5.   Figuring Your Tax

Introduction

After you have determined your alien status, the source of your income, and if and how that income is taxed in the United States, your next step is to figure your tax. The information in this chapter is not as comprehensive for resident aliens as it is for nonresident aliens. Resident aliens should get publications, forms, and instructions for U.S. citizens, because the information for filing returns for resident aliens is generally the same as for U.S. citizens.

If you are both a nonresident alien and a resident alien in the same tax year, see chapter 6 for a discussion of dual-status aliens.

Topics - This chapter discusses:

  • Identification numbers,

  • Filing status,

  • Deductions,

  • Exemptions,

  • Tax credits and payments, and

  • Special rules for bona fide residents of American Samoa and Puerto Rico.

Useful Items - You may want to see:

Publication

  • 463 Travel, Entertainment, Gift, and Car Expenses

  • 501 Exemptions, Standard Deduction, and Filing Information

  • 521 Moving Expenses

  • 526 Charitable Contributions

  • 535 Business Expenses

  • 597 Information on the United States–Canada Income Tax Treaty

Form (and Instructions)

  • W-7 Application for IRS Individual Taxpayer Identification Number

  • 1040 U.S. Individual Income Tax Return

  • 1040NR U.S. Nonresident Alien Income Tax Return

  • 1040NR-EZ U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents

  • 2106 Employee Business Expenses

  • 2106-EZ Unreimbursed Employee Business Expenses

  • 3903 Moving Expenses

  • 4563 Exclusion of Income for Bona Fide Residents of American Samoa

  • 8959 Additional Medicare Tax

See chapter 12 for information about getting these publications and forms.

Tax Year

You must figure your income and file a tax return on the basis of an annual accounting period called a tax year. If you have not previously established a fiscal tax year, your tax year is the calendar year. A calendar year is 12 consecutive months ending on December 31. If you have previously established a regular fiscal year (12 consecutive months ending on the last day of a month other than December or a 52–53 week year) and are considered to be a U.S. resident for any calendar year, you will be treated as a U.S. resident for any part of your fiscal year that falls within that calendar year.

Identification Number

A taxpayer identification number must be furnished on returns, statements, and other tax-related documents. For an individual, this is a social security number (SSN). If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). An employer identification number (EIN) is required if you are engaged in a trade or business as a sole proprietor and have employees or a qualified retirement plan.

You must furnish a taxpayer identification number if you are:

  • An alien who has income effectively connected with the conduct of a U.S. trade or business at any time during the year,

  • An alien who has a U.S. office or place of business at any time during the year,

  • A nonresident alien spouse treated as a resident, as discussed in chapter 1, or

  • Any other alien who files a tax return, an amended return, or a refund claim (but not information returns).

Social security number (SSN).   Generally, you can get an SSN if you have been lawfully admitted to the United States for permanent residence or under other immigration categories that authorize U.S. employment.

  To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. You can also download Form SS-5 from the SSA's website at www.socialsecurity.gov/ssnumber/ss5.htm. You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. Generally, you will receive your card about 2 weeks after the SSA has all of the necessary information.

F-1 and M-1 visa holders.    If you are an F-1 or M-1 student, you must also show your Form I-20. For more information, see SSA Publication 05-10181, International Students and Social Security Numbers, available online at www.socialsecurity.gov/pubs/10181.html.

J-1 visa holders.   If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. For more information, see SSA Publication 05-10107, Foreign Workers and Social Security Numbers, available online at www.socialsecurity.gov/pubs/10107.html.

Individual taxpayer identification number (ITIN).   If you do not have and are not eligible to get an SSN, you must apply for an ITIN. For details on how to do so, see Form W-7 and its instructions. Allow 6 to 10 weeks for the IRS to notify you of your ITIN. If you already have an ITIN, enter it wherever an SSN is required on your tax return.

  An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law.

  In addition to those aliens who are required to furnish a taxpayer identification number and are not eligible for an SSN, a Form W-7 must be filed for:
  • Alien individuals who are claimed as dependents and are not eligible for an SSN, and

  • Alien spouses who are claimed as exemptions and are not eligible for an SSN.

Employer identification number (EIN).   An individual may use an SSN (or ITIN) for individual taxes and an EIN for business taxes. To apply for an EIN, file Form SS-4, Application for Employer Identification Number, with the IRS.

