Instructions for Form 1040NR |
2006 Tax Year |
Line Instructions for Form 1040NR
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Name, Address, and Identifying Number
Name.
If you are filing Form 1040NR for an estate or trust, enter the name of the estate or trust. Attach a statement to
Form 1040NR with your name,
title, address, and the name and address of any U.S. grantors and beneficiaries. If you are filing Form 1040NR for an estate
or trust engaged in a
trade or business in the United States during 2006, give the names and addresses of all beneficiaries.
P.O. box.
Enter your box number only if your post office does not deliver mail to your home.
Foreign address.
Enter the information in the following order: City, province or state, and country. Follow the country's practice
for entering the postal code. Do
not abbreviate the country name.
Identifying number.
If you are an individual, you generally are required to enter your social security number (SSN). 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/online/ss-5.html. 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. If you
are an F-1 or M-1 student, you also must show your Form I-20. If you are a J-1 exchange visitor, you will also need to show
your Form DS-2019.
Generally, you will receive your card about 2 weeks after the SSA has all the evidence and information it needs.
If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number
(ITIN). For details on how
to do so, see Form W-7 and its instructions. It usually takes about 4-6 weeks to get an ITIN.
If you already have an ITIN, enter it wherever your SSN is requested on your tax return. If you are required to include
another person's SSN on
your return and that person does not have and cannot get an SSN, enter that person's ITIN.
Note.
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.
If you are filing Form 1040NR for an estate or trust, enter the employer identification number (EIN) of the estate
or trust. For details on how to
get an EIN, see Form SS-4 and its instructions.
An incorrect or missing identifying number may increase your tax or reduce your refund.
The amount of your tax depends on your filing status. Before you decide which box to check, read the following explanations.
Were you single or married?
If you were married on December 31, consider yourself married for the whole year. If you were single, divorced, or
legally separated under a decree
of divorce or separate maintenance on December 31, consider yourself single for the whole year. If you meet the tests described
under Married
persons who live apart below, you may consider yourself single for the whole year.
If your spouse died in 2006, consider yourself married to that spouse for the whole year, unless you remarried before
the end of 2006.
U.S. national.
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.
Married persons who live apart.
Some married persons who have a child and who do not live with their spouse can file as single. If you meet all five
of the following tests and you
are a married resident of Canada or Mexico, or you are a married U.S. national, check the box on line 1. If you meet the tests
below and you are a
married resident of the Republic of Korea (South Korea), check the box on line 2.
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You file a return separate from your spouse.
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You paid more than half the cost to keep up your home in 2006.
-
You lived apart from your spouse during the last 6 months of 2006.
-
Your home was the main home of your child, stepchild, or foster child for more than half of 2006. Temporary absences, such
as for school,
vacation, or medical care, count as time lived in the home.
-
You are able to claim a dependency exemption for the child or the child's other parent claims him or her as a dependent under
the rules for
children of divorced or separated parents. See Form 8332, Release of Claim to Exemption for Child of Divorced or Separated
Parents.
Adopted child.
An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for
legal adoption.
Foster child.
A foster child is any child placed with you by an authorized placement agency, or by judgment, decree, or other order
of any court of competent
jurisdiction.
Line 6—Qualifying widow(er) with dependent child.
You can check the box on line 6 if all seven of the following apply.
-
You were a resident of Canada, Mexico, or the Republic of Korea (South Korea), or were a U.S. national.
-
Your spouse died in 2004 or 2005 and you did not remarry before the end of 2006.
-
You have a child or stepchild whom you claim as a dependent. This does not include a foster child.
-
This child lived in your home for all of 2006. Temporary absences, such as for school, vacation, or medical care, count as
time lived in the
home.
-
You paid over half the cost of keeping up your home.
-
You were a resident alien or U.S. citizen the year your spouse died. This refers to your actual status, not the election that
some
nonresident aliens can make to be taxed as U.S. residents.
-
You were entitled to file a joint return with your spouse the year he or she died, even if you did not actually do so.
Exemptions for estates and trusts are described in the instructions for line 39 on page 18.
Note.
Residents of India who were students or business apprentices may be able to claim exemptions for their spouse and dependents.
See Pub. 519 for
details.
Line 7b—Spouse.
If you checked filing status box 3 or 4, you can take an exemption for your spouse only if your spouse had no gross
income for U.S. tax purposes
and cannot be claimed as a dependent on another U.S. taxpayer's return. (You can do this even if your spouse died in 2006.)
In addition, if you
checked filing status box 4, your spouse must have lived with you in the United States at some time during 2006. Finally,
your spouse must have an SSN
or an ITIN. If your spouse is not eligible to obtain an SSN, he or she must apply for an ITIN. See Identifying number on page 8 for
additional information.
Line 7c—Dependents.
Only U.S. nationals and residents of Canada, Mexico, and the Republic of Korea (South Korea)
can claim exemptions for their dependents. If you were a U.S. national or a resident of Canada or Mexico, you can claim exemptions
for your children
and other dependents on the same terms as U.S. citizens. See Pub. 501 for more details. If you were a resident of the Republic
of Korea (South Korea),
you can claim an exemption for any of your children who lived with you in the United States at some time during 2006. Be sure
to complete item I on
page 5 of the form.
You can take an exemption for each of your dependents. If you have more than four dependents, attach a statement to
your return with the required
information.
For additional information on whether you can claim an exemption for a dependent, see Exemptions for Dependents in Pub. 501.
Children who did not live with you due to divorce or separation.
If you checked filing status box 1 or 3 and are claiming as a dependent a child who
did not live with you under the rules for children of divorced or separated parents, attach Form 8332 or similar statement
to your return. See Form
8332 for details.
Other dependent children.
Include the total number of children who did not live with you for reasons other than divorce or separation on the
line labeled “ Dependents on
7c not entered above.”
Line 7c, column (2). You must enter each dependent's identifying number (SSN, ITIN, or adoption taxpayer identification number (ATIN)).
If you do not enter the correct identifying number, at the time we process your return we may disallow the exemption claimed
for the dependent and
reduce or disallow any other tax benefits (such as the child tax credit) based on the dependent.
For details on how your dependent can get an identifying number, see Identifying number on page 8.
If your dependent child was born and died in 2006 and you do not have an identifying number for the child, you may
attach a copy of the child's
birth certificate instead and enter “ Died” in column (2).
Adoption taxpayer identification numbers (ATINs).
If you have a dependent who was placed with you by an authorized placement agency and you do not know his or her SSN,
you must get an ATIN for the
dependent from the IRS. An authorized placement agency includes any person authorized by state law to place children for legal
adoption. See Form W-7A
for details.
Line 7c, column (4). Check the box in this column if your dependent is a qualifying child for the child tax credit (defined below). If
you have at least one qualifying child, you may be able to take the child tax credit on line 48 and the additional child tax
credit on line 62.
Qualifying child for child tax credit.
A qualifying child for purposes of the child tax credit is a child who:
-
Was under age 17 at the end of 2006.
-
Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for
example, your
grandchild, niece, or nephew).
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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 2006.
-
Lived with you more than half of 2006. Temporary absences, such as for school, vacation, or medical care, count as time lived
in the
home.
An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for
legal adoption.
Rounding Off to Whole Dollars
You may round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all
amounts. To round, drop
amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50
becomes $3.
If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and
round off only the total.
Income Effectively Connected With U.S. Trade or Business
Pub. 519 explains how income is classified and what income you should report here. The instructions for this section assume
you have decided that
the income involved is effectively connected with a U.S. trade or business in which you were engaged. But your decision may
not be easy. Interest, for
example, may be effectively connected with a U.S. trade or business, it may not be, or it may be tax-exempt. The tax status
of income also depends on
its source. Under some circumstances, items of income from foreign sources are treated as effectively connected with a U.S.
trade or business. Other
items are reportable as effectively connected or not effectively connected with a U.S. trade or business, depending on how
you elect to treat them.
Line 8—Wages, salaries, tips, etc.
