Publications relating to International issues can be used as technical reference material. Following is a list of the most common publications used.

The following manuals can provide additional information on International returns:

International IMF related documents are processed exclusively in Austin Submission Processing Campus (AUSPC), which has the responsibility for reviewing notices and transcripts.

Service officials and management must communicate security standards contained in IRM 1.4.6, Manager's Security Handbook to subordinate employees and establish methods to enforce them.

Employees are responsible for taking required precautions in providing security for documents, information and property which are handled in performing official duties.

Alien - Any person who is not a U.S. Citizen or U.S. National. For income tax purposes, aliens are classified as Resident or Nonresident.

Bona Fide Residence - A residence established in a foreign country or countries for an uninterrupted period which includes an entire year that extends into the current tax year.

Domicile - A fixed or permanent place of living for an indefinite length of time. A domicile can be different from the taxpayer's residence.

Dual-Status - Aliens who are both Residents and Nonresidents of the U.S. within the same tax year.

Effectively Connected Income - Any compensation received for personal services in the U.S. Any earned income derived from an office or fixed place of business in the U.S. Generally applies to nonresident.

Excludable Income - Any income that can be omitted from taxable income such as Form 2555/2555-EZ exemptions, Form 4563 exemptions and exemptions due to tax treaty conventions and IRC exemptions.

Foreign Tax Treaties - Country- specific treaties designed to avoid international double taxation and to prevent tax evasion.

Fulbright Grant - A grant under the Mutual Educational and Cultural Exchange Act of 1961. It can be received for teaching and research duties, or by students.

Green Card Test - A taxpayer is a lawful permanent resident of the U.S. at any time during the calendar year if that person has been issued an alien registration card, also known as a "green card" .

Nonresident Alien - An alien who is temporarily residing in the U.S., a resident alien who has abandoned permanent residence in the U.S. or an alien who has never been in the U.S.

Non-Effectively Connected Income - Nonresident aliens' income received from sources within the U.S. which are not connected with a U.S. trade or business.

Physical Presence Test - A rule applied in determining if a taxpayer qualifies for the Foreign Income exemption. Generally, the taxpayer must be physically present in a foreign country for a minimum of 330 days during a consecutive 12-month period that includes part of the current tax year.

Principal Residence - Usually the home in which a taxpayer resides for the majority of the tax year.

Resident Alien - Aliens admitted to the U.S. under permanent immigration visas are generally resident aliens and meet the substantial presence test or lawful permanent residency test. (Green Card Test)

Schedule Not Effectively Connected (NEC) - Tax on Income Not Effectively Connected With a U.S. Trade or Business (page 4 of Form 1040NR).

Schedule Other Information (OI) - Other Information (page 5 of Form 1040NR).

IRC Section 911 - Section of the Internal Revenue Code that allows U.S. citizens and resident aliens to claim an exemption for certain income earned outside the U.S. and certain housing costs. Taxpayers use Form 2555 to claim this exemption.

IRC Section 931 - Section of the Internal Revenue Code that allows bona fide residents of American Samoa to exempt income using Form 4563, exemption of Income for Bona Fide Residents of American Samoa. It also allows bona fide residents of Guam or CNMI to allocate tax using Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands.

IRC Section 933 - Section of the Internal Revenue Code that allows U.S. citizens who are bona fide residents of Puerto Rico for at least 2 years to exempt income from sources within Puerto Rico sources.

Substantial Presence Test - A rule applied in determining if an alien is a U.S. Resident for tax purposes. Generally, an individual meets the substantial presence test if the individual was in the United States for at least 31 days during the current calendar year and was present in the United States for at least 183 days during the current year and the two preceding calendar years (when multiplied by the applicable multiplier provided in IRC Section 7701(b)(3)(A).

Tax Home - A taxpayer's principal place of business, employment, station or post of duty, regardless of where the taxpayer maintains his or her residence.

Treaty Trader - Nonresident Alien who has entered the U.S. on an "E-1" visa.

U.S. National - An individual who, although not a U.S. citizen, owes his or her allegiance to the United States. For tax purposes, U.S. national refers to American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.