Filing Status

The amount of your tax depends on your filing status. Your filing status is important in determining whether you can take certain deductions and credits. The rules for determining your filing status are different for resident aliens and nonresident aliens.

Resident Aliens

Resident aliens can use the same filing statuses available to U.S. citizens. See your form instructions or Publication 501 for more information on filing status.

Married filing jointly.   Generally, you can file as married filing jointly only if both you and your spouse were resident aliens for the entire tax year, or if you make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year.

Qualifying widow(er).   If your spouse died in 2011 or 2012, you did not remarry before the end of 2013, and you have a dependent child living with you, you may qualify to file as a qualifying widow(er) and use the joint return tax rates. This applies only if you could have filed a joint return with your spouse for the year your spouse died.

Head of household.   You can qualify as head of household if you are unmarried or considered unmarried on the last day of the year and you pay more than half the cost of keeping up a home for you and a qualifying person. You must be a resident alien for the entire tax year.

  You are considered unmarried for this purpose if your spouse was a nonresident alien at any time during the year and you do not make one of the choices discussed in chapter 1 to treat your spouse as a resident alien for the entire tax year.

Note.   Even if you are considered unmarried for head of household purposes because you are married to a nonresident alien, you may still be considered married for purposes of the earned income credit. In that case, you will not be entitled to the credit. See Publication 596 for more information.

Nonresident Aliens

If you are a nonresident alien filing Form 1040NR, you may be able to use one of the filing statuses discussed later. If you are filing Form 1040NR-EZ, you can only claim “Single nonresident alien” or “Married nonresident alien” as your filing status.

Married nonresident alien.   Married nonresident aliens who are not married to U.S. citizens or residents generally must use the Tax Table column or the Tax Computation Worksheet for married filing separate returns when determining the tax on income effectively connected with a U.S. trade or business.

Exceptions.   Married nonresident aliens normally cannot use the Tax Table column or the Tax Computation Worksheet for single individuals. However, you may be able to file as single if you lived apart from your spouse during the last 6 months of the year and you are a married resident of Canada, Mexico, South Korea, or are a married U.S. national. See the instructions for Form 1040NR or Form 1040NR-EZ to see if you qualify. U.S. national is defined later in this section under Qualifying widow(er) .

  A nonresident alien generally cannot file as married filing jointly. However, a nonresident alien who is married to a U.S. citizen or resident can choose to be treated as a resident and file a joint return on Form 1040, Form 1040A, or Form 1040EZ. For information on these choices, see chapter 1. If you do not make the choice to file jointly, file Form 1040NR or Form 1040NR-EZ and use the Tax Table column or the Tax Computation Worksheet for married individuals filing separately.

Qualifying widow(er).   You may be eligible to file as a qualifying widow(er) and use the joint return tax rates if all of the following conditions apply.
  1. You were a resident of Canada, Mexico, or South Korea, or a U.S. national (defined later).

  2. Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013.

  3. You have a dependent child living with you.

See the instructions for Form 1040NR for the rules for filing as a qualifying widow(er) with a dependent child.

  A U.S. national is an individual who, although not a U.S. citizen, owes his or her allegiance to the United States. U.S. nationals include American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.

Head of household.   You cannot file as head of household if you are a nonresident alien at any time during the tax year. However, if you are married, your spouse can qualify as a head of household if:
  • Your spouse is a resident alien or U.S. citizen for the entire tax year,

  • You do not choose to be treated as a resident alien, and

  • Your spouse meets the other requirements for this filing status, as discussed earlier under Resident Aliens .

Note.   Even if your spouse is considered unmarried for head of household purposes because you are a nonresident alien, your spouse may still be considered married for purposes of the earned income credit. In that case, your spouse will not be entitled to the credit. See Publication 596 for more information.

Estates and trusts.   A nonresident alien estate or trust using Form 1040NR must use Tax Rate Schedule W in the Form 1040NR instructions when determining the tax on income effectively connected with a U.S. trade or business.

Special rules for aliens from certain U.S. possessions.   A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year and who is temporarily working in the United States should read Bona Fide Residents of American Samoa or Puerto Rico, at the end of this chapter, for information about special rules.