Enter the total of your effectively connected wages, salaries, tips, etc. For most people, the amount to enter on
this line should be shown in
their Form(s) W-2, box 1. However, do not include on line 8 amounts exempted under a tax treaty. Instead, include these amounts
on line 22 and
complete item M on page 5 of Form 1040NR.
Services performed partly inside and partly outside the United States.
If you performed services as an employee both inside and outside the United States, you must allocate your compensation
between U.S. and non-U.S.
sources. Only the U.S. source income is included on line 8 as effectively connected wages.
Compensation (other than certain fringe benefits) generally is sourced on a time basis. To figure your U.S. source
income, divide the number of
days you performed labor or personal services within the United States by the total number of days you performed labor or
personal services within and
without the United States. Multiply the result by your total compensation (other than certain fringe benefits).
Certain fringe benefits (such as housing and educational expenses) are sourced on a geographic basis. The source of
the fringe benefit compensation
generally is your principal place of work. The amount of the fringe benefit compensation must be reasonable and you must keep
records that are
adequate to support the fringe benefit compensation.
However, you may be able to use an alternative basis to determine the source of your compensation if the alternative
basis more properly determines
the source of the compensation. For 2006, if your total compensation is $250,000 or more and you allocate your compensation
using an alternative
basis, check the box in item R on page 5. In addition, attach to Form 1040NR a statement that contains the following information.
-
The specific compensation or the specific fringe benefit for which an alternative basis is used.
-
For each such item, the alternative basis of allocation of source used.
-
For each such item, a computation showing how the alternative allocation was computed.
-
A comparison of the dollar amount of the compensation sourced within and without the United States under both the alternative
basis and the
time or geographical basis for determining the source.
You must keep documentation showing why the alternative basis more properly determines the source of the compensation.
Also include on line 8:
-
Wages received as a household employee for which you did not receive a Form W-2 because your employer paid you less than $1,500
in 2006.
Also, enter “HSH” and the amount not reported on a Form W-2 on the dotted line next to line 8.
-
Tip income
you did not report to your employer. Also include allocated tips shown on your Form(s) W-2 unless you can prove that
you received less. Allocated tips should be shown in your Form(s) W-2, box 8. They are not included as income in box 1. See
Pub. 531 for more
details.
You may owe social security and Medicare tax on unreported or allocated tips. See the instructions for line 54 on page 21.
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Dependent care benefits,
which should be shown in your Form(s) W-2, box 10. But first complete Form 2441 to see if you can exclude
part or all of the benefits.
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Employer-provided adoption benefits,
which should be shown in your Form(s) W-2, box 12, with code T. You also may be able to
exclude amounts if you adopted a child with special needs and the adoption became final in 2006. See the Instructions for
Form 8839 to find out if you
can exclude part or all of the benefits.
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Excess salary deferrals.
The amount deferred should be shown in your Form W-2, box 12, and the “Retirement plan” box in box
13 should be checked. If the total amount you deferred for 2006 under all plans was more than $15,000 (excluding catch-up
contributions as explained
below), include the excess on line 8. This limit is (a) $10,000 if you only have SIMPLE plans, or (b) $18,000 for section
403(b) plans, if you qualify
for the 15-year rule in Pub. 571. Although designated Roth contributions are subject to this limit, do not include the excess
attributable to such
contributions on line 8. They already are included as income in box 1 of your Form W-2.
A higher limit may apply to participants in section 457(b) deferred compensation plans for the 3 years before retirement age.
Contact your plan
administrator for more information.
If you were age 50 or older at the end of 2006, your employer may have allowed an additional deferral of up to $5,000 ($2,500
for SIMPLE plans).
This additional deferral amount is not subject to the overall limit on elective deferrals.
You cannot deduct the amount deferred. It is not included as income in your Form W-2,
box 1.
-
Disability pensions shown on Form 1042-S or Form 1099-R if you have not reached the minimum retirement age set by your employer.
Disability
pensions received after you reach that age and other payments shown on Form 1042-S or Form 1099-R (other than payments from
an IRA*) are reported on
lines 17a and 17b. Payments from an IRA are reported on lines 16a and 16b.
-
Corrective distributions from a retirement plan shown on Form 1042-S or Form 1099-R of excess salary deferrals and excess
contributions
(plus earnings). But do not include distributions from an IRA* on line 8. Instead, report distributions from an IRA on lines
16a and 16b.
*This includes a Roth, SEP, or SIMPLE IRA.
Missing or incorrect Form W-2. Your employer is required to provide or send Form W-2 to you no later than January 31, 2007. If you do
not receive it by early February, ask your employer for it. Even if you do not get a Form W-2, you still must report your
earnings on line 8. If you
lose your Form W-2 or it is incorrect, ask your employer for a new one.
Line 9a—Taxable interest.
Report on line 9a all of your taxable interest income from assets effectively connected with a U.S. trade or business.
If you received interest not effectively connected with a U.S. trade or business, report it on Form 1040NR, page 4,
unless it is tax exempt under a
treaty and the withholding agent did not withhold tax on the payment. If the interest is tax exempt under a treaty, complete
item M on page 5.
See Pub. 901 for a quick reference guide to the provisions of U.S. tax treaties.
In addition, interest from a U.S. bank, savings and loan association, credit union, or similar institution, and from
certain deposits with U.S.
insurance companies, is tax exempt to a nonresident alien if it is not effectively connected with a U.S. trade or business.
Interest credited in 2006 on deposits that you could not withdraw because of the bankruptcy or insolvency of the financial
institution may not have
to be included in your 2006 income. For details, see Pub. 550.
Line 9b—Tax-exempt interest.
Certain types of interest income from investments in state and municipal bonds and similar instruments are not taxed
by the United States. If you
received such tax-exempt interest income, report the amount on line 9b. Include any exempt-interest dividends from a mutual
fund or other regulated
investment company. Do not include interest earned on your IRA or Coverdell education savings account. Also do not include
interest from a U.S. bank,
savings and loan association, credit union, or similar institution (or from certain deposits with U.S. insurance companies)
that is exempt from tax
under a tax treaty or under section 871(i) because the interest is not effectively connected with a U.S. trade or business.
Line 10a—Ordinary dividends.
Enter your total ordinary dividends from assets effectively connected with a U.S. trade or business. Each payer should
send you a Form 1099-DIV.
Capital gain distributions.
If you received any capital gain distributions, see the instructions for line 14 on page 12.
Nondividend distributions.
Some distributions are a return of your cost (or other basis). They will not be taxed until you recover your cost
(or other basis). You must reduce
your cost (or other basis) by these distributions. After you get back all of your cost (or other basis), you must report these
distributions as
capital gains on Schedule D (Form 1040). For details, see Pub. 550.
Dividends on insurance policies are a partial return of the premiums you paid. Do not report them as dividends. Include them
in income only if they
exceed the total of all net premiums you paid for the contract.
Line 10b—Qualified dividends.
Enter your total qualified dividends on line 10b. Qualified dividends are eligible for a lower tax rate than other
ordinary income. Generally,
these dividends are shown in your Form(s) 1099-DIV, box 1b. See Pub. 550 for the definition of qualified dividends if you
received dividends not
reported on Form 1099-DIV.
Exception.
Some dividends may be reported as qualified dividends in Form 1099-DIV, box 1b, but are not qualified dividends. These
include:
-
Dividends you received as a nominee. See chapter 1 in Pub. 550.
-
Dividends you received on any share of stock that you held for less than 61 days during the 121-day period that began 60 days
before the
ex-dividend date. The ex-dividend date is the first date following the declaration of a dividend on which the purchaser of
a stock is not entitled to
receive the next dividend payment. When counting the number of days you held the stock, include the day you disposed of the
stock but not the day you
acquired it. See the examples below. However, you cannot count certain days during which your risk of loss was diminished.
See Pub. 550 for more
details.