Visa - An endorsement written or stamped on a passport granting entry into a country.

Withholding Agent - Any person (e.g. individual trust, partnership, estate, corporation, government agency, non-profit organization or private organization), whether foreign or domestic, required to withhold income tax on U.S. source income received by a nonresident alien, foreign partnership corporation, and various other organizations. A withholding agent is responsible for submitting the withholding information on Form 1042 and providing the income recipient information on Form 1042-S.

U.S. citizens living or traveling outside the United States are generally required to file U.S. income tax returns and report worldwide income.

An alien individual is a Resident alien if the individual meets the "green card test" or the "substantial presence test" for the calendar year, or makes the election to be taxed as a resident alien under IRC 6013(g) or (h). Resident aliens are generally required to file U.S. Income Tax Returns and pay U.S. Tax on worldwide income.

If an alien individual does not meet either of these tests (and does not make an election), the individual is a nonresident alien. A nonresident alien must file Form 1040NR, U.S. Nonresident Alien Income Tax Return, to report and pay U.S. Tax on certain types of income. An individual who is classified as a resident alien under the green card test or substantial presence test and is also a resident in another country, may be treated as a nonresident alien under the residency tie breaker rules of an applicable income tax treaty.

The United States may tax the income of a nonresident alien individual (who is neither a U.S. citizen nor resident) in one or both of the following ways:

Resident aliens can use the same filing status available to U.S. citizens.

Nonresident aliens may use the following Filing Status Codes as listed by country:

Married Filing Joint for Nonresident Aliens- A nonresident alien married to a U.S. citizen or resident alien is taxed at citizen/resident rates if that person files married filing joint and discloses all worldwide income on the return. This includes situations where one spouse begins the year as a nonresident alien and ends the year as a resident, and the other spouse ends the year in nonresident status. Both taxpayers must have a valid SSN or ITIN [IRC 6013(g) or (h)].

Special Provisions- Married residents living in Canada, Mexico, South Korea and U.S. Nationals who are living apart from their spouses "may file as single" if they meet certain requirements.

Qualifying Widow(er)- An alien can claim this filing status only if they are a U.S. National or a resident of Canada, Mexico, or South Korea and the spouse's date of death was no more than two years prior to the tax year. The taxpayer must also have a dependent child to qualify.

Resident aliens may claim personal exemptions and exemptions for dependents in the same way as U.S. citizens.

exemptions under Article 4 (7) of the U.S. tax treaty with South Korea allow for a prorated exemption for a taxpayer's spouse and children. The spouse and children claimed must live with the alien in the United States at some time during the tax year. exemptions are based on the ratio of U.S. source income effectively connected to total gross income for the entire year. Use the following formula to determine the prorated exemption amount:

Nonresident aliens from Canada, Mexico and U.S. Nationals are allowed to claim their spouse, children and other dependents as exemptions. The spouse must not have gross income for U.S. tax purposes and must not be claimed as a dependent on another U.S. taxpayer's return. Nonresident taxpayers from Japan may claim exemptions for spouse, children and other dependents for Tax Year 2005 and prior.

Nonresident aliens from all other countries may claim only one exemption for self.

Residents of India who entered the U.S. as students or business apprentices and who are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty may be able to claim exemptions for their spouse and dependents.

For more information on exemptions refer to IRM 21.8.1.11.6.3, exemptions- Form 1040NR, IMF International Adjustments.

Resident aliens may claim the same itemized deductions as U.S. citizens using Schedule A of Form 1040. Resident aliens may claim the standard deduction for their particular filing status if they do not itemize.

Nonresident aliens must itemize deductions.

Taxpayers excluding income under Section 933 (Puerto Rico) or IRC 931 (Form 4563) may prorate their itemized deductions or standard deduction.

Social Security Number (SSN) - Generally signifies the filer is a U.S. citizen or resident alien and taxed on worldwide income. Compare the SSN on the notice with the return.