Reporting Your Income

You must report each item of income that is taxable according to the rules in chapters 2, 3, and 4. For resident aliens, this includes income from sources both within and outside the United States. For nonresident aliens, this includes both income that is effectively connected with a trade or business in the United States (subject to graduated tax rates) and income from U.S. sources that is not effectively connected (subject to a flat 30% tax rate or lower tax treaty rate).

Deductions

Resident and nonresident aliens can claim similar deductions on their U.S. tax returns. However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U.S. trade or business.

Resident Aliens

You can claim the same deductions allowed to U.S. citizens if you are a resident alien for the entire tax year. While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. You should get Form 1040 and instructions for more information on how to claim your allowable deductions.

Nonresident Aliens

You can claim deductions to figure your effectively connected taxable income. You generally cannot claim deductions related to income that is not connected with your U.S. business activities. Except for personal exemptions, and certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income.

Ordinary and necessary business expenses.   You can deduct all ordinary and necessary expenses in the operation of your U.S. trade or business to the extent they relate to income effectively connected with that trade or business. The deduction for travel expenses while in the United States is discussed under Itemized Deductions, later. For information about other business expenses, see Publication 535.

Losses.   You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. to the extent that they relate to income that is effectively connected with a trade or business in the United States.

Educator expenses.   If you were an eligible educator in 2013, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2013 for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment, and other equipment and materials used in the classroom. For more information, see your tax form instructions.

Individual retirement arrangement (IRA).   If you made contributions to a traditional IRA for 2013, you may be able to take an IRA deduction. But you must have taxable compensation effectively connected with a U.S. trade or business to do so. A Form 5498 should be sent to you by May 31, 2014, that shows all contributions to your traditional IRA for 2013. If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc.) at work or through self-employment, your IRA deduction may be reduced or eliminated. But you can still make contributions to a traditional IRA even if you cannot deduct them. If you made nondeductible contributions to a traditional IRA for 2013, you must report them on Form 8606, Nondeductible IRAs.

  For more information, see Publication 590, Individual Retirement Arrangements (IRAs).

Moving expenses.   If you are a nonresident alien temporarily in the United States earning taxable income for performing personal services, you can deduct moving expenses to the United States if you meet both of the following tests.
  • You are a full-time employee for at least 39 weeks during the 12 months right after you move, or if you are self-employed, you work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months right after you move.

  • Your new job location is at least 50 miles farther (by the shortest commonly traveled route) from your former home than your former job location was. If you had no former job location, the new job location must be at least 50 miles from your former home.

  You cannot deduct the moving expense you have when returning to your home abroad or moving to a foreign job site.

  Figure your deductible moving expenses to the United States on Form 3903, and deduct them on line 26 of Form 1040NR.

  For more information on the moving expense deduction, see Publication 521.

Reimbursements.   If your employer reimbursed you for allowable moving expenses under an accountable plan, your employer should have excluded these reimbursements from your income. You can only deduct allowable moving expenses that were not reimbursed by your employer or that were reimbursed but the reimbursement was included in your income. For more information, see Publication 521.

Moving expense or travel expense.   If you deduct moving expenses to the United States, you cannot also deduct travel expenses (discussed later under Itemized Deductions) while temporarily away from your tax home in a foreign country. Moving expenses are based on a change in your principal place of business while travel expenses are based on your temporary absence from your principal place of business.

Self-employed SEP, SIMPLE, and qualified retirement plans.   If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U.S. trade or business.

  Get Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for further information.

Penalty on early withdrawal of savings.   You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. However, if the interest income is effectively connected with your U.S. trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged.

Student loan interest expense.   If you paid interest on a student loan in 2013, you may be able to deduct up to $2,500 of the interest you paid. Generally, you can claim the deduction if all the following requirements are met.
  1. Your filing status is any filing status except married filing separately.

  2. Your modified adjusted gross income is less than $75,000.

  3. No one else is claiming an exemption for you on his or her 2013 tax return.

  4. You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone you could have claimed as a dependent for the year the loan was taken out except that:

    1. The person filed a joint return,

    2. The person had gross income that was equal to or more than the exemption amount for that year ($3,900 for 2013), or

    3. You could be claimed as a dependent on someone else's return.

  5. The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan.

  6. The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out.

  7. The person for whom the expenses were paid or incurred was an eligible student.

Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. For more information, see Publication 970, Tax Benefits for Education.