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Dividends attributable to periods totaling more than 366 days that you received on any share of preferred stock held for less
than 91 days
during the 181-day period that began 90 days before the ex-dividend date. When counting the number of days you held the stock,
you cannot count
certain days during which your risk of loss was diminished. See Pub. 550 for more details. Preferred dividends attributable
to periods totaling less
than 367 days are subject to the 61-day holding period rule above.
-
Dividends on any share of stock to the extent that you are under an obligation (including a short sale) to make related payments
with
respect to positions in substantially similar or related property.
-
Payments in lieu of dividends, but only if you know or have reason to know that the payments are not qualified dividends.
Example 1.
You bought 5,000 shares of XYZ Corp. common stock on June 29, 2006. XYZ Corp. paid a cash dividend of 10 cents per
share. The ex-dividend date was
July 7, 2006. Your Form 1099-DIV from XYZ Corp. shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends).
However, you sold the
5,000 shares on August 2, 2006. You held your shares of XYZ Corp. for only 34 days of the 121-day period (from June 30, 2006,
through August 2, 2006).
The 121-day period began on May 8, 2006 (60 days before the ex-dividend date), and ended on September 5, 2006. You have no
qualified dividends from
XYZ Corp. because you held the XYZ stock for less than 61 days.
Example 2.
Assume the same facts as in Example 1 except that you bought the stock on July 6, 2006 (the day before the ex-dividend
date), and you sold the
stock on September 7, 2006. You held the stock for 63 days (from July 7, 2006, through September 7, 2006). The $500 of qualified
dividends shown in
Form 1099-DIV, box 1b, are all qualified dividends because you held the stock for 61 days of the 121-day period (from July
7, 2006, through September
5, 2006).
Example 3.
You bought 10,000 shares of ABC Mutual Fund common stock on June 29, 2006. ABC Mutual Fund paid a cash dividend of
10 cents a share. The
ex-dividend date was July 7, 2006. The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated
as qualified dividends
equals 2 cents per share. Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends
of $200. However,
you sold the 10,000 shares on August 2, 2006. You have no qualified dividends from ABC Mutual Fund because you held the ABC
Mutual Fund stock for less
than 61 days.
Be sure you use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, whichever applies,
to
figure your tax. Your tax may be less. See the instructions for line 41 beginning on page 18 for details.
Line 11—Taxable refunds, credits, or offsets of state and local income taxes.
If you received a refund, credit, or offset of state or local income taxes in 2006, you may receive a Form 1099-G.
If you chose to apply part or
all of the refund to your 2006 estimated state or local income tax, the amount applied is treated as received in 2006.
For details on how to figure the amount you must report as income, see Recoveries in Pub. 525.
Line 12—Scholarship and fellowship grants.
If you received a scholarship or fellowship, part or all of it may be taxable.
If you were a degree candidate, the amounts you used for expenses other than tuition and course-related expenses (fees,
books, supplies, and
equipment) are generally taxable. For example, amounts used for room, board, and travel are generally taxable.
If you were not a degree candidate, the full amount of the scholarship or fellowship is generally taxable. Also, amounts
received in the form of a
scholarship or fellowship that are payment for teaching, research, or other services are generally taxable as wages even if
the services were required
to get the grant.
If the grant was reported on
Form(s) 1042-S, you must generally include the amount shown in Form(s) 1042-S, box 2, on line 12. However, if any or all of
that amount is exempt
by treaty, do not include the treaty-exempt amount on line 12. Instead, include the treaty-exempt amount on line 22 and complete
item M on page 5 of
Form 1040NR.
Attach any Form(s) 1042-S you received from the college or institution. If you did not receive a Form 1042-S, attach
a statement from the college
or institution (on their letterhead) showing the details of the grant.
For more information about scholarships and fellowships in general, see Pub. 970.
Example 1.
You are a citizen of a country that has not negotiated a tax treaty with the United States. You are a candidate for
a degree at ABC University
(located in the United States). You are receiving a full scholarship from ABC University. The total amounts you received from
ABC University during
2006 are as follows:
|
Tuition and fees
|
$25,000
|
|
|
Books, supplies, and equipment
|
1,000
|
|
|
Room and board
|
9,000
|
|
|
|
$35,000
|
|
The Form 1042-S you received from ABC University for 2006 shows $9,000 in box 2 and $1,260 (14% of $9,000) in box 7.
Note.
Box 2 shows only $9,000 because withholding agents (such as ABC University) are not required to report section 117 amounts
(tuition, fees,
books, supplies, and equipment) on Form 1042-S.
When completing Form 1040NR:
-
Enter on line 12 the $9,000 shown in box 2 of Form 1042-S.
-
Enter $0 on line 30. Because
section 117 amounts (tuition, fees, books, supplies, and equipment) were not included in box 2 of your Form 1042-S (and are
not included on line
12 of Form 1040NR), you cannot exclude any of the section 117 amounts on line 30.
-
Include on line 59 the $1,260 shown in box 7 of Form 1042-S.
Example 2.
The facts are the same as in Example 1 except that you are a citizen of a country that has negotiated a tax treaty
with the United States and you
were a resident of that country immediately before leaving for the United States to attend ABC University. Also, assume that,
under the terms of the
tax treaty, all of your scholarship income is exempt from tax because ABC University is a nonprofit educational organization.
Note.
Many tax treaties do not permit an exemption from tax on scholarship or fellowship grant income unless the income is from
sources outside the
United States. If you are a resident of a treaty country, you must know the terms of the tax treaty between the United States
and the treaty country
to claim treaty benefits on Form 1040NR. See the instructions for item M on page 29 for details.
When completing Form 1040NR:
-
Enter $0 on line 12. The $9,000 reported to you in box 2 of
Form 1042-S is reported on line 22 (not line 12).
-
Enter $9,000 on line 22.
-
Enter $0 on line 30. Because none of the $9,000 reported to you in box 2 of Form 1042-S is included in your income, you cannot
exclude it on
line 30.
-
Include on line 59 any withholding shown in box 7 of Form 1042-S.
-
Provide all the required information in item M on page 5.
Line 13—Business income or (loss).
If you operated a business or practiced your profession as a sole proprietor, report your effectively connected income
and expenses on Schedule C
or Schedule C-EZ (Form 1040).
Include any income you received as a dealer in stocks, securities, and commodities through your U.S. office. If you
dealt in these items through an
independent agent, such as a U.S. broker, custodian, or commissioned agent, your income may not be considered effectively
connected with a U.S.
business.
Line 14—Capital gain or (loss).
If you had effectively connected capital gains or losses, including any effectively connected capital gain distributions,
or a capital loss
carryover from 2005, you must complete and attach Schedule D (Form 1040). But see the Exception below. Enter the effectively connected gain
or (loss) from Schedule D (Form 1040) on line 14.
Gains and losses from disposing of U.S. real property interests are reported on Schedule D (Form 1040) and included
on line 14 of Form 1040NR. See
Dispositions of U.S. Real Property Interests on page 6.
Exception.
You do not have to file Schedule D (Form 1040) if both of the following apply.
-
The only amounts you have to report on Schedule D (Form 1040) are effectively connected capital gain distributions from Form(s)
1099-DIV,
box 2a, or substitute statements.
-
None of the Form(s) 1099-DIV or substitute statements have an amount in box 2b (unrecaptured section 1250 gain), box 2c (section
1202 gain),
or box 2d (collectibles (28%) gain).
If both of the above apply, enter your effectively connected capital gain distributions (from box 2a of Form(s) 1099-DIV)
on line 14 and check the
box on that line. If you received capital gain distributions as a nominee (that is, they were paid to you but actually belong
to someone else), report
on line 14 only the amount that belongs to you. Attach a statement showing the full amount you received and the amount you
received as a nominee. See
chapter 1 of Pub. 550 for filing requirements for Forms 1099-DIV and 1096.
If you do not have to file Schedule D (Form 1040), be sure you use the Qualified Dividends and Capital Gain Tax Worksheet
on page 19 to figure your
tax. Your tax may be less if you use this worksheet.
Line 15—Other gains or (losses).
If you sold or exchanged assets used in a U.S. trade or business, see the Instructions for Form 4797.