Individual Taxpayer Identification Number (ITIN) -Beginning in January 1, 1997, taxpayers can apply for an ITIN when they are not eligible to obtain an SSN. As of January, 2004, taxpayers must file generally an income tax return with their ITIN application. For the exceptions to the requirement to include a tax return, see the instructions to Form W-7 Application for IRS Individual Taxpayer Identification Number. ITIN numbers start with nine (9) with fourth and fifth digits in the range of:

Internal Revenue Service Number (IRSN) – These numbers are used for internal processing only when the taxpayer does not qualify for an SSN or ITIN. An IRSN will start with a nine (9) with fourth and fifth digits as 18 for the Austin campus. Other campuses will use a unique fourth and fifth digit for each campus number. See IRM 21.6.2.1(2) Adjusting TIN-Related Problems for a list of other IRSN fourth and fifth digits. An IRSN is always invalid.

ITIN and Adoption of Foreign Child-A taxpayer who adopts a foreign child can use a valid SSN or an ITIN, Individual Taxpayer Identification Number, to claim a credit or exemption. Upon entry into the United States of the foreign child, the adopting taxpayer should apply to the Social Security Administration (SSA) for a valid SSN for the child. If SSA rejects the application, the taxpayer may apply to the IRS for an ITIN for the child, using Form W-7.

Temporary Taxpayer Identification Number (TTIN) -This may also be known as an IRSN. A literal “T” replaces the first digit. .

Adoption Taxpayer Identification Number (ATIN) -May be used to claim a credit or exemption for an adopted child when the child cannot obtain an SSN. The ATIN, which may be applied for using IRS Form W-7A, may ONLY be used to claim a credit or exemption for a child who was a U.S. citizen, resident, or national when the adoption process commenced and who was adopted domestically through an authorized adoption agency/agent.

During the selection process, the first selection criterion is named the Primary Selection Key. If a second criterion is selected, it is named the Secondary Selection Key.

After a Secondary Selection Key, the selection process is terminated for any remaining selection criteria both within the category and in remaining categories.

International key codes are valid for Austin Submission Processing Campus (AUSPC) only.

Earned Income is payment for personal services performed. It includes salaries, wages, commissions, bonuses, professional fees, tips, etc.

Unearned income includes the following: dividends, interest, capital gains, gambling winnings, alimony, social security benefits, pensions, annuities, etc.

Some types of income fall into more than one category: business profits, royalties, rents, etc.

Use the prior year tax forms, tax tables and tax rate schedules to verify amounts for the tax computation method most beneficial to taxpayer.

Returns for December 31, 2009 and prior require manual computation of exemption, standard deduction, itemized deductions and most credits.

Tax treaties can vary year to year. For prior tax years, make sure to check treaty validity using prior year publications. Refer to 3.38.147.3.11(3) and (4).

Visas are assigned based on immigrant or non-immigrant status. Visas are generally assigned to non-immigrants admitted temporarily to the U.S. for a specific purpose and period of time.

The method of taxation for a visa-holder depends primarily upon whether the individual is classified as a resident or a nonresident alien.

If a visa-holder is determined to be a nonresident alien, taxpayer is taxed on all U.S. source income and on all income that is effectively connected with the conduct of a trade or business in the U.S. Non-effectively connected foreign source income is not taxed. Resident aliens are taxed the same way as citizens.

The following are types and definitions of visas most frequently recognized by the Service:

The United States has income tax treaties with a number of countries. Under these treaties, residents of foreign countries are (if eligible) taxed at a reduced rate, or are exempt from U.S. income taxes on certain items of income received from sources within the United States. These reduced rates and exemptions vary among countries and specific items of income. The term "resident" is defined under the relevant treaty and some treaties require a physical presence within the foreign country such that citizenship alone may not establish "residency" .

Tax treaties reduce the U.S. taxes of residents of foreign countries. With certain exceptions, they do not reduce the U.S. taxes of U.S. citizens or residents. U.S. citizens and residents are subject to U.S. income tax on their worldwide income. Caution: If the taxpayer writes “Republic of China”, this is Taiwan and we do not have a tax treaty with this country.

All treaty information should be provided on Item L, Schedule OI on page 5 of Form 1040NR or Item J, Schedule OI, page 2 of Form 1040NR-EZ. Taxpayers should not include amounts exemptd by treaty on Line 8, Form 1040NR or Line 3, Form 1040NR-EZ. The treaty amounts should be included on Line 22, Form 1040NR or Line 6, Form 1040NR-EZ.