Exemptions

Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U.S. citizens. However, nonresident aliens generally can claim only a personal exemption for themselves on their U.S. tax return.

Resident Aliens

You can claim personal exemptions and exemptions for dependents according to the dependency rules for U.S. citizens. You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U.S. tax purposes and was not the dependent of another taxpayer. You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States.

You can claim an exemption for each person who qualifies as a dependent according to the rules for U.S. citizens. The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Get Publication 501 for more information.

Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. See Identification Number, earlier.

Nonresident Aliens

Generally, if you are a nonresident alien engaged in a trade or business in the United States, you can claim only one personal exemption ($3,900 for 2013). You may be able to claim an exemption for a spouse and a dependent if you are described in any of the following discussions.

Your spouse and each dependent for whom you claim an exemption must have either an SSN or an ITIN. See Identification Number, earlier.

Residents of Mexico or Canada or U.S. nationals.   If you are a resident of Mexico or Canada or a national of the United States (defined earlier), you can also claim a personal exemption for your spouse if your spouse had no gross income for U.S. tax purposes and cannot be claimed as the dependent on another U.S. taxpayer's return. In addition, you can claim exemptions for your dependents who meet certain tests. Residents of Mexico, Canada, or nationals of the United States must use the same rules as U.S. citizens to determine who is a dependent and for which dependents exemptions can be claimed. See Publication 501 for these rules. For purposes of these rules, dependents who are U.S. nationals meet the citizenship test discussed in Publication 501.

Residents of South Korea.   Nonresident aliens who are residents of South Korea may be able to claim exemptions for a spouse and children. The income tax treaty with South Korea imposes two additional requirements on South Korean residents:
  1. The spouse and all children claimed must live with the alien in the United States at some time during the tax year, and

  2. The additional deduction for the exemptions must be prorated based on the ratio of the alien's U.S. source gross income effectively connected with a U.S. trade or business for the tax year to the alien's entire income from all sources during the tax year.

Example.

Mr. Park, a nonresident alien who is a resident of South Korea, lives temporarily in the United States with his wife and two children. During the tax year he receives U.S. compensation of $18,000. He also receives $6,000 of income from sources outside the United States that is not effectively connected with his U.S. trade or business. Thus, his total income for the year is $24,000. Mr. Park meets all requirements for claiming exemptions for his spouse and two children. The additional deduction for 2013 is $8,775 figured as follows:

$18,000 
$24,000
× $11,700* = $8,775
           
  *3 × $3,900 = $11,700  

Students and business apprentices from India.   Students and business apprentices 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.

  You can claim an exemption for your spouse if he or she had no gross income during the year and cannot be claimed as a dependent on another U.S. taxpayer's return.

  You can claim exemptions for each of your dependents not admitted to the United States on “F-2,” “J-2,” or “M-2” visas if they meet the same rules that apply to U.S. citizens. See Publication 501 for these rules.

  List your spouse and dependents on line 7c of Form 1040NR. Enter the total on the appropriate line to the right of line 7c.

Itemized Deductions

Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U.S. trade or business.

Resident Aliens

You can claim the same itemized deductions as U.S. citizens, using Schedule A of Form 1040. These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions.

If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. For further information, see Form 1040 and instructions.

Nonresident Aliens

You can deduct certain itemized deductions if you receive income effectively connected with your U.S. trade or business. These deductions include state and local income taxes, charitable contributions to U.S. organizations, casualty and theft losses, and miscellaneous deductions. Use Schedule A of Form 1040NR to claim itemized deductions.

If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. If you are claiming any other itemized deduction, you must file Form 1040NR.

Standard deduction.   Nonresident aliens cannot claim the standard deduction. However, see Students and business apprentices from India , next.

Students and business apprentices from India.   A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. You can claim the standard deduction provided you do not claim itemized deductions.

  Use Worksheet 5-1 to figure your standard deduction. If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction.

State and local income taxes.   You can deduct state and local income taxes you paid on income that is effectively connected with a trade or business in the United States. If you received a refund or rebate in 2013 of taxes you paid in an earlier year, do not reduce your deduction by that amount. Instead, you must include the refund or rebate in income if you deducted the taxes in the earlier year and the deduction reduced your tax. See Recoveries in Publication 525 for details on how to figure the amount to include in income.