Lines 16a and 16b—IRA distributions.
You should receive a Form 1099-R showing the amount of any distribution from your individual retirement arrangement
(IRA). Unless otherwise noted
in the line 16a and 16b instructions, an IRA includes a traditional IRA, Roth IRA, simplified employee pension (SEP) IRA,
and a savings incentive
match plan for employees (SIMPLE) IRA. Except as provided below, leave line 16a blank and enter the total distribution on
line 16b.
Special rules may apply if you received a distribution from your IRA, and your main home was in the
Hurricane Katrina, Rita, or Wilma disaster areas. See Form 8915 and its instructions for details.
Exception 1.
Enter the total distribution on line 16a if you rolled over part or all of the distribution from one:
-
IRA to another IRA of the same type (for example, from one traditional IRA to another traditional IRA), or
-
SEP or SIMPLE IRA to a traditional IRA.
Also, enter “ Rollover” next to line 16b. If the total distribution was rolled over in a qualified rollover, enter -0- on line 16b. If the
total distribution was not rolled over in a qualified rollover, enter the part not rolled over on line 16b unless Exception 2 applies to
the part not rolled over. Generally, a qualified rollover must be made within 60 days after the day you received the distribution.
For more details on
rollovers, see Pub. 590, Individual Retirement Arrangements (IRAs).
If you rolled over the distribution (a) in 2007, or (b) from an IRA into a qualified plan (other than an IRA), attach
a statement explaining what
you did.
Exception 2.
If any of the following apply, enter the total distribution on
line 16a and see Form 8606 and its instructions to figure the amount to enter on line 16b.
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You received a distribution from an IRA (other than a Roth IRA) and you made nondeductible contributions to any of your traditional
or SEP
IRAs for 2006 or an earlier year. If you made nondeductible contributions to these IRAs for 2006, also see Pub. 590.
-
You received a distribution from a Roth IRA. But if either 1 or 2 below applies, enter -0- on line 16b; you do not have to
see Form 8606 or
its instructions.
-
Distribution code T is shown in Form 1099-R, box 7, and you made a contribution (including a conversion) to a Roth IRA for
2001 or an
earlier year.
-
Distribution code Q is shown in Form 1099-R, box 7.
-
You converted part or all of a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2006.
-
You had a 2005 or 2006 IRA contribution returned to you, with the related earnings or less any loss, by the due date (including
extensions)
of your tax return for that year.
-
You made excess contributions to your IRA for an earlier year and had them returned to you in 2006.
-
You recharacterized part or all of a contribution to a Roth IRA as a traditional IRA contribution, or vice versa.
Exception 3.
If the distribution is a qualified charitable distribution (QCD), enter the total distribution on line 16a. If the
total amount distributed is a
QCD, enter -0- on line 16b. If only part of the distribution is a QCD, enter the part that is not a QCD on line 16b unless
Exception 2
applies to that part. Enter “ QCD” next to line 16b.
A QCD is a distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization
eligible to receive
tax-deductible contributions (with certain exceptions). You must have been at least age 70½ when the distribution was made.
Your total
QCDs for the year cannot be more than $100,000. The amount of the QCD is limited to the amount that otherwise would be included
in your income. If
your IRA includes nondeductible contributions, the distribution first is considered to be paid out of otherwise taxable income.
See Pub. 590 for
details.
You cannot claim a charitable contribution deduction for any QCD not included in your income.
Note.
If you received more than one distribution, figure the taxable amount of each distribution and enter the total of the taxable
amounts on line
16b. Enter the total amount of those distributions on line 16a.
You may have to pay an additional tax if (a) you received an early distribution from your IRA and the total was not rolled
over, or (b) you were
born before July 1, 1935, and received less than the minimum required distribution from your traditional, SEP, and SIMPLE
IRAs. See the instructions
for line 55 on page 21 for details.
Lines 17a and 17b—Pensions and annuities.
Use lines 17a and 17b to report effectively connected pension and annuity payments you received. You should receive
a Form 1042-S or 1099-R showing
the amount of your pension and annuity payments. For details on rollovers and lump-sum distributions, see pages 14 and 15.
But if this income is not
effectively connected with your U.S. trade or business, report it on line 82.
Special rules may apply if you received a distribution from a profit-sharing or retirement plan, and your
main home was in the Hurricane Katrina, Rita, or Wilma disaster areas. See Form 8915 and its instructions for details.
Do not include the following payments on lines 17a and 17b. Instead, report them on line 8.
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Disability pensions received before you reach the minimum retirement age set by your employer.
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Corrective distributions (including any earnings) of excess salary deferrals or excess contributions to retirement plans.
The plan must
advise you of the year(s) the distributions are includible in income.
If you received a Form 1042-S or 1099-R that shows federal income tax withheld, attach it to Form 1040NR.
Some annuities are tax-exempt. See chapter 3 of Pub. 519.
Note.
If you performed services in the United States, your income generally is effectively connected with the conduct of a U.S.
trade or business.
(See section 864 for details and exceptions.) When you receive a pension in a later year as a result of effectively connected
services, the pension
also may be considered effectively connected with the conduct of a U.S. trade or business.
Fully taxable pensions and annuities.
If your pension or annuity is fully taxable, enter it on line 17b; do not make an entry on line 17a. Your payments
are fully taxable if (a) you did
not contribute to the cost (defined on page 14) of your pension or annuity, or (b) you got your entire cost back tax free
before 2006.
If you received a Form RRB-1099-R, see Pub. 575 for information on how to report your benefits.
Partially taxable pensions and annuities.
Enter the total pension or annuity payments you received in 2006 on line 17a. If your Form 1042-S or Form 1099-R does
not show the taxable amount,
you must use the General Rule explained in Pub. 939 to figure the taxable part to enter on line 17b. But if your annuity starting
date (defined on
page 14) was after July 1, 1986, see Simplified method on page 14 to find out if you must use that method to figure the taxable part.
You can ask the IRS to figure the taxable part for you for a $380 fee. For details, see Pub. 939.
If your Form 1099-R shows a taxable amount, you can report that amount on line 17b. But you may be able to report
a lower taxable amount by using
the General Rule or the Simplified Method. If you received Form 1042-S, you must figure the taxable part by using the General
Rule or the Simplified
Method.
Annuity starting date.
Your annuity starting date is the later of the first day of the first period for which you received a payment or the
date the plan's obligations
became fixed.
Simplified method.
You must use the Simplified Method if (a) your annuity starting date (defined above) was after July 1, 1986, and you
used this method last year to
figure the taxable part, or (b) your annuity starting date was after November 18, 1996, and both of the following apply.
-
The payments are from a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity.
-
On your annuity starting date, either you were under age 75 or the number of years of guaranteed payments was fewer than 5.
See Pub. 575 for
the definition of guaranteed payments.
If you must use the Simplified Method, complete the worksheet on this page to figure the taxable part of your pension
or annuity. For more details
on the Simplified Method, see Pub. 575.
Simplified Method Worksheet—Lines 17a and 17b
Before you begin:
If you are the beneficiary of a deceased employee or former employee who died before August 21, 1996, include any death benefit
exclusion that you are entitled to (up to $5,000) in the amount entered on line 2 below.
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Note. If you had more than one partially taxable pension or annuity, figure the taxable part of
each separately. Enter the total of the taxable parts on Form 1040NR, line 17b. Enter the total pension or annuity payments
received in 2006 on Form
1040NR, line 17a. |
1. |
Enter the total pension or annuity payments received in 2006. Also, enter this amount on Form
1040NR, line 17a
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1. |
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2. |
Enter your cost in the plan at the annuity starting date
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2. |
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Note. If you completed this worksheet last year, skip line 3 and enter the amount from line
4 of last year's worksheet on line 4 below (even if the amount of your pension or annuity has changed). Otherwise, go to line
3
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3. |
Enter the appropriate number from Table 1 below. But if your
annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate
number from Table 2 below
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3. |
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4. |
Divide line 2 by the number on line 3
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4. |
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5. |
Multiply line 4 by the number of months for which this year's payments were made. If your
annuity starting date was before 1987, skip lines 6 and 7 and enter this amount on line 8. Otherwise, go to line 6
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5. |
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6. |
Enter the amount, if any, recovered tax free in years after 1986
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6. |
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7. |
Subtract line 6 from line 2
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7. |
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8. |
Enter the smaller of line 5 or line 7
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8. |
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9. |
Taxable amount. Subtract line 8 from line 1. Enter the result, but not less than zero. Also,
enter this amount on Form 1040NR, line 17b. If your Form 1099-R shows a larger amount, use the amount on this line instead
of the amount from Form
1099-R
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9. |
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10. |
Was your annuity starting date before 1987?