Tax treaties can vary year to year. Make sure to check treaty validity using Publication 901, U.S. Tax Treaties, Publication 915, Social Security Benefits and Equivalent Railroad Retirement Benefits, Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities and/or www.irs.gov/businesses/international/article/0,,id=96739,00.html.

For a claim of a treaty exemption to be valid, the taxpayer must provide the name of the country of which they are a resident, the relevant treaty article, and the amount of “exempt” income during the tax year.

Article XXV refers to a tax treaty between the United States and Canada based on a Non-Discrimination provision which allows citizens/residents of Canada to figure their 1040NR tax based upon a hypothetical 1040 tax computed on married filing joint tax rates. The taxpayers must include worldwide income in their 1040 tax computation. Article XXV returns can be recognized by any of the following on Form 1040NR:

The taxpayer may not exempt income by claiming “Tiebreaker” under Article IV. Article IV is not a valid article for exemption.

Under certain circumstances, tax treaties between the United States and all countries may be claimed on Form 1040. The amount must be reported as income on line 7 and as a negative amount on line 21 along with the relevant tax treaty article. It must be related to teaching, studying, or training.

U.S. citizens and resident aliens who file calendar year returns are required to file a tax return by April 15. However, taxpayers who are overseas on the due date receive an automatic extension of two months (until June 15 for calendar year filers).

If taxpayers are unable to file their return by the due date, they can generally get an automatic 6 month extension of time to file using a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. For taxpayers who are overseas on the due date of their return, the 2-month period mentioned above (until June 15 for calendar year taxpayers) and the 6-month automatic extension period start at the same time. In other words, for taxpayers who are overseas, if taxpayers are unable to file their return within the automatic 2-month extension period they can generally get an additional 4 month using a Form 4868 (for a total of 6 months).

The extension of time to file only applies to the calculation of penalties. Interest accrues from the due date of the return.

If taxpayers file a Form 2350, Application for Extension of Time to File U.S. Income Tax Return, to qualify for exemption of income under IRC 911, they are generally granted an extension to a date thirty days after the date on which the taxpayer expects to meet the criteria. Taxpayers who expect to meet the requirements based on bona fide residence or physical presence in a foreign country can request an extension until they qualify.

Nonresident Aliens with wage income subject to W-2 withholding have an original due date of April 15.

Nonresident Aliens without wage income subject to W-2 withholding have an original due date of June 15.

Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, provides for a 6-month extension.

The extension provisions apply to fiscal as well as calendar year filers.

Any extension request beyond December 15 for a calendar year filer requires approval.

In addition to the automatic extensions requested using a Form 4868, taxpayers who are overseas may request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Taxpayers must send the IRS a letter explaining the reasons why the additional 2 months is needed.

U.S. territories are required to file by April 15th for calendar year filers. Taxpayers are allowed an automatic 2-month extension if they are U.S. citizens or resident alien and are living outside the U.S. or Puerto Rico and the main place of business or post of duty is outside the U.S. or Puerto Rico on the due date of the return.

Failure to file timely U.S. returns could result in the loss of certain deductions and credits for taxes paid or accrued.

Follow procedures in IRM 3.14.1.7.3 with the exception of suspending your case for 60 days instead of 45 days.

Use Online Notice Review (OLNR) and Integrated Data Retrieval System (IDRS) tax module data to determine disposition of notice.

Follow guidelines in IRM 3.14.1, IMF Notice Review.

Verify name, address, taxpayer identification number (TIN), tax period and DLN as shown on the return with information contained in the notice.

Math Error - Review math error explanation for accuracy and verify from the point of error.

Estimated Tax (ES) Discrepancy- See IRM 3.14.1 for notice disposition and case resolution.

Follow guidelines in IRM 3.14.1, IMF Notice Review.

For Form 1040-PR, labels will convert to Spanish on the actual notice.

The taxpayer is entitled to the following exemptions and/or deductions on Form 2555:

Form 2555 must be attached to a Form 1040.