Charitable contributions.   You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Certain organizations that promote national or international amateur sports competition are also qualified organizations.

Foreign organizations.   Contributions made directly to a foreign organization are not deductible. However, you can deduct contributions to a U.S. organization that transfers funds to a charitable foreign organization if the U.S. organization controls the use of the funds or if the foreign organization is only an administrative arm of the U.S. organization.

  For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions.

Worksheet 5-1. 2013 Standard Deduction Worksheet for Students and Business Apprentices From India

Caution. If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. You cannot take the standard deduction even if you were born before January 2, 1949, or are blind.
1 Enter the amount shown below for your filing status.        
 
  • Single or married filing separately—$6,100

  • Qualifying widow(er)—$12,200

1.      
 
 
2 Can you be claimed as a dependent on someone else's U.S. income tax return? 
check box
No. Enter the amount from line 1 on line 4. Skip line 3 and go to line 5. 
check box
Yes. Go to line 3.
       
3 Is your earned income* more than $650?        
 
check box
Yes. Add $350 to your earned income. Enter the total.
       
 
check box
No. Enter $1,000
3.      
4 Enter the smaller of line 1 or line 3 4.  
5 If born before January 2, 1949, OR blind, enter $1,200 ($1,500 if single). If born before January 2, 1949, AND blind, enter $2,400 ($3,000 if single). Otherwise, enter -0- 5.  
6 Add lines 4 and 5. Enter the total here and on Form 1040NR, line 38 (or Form 1040NR-EZ, line 11). Print “Standard Deduction Allowed Under U.S.–India Income Tax Treaty” in the space to the left of these lines. This is your standard deduction for 2013. 6.  
*Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income. Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19, minus amounts on lines 27 and 31 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8).
Contributions from which you benefit.   If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive.

  If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. For the excess amount to qualify, you must pay it with the intent to make a charitable contribution.

Cash contributions.   You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. The written record must include the name of the charity, date of the contribution, and the amount of the contribution.

  You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing:
  1. The amount of any money contributed,

  2. Whether the organization gave you any goods or services in return for your contribution, and

  3. A description and estimate of the value of any goods or services described in (2).

If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit.

Noncash contributions.   For contributions not made in cash, the records you must keep depend on the amount of your deduction. See Publication 526 for details. For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. See Form 8283 and its instructions for details.

Contributions of appreciated property.   If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Your basis in the property is generally what you paid for it. If you need more information about basis, get Publication 551, Basis of Assets.

  Different rules apply to figuring your deduction, depending on whether the property is:
  • Ordinary income property, or

  • Capital gain property.

For information about these rules, see Publication 526.

Limit.   The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. For a discussion of limits on charitable contributions and other information, get Publication 526.

Casualty and theft losses.   You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U.S. trade or business. The property can be personal use property or income-producing property not connected with a U.S. trade or business. The property must be located in the United States at the time of the casualty or theft. You can deduct theft losses only in the year in which you discover the loss.

  The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. The fair market value of property immediately after a theft is considered zero, because you no longer have the property.

  If your property is covered by insurance, you should file a timely insurance claim for reimbursement. If you do not, you cannot deduct this loss as a casualty or theft loss.

  Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts.

Losses from personal use property.    You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 37, Form 1040NR) for the year.

Losses from income-producing property.   These losses are not subject to the limitations that apply to personal use property. Use Section B of Form 4684 to figure your deduction for these losses.

Job expenses and other miscellaneous deductions.   You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Generally, the allowable deductions must be related to effectively connected income. Deductible expenses include:
  • Union dues,

  • Safety equipment and small tools needed for your job,

  • Dues to professional organizations,

  • Subscriptions to professional journals,

  • Tax return preparation fees, and

  • Casualty and theft losses of property used in performing services as an employee (employee property).

  Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 37, Form 1040NR). For more information on miscellaneous deductions, see the instructions for Form 1040NR.

Travel expenses.   You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work.

  For example, if you have established a “tax home” through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. You cannot deduct travel expenses for other members of your family or party.