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Yes. |
Leave line 10 blank.
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No. |
Add lines 6 and 8. This is the amount you have recovered tax
free through 2006. You will need this number when you fill out this worksheet next year.
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10. |
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Table 1 for Line 3 Above
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IF the age at annuity starting date (see page 14) was . . .
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AND your annuity starting date was—
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before November 19, 1996, enter on line 3 . . .
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after November 18, 1996, enter on line 3 . . .
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55 or under
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300
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360
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56-60
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260
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310
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61-65
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240
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260
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66-70
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170
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210
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71 or older
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120
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160
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Table 2 for Line 3 Above
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IF the combined ages at annuity starting date (see page 14) were . . .
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THEN enter on line 3 . . .
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110 or under
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410
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111-120
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360
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121-130
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310
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131-140
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260
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141 or older
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210
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Age (or combined ages) at annuity starting date.
If you are the retiree, use your age on the annuity starting date. If you are the survivor of a retiree, use the
retiree's age on his or her
annuity starting date. But if your annuity starting date was after 1997 and the payments are for your life and that of your
beneficiary, use your
combined ages on the annuity starting date.
If you are the beneficiary of an employee who died, see Pub. 575. If there is more than one beneficiary, see Pub.
575 to figure each beneficiary's
taxable amount.
Cost.
Your cost is generally your net investment in the plan as of the annuity starting date. It does not include pre-tax
contributions. Your net
investment should be shown in Form 1099-R, box 9b, for the first year you received payments from the plan. You must figure
your net investment if you
received Form 1042-S.
Rollovers.
Generally, a qualified rollover is a tax-free distribution of cash or other assets from one retirement plan that is
contributed to another plan
within 60 days of receiving the distribution. Use lines 17a and 17b to report a qualified rollover, including a direct rollover,
from one qualified
employer's plan to another or to an IRA or SEP.
Enter on line 17a the total distribution before income tax or other deductions were withheld. This amount should be
shown in Form 1099-R, box 1, or
Form 1042-S, box 2. From the total on line 17a, subtract any contributions (usually shown in box 5 of Form 1099-R or figured
by you if you received
Form 1042-S) that were taxable to you when made. From that result, subtract the amount of the qualified rollover. Enter the
remaining amount, even if
zero, on line 17b. Also enter “ Rollover” next to line 17b.
Special rules apply to partial rollovers of property. For more details on rollovers, including distributions under
qualified domestic relations
orders, see Pub. 575.
Lump-sum distributions.
If you received a lump-sum distribution from a profit-sharing or retirement plan, your Form 1099-R should have the
“ Total distribution” box
in box 2b checked. You need to determine this on your own if you received Form 1042-S. You may owe an additional tax if you
received an early
distribution from a qualified retirement plan and the total amount was not rolled over in a qualified rollover. For details,
see the instructions for
line 55 on page 21.
Enter the total distribution on line 17a and the taxable part on line 17b.
You may be able to pay less tax on the distribution if you were born before January 2, 1936, or you are the beneficiary of
a deceased employee who
was born before January 2, 1936. For details, see Form 4972.
Line 20—Unemployment compensation.
You should receive a Form 1099-G showing the total unemployment compensation paid to you in 2006.
If you received an overpayment of unemployment compensation in 2006 and you repaid any of it in 2006, subtract the
amount you repaid from the total
amount you received. Enter the result on line 20. Also, enter “ Repaid” and the amount you repaid on the dotted line next to line 20. If, in 2006,
you repaid unemployment compensation that you included in gross income in an earlier year, you can deduct the amount repaid
on Schedule A (Form
1040NR), line 11. But if you repaid more than $3,000, see Repayments in Pub. 525 for details on how to report the repayment.
Line 21—Other income.
Use this line to report any other income effectively connected with your U.S. business that is not reported elsewhere
on your return or other
schedules. List the type and amount of income. If necessary, show the required information on an attached statement. For more
details, see
Miscellaneous Income in
Pub. 525. The following are examples of income to report on line 21.
Taxable distributions from a Coverdell education savings account (ESA) or a qualified tuition program (QTP).
Distributions from these accounts may be taxable if (a) they are more than the qualified higher education expenses
of the designated beneficiary
in 2006, and (b) they were not included in a qualified rollover. See Pub. 970.
You may have to pay an additional tax if you received a taxable distribution from a Coverdell ESA or a QTP. See the Instructions
for Form 5329.
Taxable distributions from a health savings account (HSA) or an Archer MSA.
Distributions from an HSA or an Archer MSA may be taxable if (a) they are more than the unreimbursed qualified medical
expenses of the account
beneficiary or account holder in 2006, and (b) they were not included in a qualified rollover. See Pub. 969.
You may have to pay an additional tax if you received a taxable distribution from an HSA or Archer MSA. See the Instructions
for Form 8889 for HSAs
and the Instructions for Form 8853 for Archer MSAs.
Report other income on page 4 of Form 1040NR if not effectively connected with a U.S. trade or business.
Line 22—Treaty-exempt income.
Use line 22 to report your total effectively connected income that is exempt from tax by a tax treaty. Do not include
this exempt income on line
23. Also, you must complete item M on page 5 of Form 1040NR.
Line 24—Archer MSA deduction or educator expenses.
If you made a contribution to your Archer MSA for 2006, you may be able to claim this deduction. See Form 8853.
If you were an eligible educator in 2006, you can deduct up to $250 of qualified expenses you paid in 2006. An eligible
educator is a kindergarten
through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.
Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including
computer equipment,
software, and services), and other materials used in the classroom. An ordinary expense is one that is common and accepted
in your educational field.
A necessary expense is one that is helpful and appropriate for your profession as an educator. An expense does not have to
be required to be
considered necessary.
Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or
physical education. You must
reduce your qualified expenses by the following amounts.
-
Excludable U.S. series EE and I savings bond interest from Form 8815.
-
Nontaxable qualified state tuition program earnings.
-
Nontaxable earnings from Coverdell education savings accounts.
-
Any reimbursements you received for these expenses that were not reported to you in Form W-2, box 1.
If you are deducting only educator expenses on line 24, enter “ E” on the dotted line to the left of the line 24 entry space. If you have both
educator expenses and an Archer MSA deduction, enter a “ B” to the left of the line 24 entry space and attach a schedule listing each amount
separately.
Line 25—Health savings account deduction.
If contributions (other than employer contributions) were made to your health savings account for 2006, you may be
able to take this deduction. See
Form 8889.
Line 26—Moving expenses.
Employees and self-employed persons (including partners) can deduct certain moving expenses. The move must be in connection
with employment that
generates effectively connected income.
If you moved in connection with your job or business or started a new job, you may be able to take this deduction.
But your new workplace must be
at least 50 miles farther from your old home than your old home was from your old workplace. If you had no former workplace,
your new workplace must
be at least 50 miles from your old home. The deduction is generally limited to moves to or within the United States or its
possessions. If you meet
these requirements, see Pub. 521. Use Form 3903 to figure the amount to enter on this line.
Line 27—Self-employed SEP, SIMPLE, and qualified plans.
If you were self-employed or a partner, you may be able to take this deduction. See Pub. 560 or, if you were a minister,
Pub. 517.
Line 28—Self-employed health insurance deduction.