Foreign earned income shown on line 26 of Form 2555 must be shown as income on Form 1040 on Lines 7, 12, 18 or 21.

Indications of a Form 2555 attached to Form 1040 are:

Taxpayers may only use Form 2555-EZ if excluding income and all of the following conditions exist:

These can be filed on Form 2555, but not on Form 2555-EZ:

A taxpayer may take a deduction for taxes paid or accrued during the year to;

This deduction is claimed on Line 8, Schedule A.

Taxpayers may not claim both a deduction on Schedule A and a credit on Form 1116 for foreign income taxes in the same year. The Foreign Tax Credit or deduction may not be figured on income that has been exemptd on Form 2555/2555-EZ.

Effectively Connected Income includes:

Effectively Connected Income is generally not subject to withholding if the taxpayer has complied with applicable documentation requirements, but is taxed on a net basis at graduated rates.

Nonresident aliens with wages subject to U.S. withholding tax are required to file by the 15th day of the 4th month after the tax year ends. A calendar year return is due April 15th.

Effectively Connected Income is reported on page 1 of Form 1040NR. A return that shows effectively connected income on page 1 of Form 1040NR is processed with Document Code 73.

Gain or loss on the disposition of a U.S. real property interest is taxed as if the gain or loss were effectively connected with the conduct of a U.S. trade or business. Gains and losses are reported on Schedule D (Form 1040) and Form 1040NR, line 14. Also, net gains may be subject to the Alternative Minimum Tax, Form 6251. See Pub. 519 for more information.

If a nonresident alien disposes of U.S. real property interests at a gain, the taxpayer must make a special computation on Alternative Minimum Tax Form 6251. The taxpayer will also enter Return Processing Instruction (RPI) on the dotted line next to line 30.

The following types of income are subject to U.S. withholding at 30% (unless reduced by an applicable treaty or other code provision) to the extent the income is (1) U.S. sourced, and (2) NOT effectively connected to a U.S. trade or business:

With certain exceptions, U.S. source non-effectively connected income is reported on Schedule NEC, page 4 of Form 1040NR. It is generally subject to U.S. withholding tax at a flat 30% rate (or a lower treaty rate). No deductions are allowed against such income.

A nonresident alien otherwise required to file a return, but who did not receive wages subject to U.S. withholding tax, is required to file by the 15th day of the 6th month after the end of the tax year. A calendar year return is due June 15th.

The document code shown in the DLN is 72.

Income reported on Form 1040NR is classified as effectively connected or non-effectively connected income.

Effectively connected income is reported on Form 1040NR and taxed at graduated rates with exemption from withholding.

Form 1040NR effectively connected income is income from wages, interest, dividends, connected with U.S. trade or business, etc.

Effectively Connected Income is reported on page 1 of Form 1040NR.

Non-effectively connected income is reported on Schedule NEC, page 4 of Form 1040NR and is taxed at a flat rate of 30% or a lower treaty rate.

If married filing separate and spouse has U.S. income, FSC is 3.

If married filing separate and spouse has no U.S. income, FSC is 6.

Exemption are subject to a "phase out" based on adjusted gross income on Line 35 of Form 1040NR. For tax year 2009 and prior.

Deductions must be itemized and limited to state and local income taxes, gifts to U.S. charities, casualty or theft losses, expenses and other miscellaneous deductions.

Students and business apprentices who are residents of India may be able to claim a standard deduction. The return is sometimes annotated "Standard Deduction allowed under U.S.-India Income Tax Treaty" on Line 37 of the 1040NR.

Income reported on Form 1040NR-EZ is classified as effectively connected income only.

All Forms 1040NR-EZ are assigned Document Code 73.

Due date is the fifteenth day of the fourth month following the end of the tax year.

Gambling winnings are subject to 30% withholding. Lottery winnings are not exempt. Winnings subject to withholding tax are not reduced by gambling losses. Gambling winnings are non effectively connected unless documentation is submitted to prove an NRA is a professional gambler.

Nonresident aliens with income from gambling winnings are subject to tax at a flat 30% rate unless covered by a treaty. This income is also subject to withholding at source. Based on these treaties, gambling winnings are not subject to United States tax for the following countries:

Federal tax withheld on gambling winnings must be substantiated with Form 1042-S (Income Code 28), W-2G, or 1099-G.