Deductible travel expenses.   If you qualify, you can deduct your expenses for:
  • Transportation—airfare, local transportation, including train, bus, etc.,

  • Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and

  • Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. You generally can deduct only 50% of unreimbursed meal expenses. The standard meal allowance rates for high-cost areas are available at www.gsa.gov/perdiem. The rates for other areas are in Publication 463.

  Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 7 of Schedule A (Form 1040NR).

Expenses allocable to U.S. tax-exempt income.   You cannot deduct an expense, or part of an expense, that is allocable to U.S. tax-exempt income, including income exempt by tax treaty.

Example.

Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U.S. company. During her stay in the United States, she received a salary of $8,000 from her Polish employer. She received no other U.S. source income. She spent $3,000 on travel expenses, of which $1,000 were for meals. None of these expenses were reimbursed. Under the tax treaty with Poland, $5,000 of her salary is exempt from U.S. income tax. In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). She must reduce the remaining $2,500 of travel expenses by 62.5% ($1,563) because 62.5% ($5,000 ÷ $8,000) of her salary is exempt from tax. She enters the remaining total of $937 on line 7 of Schedule A (Form 1040NR). She completes the remaining lines according to the instructions for Schedule A.

More information.   For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463.

Tax Credits and Payments

This discussion covers tax credits and payments for resident aliens, followed by a discussion of the credits and payments for nonresident aliens.

Resident Aliens

Resident aliens generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U.S. citizens.

The following items are some of the credits you may be able to claim.

Foreign tax credit.   You can claim a credit, subject to certain limits, for income tax you paid or accrued to a foreign country on foreign source income. You cannot claim a credit for taxes paid or accrued on excluded foreign earned income. To claim a credit for income taxes paid or accrued to a foreign country, you generally will file Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), with your Form 1040.

  For more information, get Publication 514, Foreign Tax Credit for Individuals.

Child and dependent care credit.   You may be able to take this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Generally, you must be able to claim an exemption for your dependent.

  For more information, get Publication 503, Child and Dependent Care Expenses, and Form 2441, Child and Dependent Care Expenses.

Credit for the elderly or the disabled.   You may qualify for this credit if you are 65 or older or if you retired on permanent and total disability. For more information on this credit, get Publication 524, Credit for the Elderly or the Disabled, and Schedule R (Form 1040A or 1040).

Education credits.   You may qualify for these credits if you paid qualified education expenses for yourself, your spouse, or your dependent. There are two education credits: the American Opportunity Credit and the lifetime learning credit. You cannot claim these credits if you are married filing separately. Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to figure the credit. For more information, see Publication 970.

Retirement savings contributions credit.   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. You cannot claim this credit if:
  1. You were born after January 1, 1996,

  2. You were a full-time student,

  3. Your exemption is claimed by someone else on his or her 2013 tax return, or

  4. Your adjusted gross income is more than:

    1. $59,000, if your filing status is married filing jointly,

    2. $44,250, if your filing status is head of household, or

    3. $29,500, if your filing status is single, married filing separately, or qualifying widow(er).

Use Form 8880, Credit for Qualified Retirement Savings Contributions, to figure the credit. For more information, see Publication 590.

Child tax credit.   You may be able to take this credit if you have a qualifying child.

  A qualifying child for purposes of the child tax credit is a child who:
  • Was under age 17 at the end of 2013.

  • Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew).

  • Is a U.S. citizen, a U.S. national, or a resident alien.

  • Did not provide over half of his or her own support for 2013.

  • Lived with you more than half of 2013. Temporary absences, such as for school, vacation, or medical care, count as time lived in the home.

  • Is claimed as a dependent on your return.

An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

  See your form instructions for additional details.

Adoption credit.   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. To claim the adoption credit, file Form 8839, Qualified Adoption Expenses, with your Form 1040.

Earned income credit.   You may qualify for an earned income credit of up to $3,250 if a child lived with you in the United States and your earned income and adjusted gross income were each less than $37,870 ($43,210 if married filing jointly). If two children lived with you in the United States and your earned income and adjusted gross income were each less than $43,038 ($48,378 if married filing jointly), your credit could be as much as $5,372. If three or more children lived with you in the United States and your earned income and adjusted gross income were each less than $46,227 ($51,567 if married filing jointly), your credit could be as much as $6,044. If you do not have a qualifying child and your earned income and adjusted gross income were each less than $14,340 ($19,680 if married filing jointly), your credit could be as much as $487. You cannot claim the earned income credit if your filing status is married filing separately.

