapter 5 of Pub. 519" (IRS).

FICA on F-1 and OPT wages: the Social Security refund route

F-1, J-1 and M-1 students are exempt from FICA (Social Security and Medicare) tax on wages paid for services authorised by their visa. The IRS: "These nonresident alien students are exempt from Social Security Tax and Medicare Tax on wages paid to them for services performed within the U.S. To qualify for the exemption, the services performed need to be allowed by USCIS for these nonimmigrant statuses" (IRS). Exempt employment includes "On-campus student employment up to 20 hours a week (40 hrs. during summer vacations)," "Off-campus student employment allowed by United States Citizenship and Immigration Services (USCIS)," and "Practical Training student employment on or off campus" (IRS).

If FICA was withheld in error by your employer, the refund path has two steps: "If Social Security or Medicare taxes were withheld in error from pay that is not subject to these taxes, contact the employer who withheld the taxes for a refund. If you are unable to get a full refund of the amount from your employer, file a claim for refund with the Internal Revenue Service on Form 843, Claim for Refund and Request for Abatement and Form 8316" (IRS).

The exemption does not carry into H-1B: "Teachers, trainees, and researchers in H-1b status, and alien nurses in H-1a or H-1c status, are liable for Social Security/Medicare taxes from the very first day of U.S. employment, regardless of whether they are nonresident or resident aliens" (IRS). October 1 status-change H-1B hires in particular should expect FICA from day one of H-1B.

First-year H-1B: 1040-NR, first-year choice, or dual-status?

For an Indian engineer whose H-1B activates on October 1 of a given year, December 31 arrives before they have met the Substantial Presence Test. The default outcome: file Form 1040-NR for that first calendar year, taxing US-source wages on 1040-NR rules without the standard deduction (Article 21(2) does not apply to H-1B workers). The next year, once SPT is met, Form 1040 applies for the full year.

Two elections can change that:

• First-year choice (Publication 519) can let you become a resident alien for part of the first year if you meet specific day-count conditions in the first and second years. See resident alien vs nonresident alien for when this matters.
• Choosing resident alien status by joint election with a resident spouse (section 6013(g) or 6013(h)) lets a mixed-status couple file 1040 jointly for a year that would otherwise be nonresident; this pulls worldwide income (including Indian salary before the move and Indian investment income) into the US return.

Each election has trade-offs: resident status unlocks the standard deduction and more credits, but it brings worldwide income into scope and triggers FBAR and Form 8938 if your Indian accounts cross those thresholds. See FBAR for Indian bank accounts and Form 8938 for Indian assets.

A worked example: Priya, F-1 to H-1B in 2025

Priya is from Hyderabad. She arrived on F-1 in August 2021 and started 12-month OPT in August 2024. On October 1, 2025 her status converted to H-1B. For calendar 2025:

• Jan–Sep: F-1/OPT (exempt individual days, excluded from SPT).
• Oct–Dec: H-1B (92 counted days — not enough to meet SPT on its own in 2025).

Priya files Form 1040-NR for 2025. On line 12 she claims the $15,750 single standard deduction under Article 21(2) of the US–India treaty for the portion of the year she was an eligible student/business apprentice; her tax preparer applies the facts of her F-1/OPT period to determine Article 21(2) eligibility against the IRS and Pub. 519 criteria. She files Form 8843 with the return to document her F-1 exempt-individual days. FICA withheld during OPT is exempt under section 3121(b)(10); any FICA withheld on OPT wages goes through Form 843 and Form 8316. FICA on H-1B wages from October 1 onward is correctly withheld.

In 2026, Priya is on H-1B all year, meets SPT, and files Form 1040 (standard deduction $15,750 if that is the figure for the then-current year — verify the 2026 single standard deduction on the current IRS 1040 instructions before filing).