Form 1040NR -Gambling tax from Schedule NEC, page 4, Line 11, should be reported on Line 53, Page 2.

Form 1040NR - U.S. tax withheld at source from page 2, Line 60d.

Qualified scholarships are exempt from tax. To obtain the exemption, the taxpayer must be a degree candidate to qualify for a tax-free scholarship/fellowship.

A degree candidate is a full or part-time student who is pursuing a degree at a college or university (bachelor's or higher degree) or another accredited educational institution providing training in a recognized occupation.

A qualified scholarship or fellowship is any amount used under the terms of the grant for any of the following:

Amount(s) received for incidental expenses do not qualify as a tax free scholarship. Incidental expenses include expenses for room, board, travel, research, and clerical help. Also included are expenses for equipment and other items that are not required for either enrollment or attendance, or in a course of instruction at the educational organization. Any portion of the grant that represents payment for teaching, research, or other services is taxable.

Scholarships/Fellowships are found on Line 12, Form 1040NR (Line 5, Form 1040NR-EZ).

An entry on Line 12, Form 1040NR (Line 5, Form 1040NR-EZ) can be from any or all of the following to report Scholarship/Fellowship/Grants received:

If it can be determined that the Scholarship/Fellowship Grant entered on Line 12, Form 1040NR (Line 5, Form 1040NR-EZ) is exempt under a valid tax treaty (check item L on Schedule OI, page 5 of Form 1040NR; item J on page 2, Form 1040NR-EZ), take the following action to remove the exempt amount:

See Tax Treatment of Scholarship and Fellowship Payments in the Job Aid for line by line references.

Nonresident alien estate and trust tax returns are filed on Form 1040NR and processed as non-Masterfile documents.

If the return was incorrectly processed to Masterfile, take the following steps:

A qualifying child for purposes of the child tax credit/additional child tax credit is a child who is:

Credit decreases based on modified adjusted gross income and threshold amounts. If the taxpayer is filing Form 2555/2555-EZ, excluding income under IRC 933 (Puerto Rico), or IRC 931 (Form 4563), the taxpayer must use the Child Tax Credit worksheet in Pub. 972. Refer to 3.38.147.15.2 for specifics on PR.

Bona fide residents of Puerto Rico should file Form 1040-PR or Form 1040-SS. ACTC can be claimed directly on the tax return by completing Parts I and II; therefore, Schedule 8812, Additional Child Tax Credit, is not required.

) If a Bona Fide resident of Puerto Rico chooses to file Form 1040/A, Schedule 8812 must be attached to claim ACTC.

U.S. territories other than Puerto Rico may not claim ACTC. (See IRM 3.38.147.15.3 for specific information on Puerto Rico.)

Education tax credits are refundable and nonrefundable credits for qualified expenses paid to an eligible educational institution.

Can be claimed for taxpayer, spouse, or eligible dependent.

Form 1040NR filers, dual-status filers, and married filing separate filers do not qualify for the education tax credit.

Credit is subject to phaseout based on modified adjusted gross income (AGI).

Limited to one credit per student.

Taxpayer may not be eligible for education credits if taxpayer (or spouse) is a nonresident alien for any part of the tax year and the nonresident alien did not elect to be treated as a resident alien.

If taxpayer is filing Form 2555/2555-EZ, or excluding income from IRC 933 (Puerto Rico), or IRC 931 (Form 4563), the taxpayer must use worksheets 2-1 and/or 3-1 in Publication 970, Tax Benefits for Education.

The Adoption credit is a nonrefundable credit for qualified expenses paid to adopt an eligible child. (The credit was a refundable credit for TY 2011.)

Taxpayer must file Form 8839 to claim the adoption credit.

Allowable credit is up to $12,650 for qualifying expenses paid to adopt a child with special needs or an eligible child.

Married nonresident aliens can claim the credit only if filing a joint return with a U.S. citizen or resident spouse.

Married NRAs may also qualify for the credit as "certain married persons who live apart."