If you were self-employed and had a net profit for the year, you may be able to deduct the amount you paid for health
insurance for yourself, your
spouse, and your dependents. The insurance plan must be established under your business. But if you were also eligible to
participate in any
subsidized health plan maintained by your or your spouse's employer for any month or part of a month in 2006, amounts paid
for health insurance
coverage for that month cannot be used to figure the deduction. For example, if you were eligible to participate in a subsidized
health plan
maintained by your spouse's employer from September 30 through December 31, you cannot use amounts paid for health insurance
coverage for September
through December to figure your deduction. For more details, see Pub. 535.
Note.
If, during 2006, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, or Pension Benefit
Guaranty
Corporation (PBGC) pension recipient, you must complete Form 8885 before completing the worksheet below. When figuring the
amount to enter on line 1
of the worksheet below, do not include:
-
Any amounts you included on Form 8885, line 4,
-
Any qualified health insurance premiums you paid to “U.S. Treasury-HCTC,” or
-
Any health coverage tax credit advance payments shown in box 1 of Form 1099-H.
If you qualify to take the deduction, use the worksheet below to figure the amount you can deduct.
Self-Employed Health Insurance Deduction Worksheet—Line 28
Before you begin:
-
If, during 2006, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, or Pension Benefit
Guaranty
Corporation (PBGC) pension recipient, see the Note above.
-
Be sure you have read the Exception above to see if you can use this worksheet instead of Pub. 535 to figure your
deduction.
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1. |
Enter the total amount paid in 2006 for health insurance coverage established under your business for 2006
for you, your spouse, and your dependents. But do not include amounts for any month you were eligible to participate in an
employer-sponsored health
plan
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1. |
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2. |
Enter your net profit and any other earned income* from the business under which the insurance plan is
established, minus any deduction you claim on Form 1040NR, line 27
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2. |
|
3. |
Self-employed health insurance deduction. Enter the smaller of line 1 or line 2 here
and on Form 1040NR, line 28
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3. |
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*Earned income includes net earnings and gains from the sale, transfer, or licensing of property
you created. It does not include capital gain income. |
Exception.
Use Pub. 535 instead of the worksheet below to figure your deduction if either of the following applies.
Line 29—Penalty on early withdrawal of savings.
The
Form 1099-INT or Form 1099-OID you received will show the amount of any penalty you were charged.
Line 30—Scholarship and fellowship grants excluded.
If you received a scholarship or fellowship grant and were a degree candidate, enter amounts used for tuition and
course-related expenses (fees,
books, supplies, and equipment), but only to the extent the amounts are included on line 12. See the examples in the instructions
for line 12 on page
12.
Line 31—IRA deduction.
If you made any nondeductible contributions to a traditional individual retirement arrangement (IRA) for 2006, you must report
them on Form 8606.
If you made contributions to a traditional IRA for 2006, you may be able to take an IRA deduction. But you must have
had earned income to do so. A
statement should be sent to you by May 31, 2007, that shows all contributions to your traditional IRA for 2006.
Were you covered by a retirement plan?
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 an IRA even if you
cannot deduct them. In
any case, the income earned on your IRA contributions is not taxed until it is paid to you.
The “ Retirement plan” box in Form W-2, box 13, should be checked if you were covered by a plan at work even if you were not vested in the
plan. You also are covered by a plan if you were self-employed and had a SEP, SIMPLE, or qualified retirement plan.
If you were covered by a retirement plan and you file Form 8815 or you exclude employer-provided adoption benefits,
see Pub. 590 to figure the
amount, if any, of your IRA deduction.
Special rule for married individuals.
If you checked filing status box 3, 4, or 5 and you were not covered by a retirement plan but your spouse was, you
are considered covered by a
plan unless you lived apart from your spouse for all of 2006.
See Pub. 590 for more details.
You may be able to take the retirement savings contributions credit. See the instructions for line 46 on page 20.
Line 32—Student loan interest deduction.
You can take this deduction only if all of the following apply.
-
You paid interest in 2006 on a qualified student loan (see below).
-
You checked filing status box 1, 2, or 6.
-
Your modified adjusted gross income (AGI) is less than $65,000. Use lines 2 through 4 of the worksheet on page 17 to figure
your modified
AGI.
-
You are not claimed as a dependent on someone else's (such as your parent's) 2006 tax return.
Use the worksheet on page 17 to figure your student loan interest deduction.
Student Loan Interest Deduction Worksheet—Line 32
1. |
Enter the total interest you paid in 2006 on qualified student loans (see page 16). Do
not enter more than $2,500
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1. |
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2. |
Enter the amount from Form 1040NR, line 23
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2.
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3. |
Enter the total of the amounts from Form 1040NR, lines 24 through 31, plus any amount you entered on the
dotted line next to line 34
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3. |
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4. |
Subtract line 3 from line 2
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4. |
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5. |
Is line 4 more than $50,000?
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□ No. Skip lines 5 and 6, enter -0- on line 7, and go to line 8.
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□ Yes. Subtract $50,000 from line 4
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5.
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6. |
Divide line 5 by $15,000. Enter the result as a decimal (rounded to at least three places).
If the result is 1.000 or more, enter 1.000
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6.
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. |
7. |
Multiply line 1 by line 6
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7. |
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8. |
Student loan interest deduction. Subtract line 7 from line 1. Enter the result
here and on Form 1040NR, line 32. Do not include this amount in figuring any other deduction on your return (such as on Schedule A (Form
1040NR), Schedule C (Form 1040), Schedule E (Form 1040), etc.)
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8. |
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Qualified student loan.
This is any loan you took out to pay the qualified higher education expenses for:
-
Yourself and your spouse.
-
Any person who was your dependent when the loan was taken out.
-
Any person you could have claimed as a dependent for the year the loan was taken out except that:
-
The person filed a joint return,
-
The person had gross income that was equal to or more than the exemption amount for that year ($3,300 for 2006), or
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You could be claimed as a dependent on someone else's return.
The person for whom the expenses were paid must have been an eligible student (see page 17). However, a loan is not a qualified
student loan if
(a) any of the proceeds were used for other purposes, or (b) the loan was from either a related person or a person who borrowed
the proceeds under a
qualified employer plan or a contract purchased under such a plan. To find out who is a related person, see Pub. 970.
Qualified higher education expenses generally include tuition, fees, room and board, and related expenses such as
books and supplies. The expenses
must be for education in a degree, certificate, or similar program at an eligible educational institution. An eligible educational
institution
includes most colleges, universities, and certain vocational schools. You must reduce the expenses by the following benefits.
-
Employer-provided educational assistance benefits that are not included in Form(s) W-2, box 1.
-
Excludable U.S. series EE and I savings bond interest from Form 8815.
-
Nontaxable qualified tuition program earnings.
-
Nontaxable earnings from Coverdell education savings accounts.
-
Any scholarship, educational assistance allowance, or other payment (but not gifts, inheritances, etc.) excluded from income.
For more details on these expenses, see Pub. 970.
An eligible student is a person who:
-
Was enrolled in a degree, certificate, or other program (including a program of study abroad that was approved for credit
by the institution
at which the student was enrolled) leading to a recognized educational credential at an eligible educational institution,
and
-
Carried at least half the normal full-time workload for the course of study he or she was pursuing.
Line 33—Domestic production activities deduction.
You may be able to deduct up to 3% of your qualified production activities income from the following activities.
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Construction of real property performed in the United States.
-
Engineering or architectural services performed in the United States for construction of real property in the United States.
-
Any lease, rental, license, sale, exchange, or other disposition of:
-
Tangible personal property, computer software, and sound recordings that you manufactured, produced, grew, or extracted in
whole or in
significant part within the United States;
-
Any qualified film you produced; or
-
Electricity, natural gas, or potable water you produced in the United States.
The deduction does not apply to income derived from:
-
The sale of food and beverages you prepare at a retail establishment;
-
Property you leased, licensed, or rented for use by any related person;
-
The transmission or distribution of electricity, natural gas, or potable water; or
-
The lease, rental, license, sale, exchange, or other disposition of land.