  
You and your spouse (if filing a joint return) and any qualifying child must have valid SSNs to claim this credit. You cannot claim the credit using an ITIN. If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. An example of a federally funded benefit is Medicaid. If a card has this legend and the individual's immigration status has changed so that the individual is now a U.S. citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend.

Other information.   There are other eligibility rules that are not discussed here. For more information, get Publication 596, Earned Income Credit.

Nonresident Aliens

You can claim some of the same credits that resident aliens can claim. You can also report certain taxes you paid, are considered to have paid, or that were withheld from your income.

Credits

Credits are allowed only if you receive effectively connected income. You may be able to claim some of the following credits.

Foreign tax credit.   If you receive foreign source income that is effectively connected with a trade or business in the United States, you can claim a credit for any income taxes paid or accrued to any foreign country or U.S. possession on that income.

  If you do not have foreign source income effectively connected with a U.S. trade or business, you cannot claim credits against your U.S. tax for taxes paid or accrued to a foreign country or U.S. possession.

  You cannot take any credit for taxes imposed by a foreign country or U.S. possession on your U.S. source income if those taxes were imposed only because you are a citizen or resident of the foreign country or possession.

  If you claim a foreign tax credit, you generally will have to attach to your return a Form 1116. See Publication 514 for more information.

Child and dependent care credit.   You may qualify for this credit if you pay someone to care for your qualifying child who is under age 13, or your disabled dependent or disabled spouse, so that you can work or look for work. Generally, you must be able to claim an exemption for your dependent.

  Married nonresident aliens can claim the credit only if they choose to file a joint return with a U.S. citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Joint Return Test in Publication 503).

  The amount of your child and dependent care expense that qualifies for the credit in any tax year cannot be more than your earned income from the United States for that tax year. Earned income generally means wages, salaries, and professional fees for personal services performed.

  For more information, get Publication 503.

Education credits.   If you are a nonresident alien for any part of the year, you generally cannot claim the education credits. However, if you are married and choose to file a joint return with a U.S. citizen or resident spouse as discussed in chapter 1, you may be eligible for these credits.

Retirement savings contributions credit.   You may qualify for this credit (also known as the saver's credit) if you made eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA) in 2013. You cannot claim this credit if:
  • You were born after January 1, 1996,

  • You were a full-time student,

  • Your exemption is claimed by someone else on his or her 2013 tax return, or

  • Your adjusted gross income is more than $29,500.

Use Form 8880 to figure the credit. For more information, see Publication 590.

Child tax credit.   You may be able to take this credit if you have a qualifying child.

  A qualifying child for purposes of the child tax credit is a child who:
  • Was under age 17 at the end of 2013.

  • Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew).

  • Is a U.S. citizen, a U.S. national, or a resident alien.

  • Did not provide over half of his or her own support for 2013.

  • Lived with you more than half of 2013. Temporary absences, such as for school, vacation, or medical care, count as time lived in the home.

  • Is claimed as a dependent on your return.

An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

  See your form instructions for additional details.

Adoption credit.   You may qualify to take a tax credit of up to $12,970 for qualifying expenses paid to adopt an eligible child. This amount may be allowed for the adoption of a child with special needs regardless of whether you have qualifying expenses. To claim the adoption credit, file Form 8839 with your Form 1040NR.

  Married nonresident aliens can claim the credit only if they choose to file a joint return with a U.S. citizen or resident spouse as discussed in chapter 1, or if they qualify as certain married individuals living apart (see Married Persons Not Filing Jointly in the Form 8839 instructions).

Credit for prior year minimum tax.   If you paid alternative minimum tax in a prior year, get Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, to see if you qualify for this credit.

Earned income credit.   If you are a nonresident alien for any part of the tax year, you generally cannot get the earned income credit. However, if you are married and choose to file a joint return with a U.S. citizen or resident spouse as discussed in chapter 1, you may be eligible for the credit.

