Question: Pedro lives in Spain. He owns real estate in the U.S. and receives rental income of $12,000 during the year. Pedro is unmarried, has never been to the U.S., and meets the definition of a nonresident alien. The rental income was his only U.S.-sourced income. Must Pedro file a U.S. tax return and, if so, is he allowed to claim the standard deduction?
Answer: Yes, Pedro will be required to file a tax return using Form 1040-NR, U.S. Nonresident Alien Income Tax Return. Since the real estate is in the U.S, he has U.S.- sourced income that must report on a federal income tax return.
Because Pedro is considered a nonresident alien and is not married to a U.S. citizen or resident with whom he is making an election to be treated as a U.S. resident, he is not eligible to claim the standard deduction; his allowable standard deduction is $0.
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