For details, see Form 8903 and its instructions.
Line 34.
Include in the total on line 34 any of the following adjustments that are related to your effectively connected income.
To find out if you can take
the deduction, see the form or publication indicated. On the dotted line next to line 34, enter the amount of your deduction
and identify it as
indicated.
-
Performing-arts-related
expenses (see Form 2106 or 2106-EZ). Identify as “QPA.”
-
Reforestation amortization and expenses (see Pub. 535). Identify as “RFST.”
-
Repayment of supplemental unemployment benefits under the Trade Act of 1974 (see Pub. 525). Identify as “Sub-Pay TRA.”
-
Contributions to section 501(c)(18)(D) pension plans (see Pub. 525). Identify as “501(c)(18)(D).”
-
Contributions by certain chaplains to section 403(b) plans (see Pub. 517). Identify as “403(b).”
-
Attorney fees and court costs for actions settled or decided after October 22, 2004, involving certain unlawful discrimination
claims, but
only to the extent of effectively connected gross income from such actions (see Pub. 525). Identify as “UDC.”
Line 35—Adjusted gross income.
If line 35 is less than zero, you may have a net operating loss that you can carry to another tax year. See Form 1045
and its instructions for
details.
Tax Computation on Income Effectively Connected With A U.S. Trade or Business
Line 37—Itemized deductions.
Enter the total itemized deductions from
line 17 of Schedule A on page 3 of the form.
Note.
Residents of India who were students or business apprentices may be able to take the standard deduction instead of their itemized
deductions.
See Pub. 519 for details .
Line 39—Deduction for exemptions.
You can claim exemptions only to the extent of your income that is effectively connected with a U.S. trade or
business.
Deduction for Exemptions Worksheet—Line 39 See the instructions for line 39 that begin on page 17.
Caution: If you are filing for a qualified disability trust (on this page), use this worksheet
only if the trust's modified AGI* is more than $150,500. Also, skip line 1, enter $3,300 on line 2, enter the trust's modified
AGI on line 3, and
enter $150,500 on line 4. |
1. |
Is the amount on Form 1040NR, line 36, more than the amount shown on line 4 below for your filing
status?
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□ No. Stop. |
Multiply $3,300 by the total number of exemptions claimed on Form 1040NR, line 7d, and enter the result on
Form 1040NR, line 39.
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□ Yes. |
Go to line 2.
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2. |
Multiply $3,300 by the total number of exemptions claimed on Form 1040NR, line 7d
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2. |
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3. |
Enter the amount from Form 1040NR, line 36
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3. |
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4. |
Enter the amount shown below for the filing status box you checked on page 1 of Form 1040NR:
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-
Box 1 or 2, enter $150,500
-
Box 3, 4, or 5, enter $112,875
-
Box 6, enter $225,750
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4. |
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5. |
Subtract line 4 from line 3.
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5. |
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6. |
Is line 5 more than $122,500 ($61,250 if you checked filing status box 3, 4, or 5)?
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□ Yes. |
Multiply $1,100 by the total number of exemptions claimed on Form 1040NR, line 7d. Enter the result here and
on Form 1040NR, line 39. Do not complete the rest of this worksheet.
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|
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□ No. |
Divide line 5 by $2,500 ($1,250 if you checked filing status box 3, 4, or 5). If the result is not a whole number, increase
it to the
next higher whole number (for example, increase 0.0004 to 1)
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6. |
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7. |
Multiply line 6 by 2% (.02) and enter the result as a decimal
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7. |
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8. |
Multiply line 2 by line 7
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8. |
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9. |
Divide line 8 by 1.5
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9. |
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10. |
Deduction for exemptions. Subtract line 9 from line 2. Enter the result
here and on Form 1040NR, line 39
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10. |
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*Figure the trust's modified AGI by applying section 67(e) without regard to section
642(b). |
Taxpayers housing individuals displaced by Hurricane Katrina.
You may be able to claim an additional exemption amount of $500 per person (up to $2,000) if you provided housing
to a person who was displaced
from his or her main home because of Hurricane Katrina and all of the following apply.
-
The person displaced lived in your main home for at least 60 consecutive days ending in 2006.
-
You did not receive rent or other amount from any source for providing the housing.
-
The main home of the person displaced was, on August 28, 2005, in the Hurricane Katrina disaster area.
-
The person displaced was not your spouse or dependent.
-
You did not claim an additional exemption amount for that person in 2005.
-
You did not claim the maximum additional exemption amount of $2,000 in 2005.
For details, see Form 8914.
Individuals.
If you are a nonresident alien individual, multiply $3,300 by the total number of exemptions entered on line 7d. If
you were a resident of the
Republic of Korea (South Korea), you must figure the exemptions for your spouse and children according to the proportion your
U.S. effectively
connected income bears to your total income. You also must complete item I on page 5 of the form. (For details, see Pub. 519.)
But use the worksheet
on this page to figure the amount, if any, to enter on line 39 if your adjusted gross income from line 36 is more than $150,500
if you checked filing
status box 1 or 2; $112,875 if you checked filing status box 3, 4, or 5; or $225,750 if you checked filing status box 6.
Estates.
If you are filing for an estate, enter $600 on line 39.
Trusts.
If you are filing for a trust whose governing instrument requires it to distribute all of its income currently, enter
$300 on line 39. If you are
filing for a qualified disability trust (defined in section 642(b)(2)(C)(ii)), enter $3,300 on line 39. But if the qualified
disability trust's
modified AGI (determined under section 67(e) without regard to section 642(b)) is more than $150,500, use the worksheet below
to figure the amount to
enter on line 39. If you are filing for any other trust, enter $100 on line 39.
Line 41—Tax.
Use one of the following methods to figure your tax. Also, include in the total on line 41 any tax from Forms 8814
and 4972. Be sure to check the
appropriate box(es).
Tax Table or Tax Computation Worksheet.
If you are filing for an estate or trust, use the Tax Rate Schedules on page 46.
Individuals.
If your taxable income (line 40) is less than $100,000, you must use the Tax Table that begins on page 33 to figure
your tax. Be sure you use the
correct column. If you checked filing status box 3, 4, or 5, you must use the Married filing separately column. If your taxable income is
$100,000 or more, use the Tax Computation Worksheet on page 45.
Exception.
Do not use the Tax Table, Tax Computation Worksheet, or Tax Rate Schedules to figure your tax if either of the following
applies.
-
You are required to figure your tax using Form 8615, the Qualified Dividends and Capital Gain Tax Worksheet on page 19, or
the Schedule D
Tax Worksheet.
-
You use Schedule J (Form 1040) (for farming or fishing income) to figure your tax.
Form 8615.
You generally must use Form 8615 to figure the tax for any child who was under age 18 at the end of 2006, and who
had more than $1,700 of
investment income, such as taxable interest, ordinary dividends, or capital gains (including capital gain distributions),
that is effectively
connected with a U.S. trade or business. But if neither of the child's parents was alive at the end of 2006, do not use Form
8615 to figure the
child's tax.
Also, a child born on January 1, 1989, is considered to be age 18 at the end of 2006. Do not use Form 8615 for such
a child.
Schedule D Tax Worksheet.
If you have to file Schedule D (Form 1040) and Schedule D, line 18 or line 19, is more than zero, use the Schedule
D Tax Worksheet on page D-10 of
the Instructions for Schedule D to figure your tax.
Qualified Dividends and Capital Gain Tax Worksheet.
If you do not have to use the Schedule D Tax Worksheet (see above) and any of the following apply, use the worksheet
on page 19 to figure your
tax.
-
You reported qualified dividends on Form 1040NR, line 10b.
-
You do not have to file Schedule D (Form 1040) and you reported capital gain distributions on Form 1040NR, line 14.
-
You are filing Schedule D and Schedule D, lines 15 and 16, are both more than zero.
Qualified Dividends and Capital Gain Tax Worksheet—Line 41
Before you begin:
-
See the instructions for line 41 on page 18 to see if you can use this worksheet to figure your tax.
