Publication 519 |
2000 Tax Year |
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 and nonresident aliens may not be able to claim all of
their itemized deductions. If your adjusted gross income is more than
$128,950 ($64,475 if married filing separately), use the worksheet in
your income tax return instructions to figure the amount you can
deduct.
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 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 Table 7, 8, or 9 in Publication 501
to figure your standard
deduction. If you are married and your spouse files a return and
itemizes deductions, you cannot take the standard deduction.
If you are filing Form 1040NR, enter the standard deduction on line
35 of Form 1040NR. In the space to the left of line 35, print,
"Standard Deduction Allowed Under U.S.-India Income Tax
Treaty." If you are filing Form 1040NR-EZ, enter the amount
on line 11.
State and local income taxes.
If during the tax year, you receive income that is connected with a
trade or business in the United States, you can deduct state and local
income taxes you paid on that 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
Contribu- tions.
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.
Contributions of $250 or more.
You may deduct a contribution of $250 or more only if you have a
written statement from the charitable organization showing:
- The amount of any money contributed and a description (but
not value) of any property donated,
- Whether the organization did or did not give you any goods
or services in return for your contribution, and
- 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.
Contributions of appreciated property.
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.
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 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 compensation is the amount of the loss. The
fair market value of property immediately after a theft is considered
zero, since 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 that is more than 10% of your adjusted gross
income (line 33, 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, and
- Tax return preparation fees.
Most miscellaneous deductions are deductible only if they are more
than 2% of your adjusted gross income (line 33, 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 can deduct only 50%
of unreimbursed meal expenses. The standard meal allowance rates are
given in Publication 1542,
Per Diem Rates (For Travel Within the
Continental United States).
Use Form 2106 or 2106-EZ to figure your allowable expenses
that you claim on line 9 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 x
$8,000) of her salary is exempt from tax. She enters the remaining
total of $937 on line 9 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.
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