  
You, your spouse, and any qualifying child must have valid SSNs to claim this credit. You cannot claim the credit using an ITIN. If a social security card has a legend that says Not Valid for Employment and the number was issued so that you (or your spouse or your qualifying child) could receive a federally funded benefit, you cannot claim the earned income credit. An example of a federally funded benefit is Medicaid. If a card has this legend and the individual's immigration status has changed so that the individual is now a U.S. citizen or lawful permanent resident, ask the SSA to issue a new social security card without the legend.

  See Publication 596 for more information on the credit.

Tax Withheld

You can claim the tax withheld during the year as a payment against your U.S. tax. You claim it on line 61 of Form 1040NR or on line 18 of Form 1040NR-EZ. The tax withheld reduces any tax you owe with Form 1040NR or Form 1040NR-EZ.

Withholding from wages.   Any federal income tax withheld from your wages during the tax year while you were a nonresident alien is allowed as a payment against your U.S. income tax liability for the same year. You can claim the income tax withheld whether or not you were engaged in a trade or business in the United States during the year, and whether or not the wages (or any other income) were connected with a trade or business in the United States.

Excess social security tax withheld.   If you have two or more employers, you may be able to claim a credit against your U.S. income tax liability for social security tax withheld in excess of the maximum required. See Social Security and Medicare Taxes in chapter 8 for more information.

Additional Medicare Tax.   Your employer is responsible for withholding the 0.9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2013. If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959.

Tax paid on undistributed long-term capital gains.   If you are a shareholder in a mutual fund (or other regulated investment company) or real estate investment trust, you can claim a credit for your share of any taxes paid by the company on its undistributed long-term capital gains. You will receive information on Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, which you must attach to your return.

Tax withheld at the source.   You can claim as a payment any tax withheld at the source on investment and other fixed or determinable annual or periodic income paid to you. Fixed or determinable income includes interest, dividend, rental, and royalty income that you do not claim to be effectively connected income. Wage or salary payments can be fixed or determinable income to you, but usually are subject to withholding as discussed above. Taxes on fixed or determinable income are withheld at a 30% rate or at a lower treaty rate.

Tax withheld on partnership income.   If you are a foreign partner in a partnership, the partnership will withhold tax on your share of effectively connected taxable income from the partnership. The partnership will give you a statement on Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, showing the tax withheld. A partnership that is publicly traded may withhold on your actual distributions of effectively connected income. In this case, the partnership will give you a statement on Form 1042-S. Claim the tax withheld as a payment on line 61b or 61d of Form 1040NR, as appropriate.

Claiming tax withheld on your return.   When you fill out your tax return, take extra care to enter the correct amount of any tax withheld shown on your information documents. The following table lists some of the more common information documents and shows where to find the amount of tax withheld.
Form number Location 
of tax  
withheld
RRB-1042S Box 12
SSA-1042S Box 9
W-2 Box 2
W-2c Box 2
1042-S Box 9
8805 Line 10
8288-A Box 2

Bona Fide Residents of American Samoa or Puerto Rico

If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens. You should file Form 1040 and report all income from sources both in and outside the United States. However, you can exclude the income discussed in the following paragraphs.

For tax purposes other than reporting income, however, you will be treated as a nonresident alien. For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. There are also limits on what deductions and credits are allowed. See Nonresident Aliens under Deductions , Itemized Deductions , and Tax Credits and Payments in this chapter.

Residents of Puerto Rico.   If you are a bona fide resident of Puerto Rico for the entire year, you can exclude from gross income all income from sources in Puerto Rico (other than amounts for services performed as an employee of the United States or any of its agencies).

  If you report income on a calendar year basis and you do not have wages subject to withholding, file your return and pay your tax by June 15. You must also make your first payment of estimated tax by June 15. You cannot file a joint income tax return or make joint payments of estimated tax. However, if you are married to a U.S. citizen or resident, see Nonresident Spouse Treated as a Resident in chapter 1.

  If you earn wages subject to withholding, your U.S. income tax return is due by April 15. Your first payment of estimated tax is also due by April 15. For information on withholding and estimated tax, see chapter 8 .

Residents of American Samoa.   If you are a bona fide resident of American Samoa for the entire year, you can exclude from gross income all income from sources in American Samoa (other than amounts for services performed as an employee of the U.S. government or any of its agencies). An employee of the American Samoan government is not considered an employee of the U.S. government or any of its agencies for purposes of the exclusion. For more information about this exclusion, get Form 4563 and Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.


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