-
If you do not have to file Schedule D (Form 1040) and you received capital gain distributions, be sure you checked the box
on line 14 of Form
1040NR.
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1.
|
Enter the amount from Form 1040NR, line 40
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1.
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2.
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Enter the amount from Form 1040NR, line 10b
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2.
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3.
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Are you filing Schedule D (Form 1040)?
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□ Yes. |
Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or line 16 is a loss, enter -0-.
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3.
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□ No. |
Enter the amount from Form 1040NR, line 14.
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4.
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Add lines 2 and 3
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4.
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5.
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Subtract line 4 from line 1. If zero or less, enter -0-
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5.
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6.
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Enter the smaller of:
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-
The amount on line 1, or
-
$30,650 if you checked filing status box 1, 2, 3, 4, or 5; or
$61,300 if you checked filing status box 6
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.
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6.
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7.
|
Is the amount on line 5 equal to or more than the amount on
line 6?
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□ Yes. □ No. |
Skip lines 7 through 9; go to line 10 and check the “No” box.
Enter the amount from line 5
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7.
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8.
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Subtract line 7 from line 6
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8.
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9.
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Multiply line 8 by 5% (.05)
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9.
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|
10.
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Are the amounts on lines 4 and 8 the same?
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□ Yes. □ No. |
Skip lines 10 through 13; go to line 14.
Enter the smaller of line 1 or line 4
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10.
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11.
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Enter the amount from line 8 (if line 8 is blank, enter -0-)
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11.
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12.
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Subtract line 11 from line 10.
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12.
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13.
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Multiply line 12 by 15% (.15)
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13.
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14.
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Figure the tax on the amount on line 5. Use the Tax Table or Tax Computation Worksheet, whichever
applies*
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14.
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15.
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Add lines 9,13, and 14
|
15.
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16.
|
Figure the tax on the amount on line 1. Use the Tax Table or Tax Computation Worksheet, whichever
applies*
|
16.
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17.
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Tax on all taxable income. Enter the smaller of line 15 or line 16 here and on
Form 1040NR, line 41
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17.
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|
*Estates and trusts must use the Tax Rate Schedules.
|
Schedule J (Form 1040).
If you had income from farming or fishing, your tax may be less if you choose to figure it using income averaging
on Schedule J.
Line 42—Alternative minimum tax.
The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds
of expenses. If you benefit
from these provisions, you may have to pay a minimum amount of tax through the alternative minimum tax. This tax is figured
on Form 6251 for
individuals. If you are filing for an estate or trust, see Schedule I (Form 1041) and its instructions to find out if you
owe this tax.
If you have any of the adjustments or preferences from the list on this page or you are claiming a net operating loss
deduction, a general business
credit, or the foreign tax credit, you must complete Form 6251. Otherwise, to see if you should complete Form 6251, add the
amount on line 38 of Form
1040NR to the amounts on lines 3 and 15 of Schedule A (Form 1040NR). If the total is more than the dollar amount shown below
that applies to you, fill
in Form 6251.
-
$42,500 if you checked filing status box 1 or 2.
-
$31,275 if you checked filing status box 3, 4, or 5.
-
$62,550 if you checked filing status box 6.
Disposition of U.S. real property interests.
If you disposed of a U.S. real property interest at a gain, you must make a special computation to see if you owe
this tax. For details, see the
Instructions for Form 6251.
Adjustments and Preferences:
-
Accelerated depreciation.
-
Stock by exercising an incentive stock option and you did not dispose of the stock in the same year.
-
Tax-exempt interest from private activity bonds.
-
Intangible drilling, circulation, research, experimental, or mining costs.
-
Amortization of pollution-control facilities or depletion.
-
Income or (loss) from tax-shelter farm activities or passive activities.
-
Income from long-term contracts not figured using the percentage-of-completion method.
-
Alternative minimum tax adjustments from an estate, trust, electing large partnership, or cooperative.
-
Section 1202 exclusion.
-
Qualified electric vehicle credit.
-
Alternative motor vehicle credit.
-
Alternative fuel vehicle refueling property credit.
-
Credit for prior year minimum tax.
Form 6251 should be filled in for a child who was under age 18 at the end of 2006 if the child's adjusted gross income from
Form 1040NR, line 36,
exceeds the child's earned income by more than $6,050.
Line 44—Foreign tax credit.
If you paid income tax to a foreign country, you may be able to take this credit, but only if you:
-
Report income from foreign sources (see Foreign Income Taxed by the United States on page 6), and
-
Have paid or owe foreign tax on that income.
Generally, you must complete and attach Form 1116 to take this credit.
Exception.
You do not have to complete Form 1116 to take this credit if all six of the following apply.
-
Form 1040NR is being filed for a nonresident alien individual and not an estate or trust.
-
All of your gross foreign source income is from the passive category (which includes most interest and dividend income).
-
All the income and any foreign taxes paid on it were reported to you on qualified payee statements, such as Form 1099-INT,
Form 1099-DIV, or
similar substitute statements.
-
If you have dividend income from shares of stock, you held those shares for at least 16 days.
-
The total of your foreign taxes is not more than $300.
-
All of your foreign taxes were:
-
Legally owed and not eligible for a refund, and
-
Paid to countries that are recognized by the United States and do not support terrorism.
Note.
If you need more information about these requirements, see the Instructions for Form 1116.
If you meet all six requirements, enter on line 44 the smaller of your total foreign taxes or the amount on Form 1040NR,
line 41. If you do not
meet all six requirements, see Form 1116 to find out if you can take the credit.
Line 45—Credit for child and dependent care expenses.
You may be able to take this credit if you paid someone to care for your qualifying child under age 13 or your dependent
or spouse who could not
care for himself or herself. For details, see the Instructions for Form 2441.
Line 46—Retirement savings contributions credit.
You may be able to take this credit if you made (a) contributions to a traditional or Roth IRA; (b) elective deferrals
to a 401(k) or 403(b) plan
(including designated Roth contributions) or to a governmental 457, SEP, or SIMPLE plan; (c) voluntary employee contributions
to a qualified
retirement plan (including the federal Thrift Savings Plan); or (d) contributions to a 501(c)(18)(D) plan.
However, you cannot take the credit if either of the following applies.
-
The amount on Form 1040NR, line 36, is more than $25,000.
-
The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1989, (b) is claimed
as a dependent on
someone else's 2006 tax return, or (c) was a student (defined below).
You were a student if during any part of 5 calendar months of 2006 you:
-
Were enrolled as a full-time student at a school, or
-
Took a full-time, on-farm training course given by a school or a state, county, or local government agency.
A school includes a technical, trade, and mechanical school. It does not include an on-the-job training course, correspondence
school, or school
offering courses only through the Internet.
For more details, see Form 8880.
Line 47—Residential energy credits.
Complete Form 5695 to claim either of the following credits.
Nonbusiness energy property credit.
You may be able to take this credit for any of the following improvements to your main home located in the United
States in 2006 if they are new
and meet certain requirements for energy efficiency.
-
Any insulation material or system primarily designed to reduce heat gain or loss in your home.
-
Exterior windows (including skylights).
-
Exterior doors.
-
A metal roof with pigmented coatings primarily designed to reduce heat gain in your home.
You also may be able to claim this credit for the cost of any of the following items if the items meet certain performance
and quality standards.
-
Certain electric heat pump water heaters, electric heat pumps, geothermal heat pumps, central air conditioners, and natural
gas, propane, or
oil water heaters.
-
A qualified natural gas, propane, or oil furnace or hot water boiler.
-
An advanced main air circulating fan used in a natural gas, propane, or oil furnace.
For details, see the Instructions for Form 5695.
Residential energy efficient property credit.
You may be able to take this credit if you paid for any of the following during 2006.
-
Qualified solar electric property for use in your home located in the United States.
-
Qualified solar water heating property for use in your home located in the United States.
-
Qualified fuel cell property installed on or in connection with your main home located in the United States.
For details, see the Instructions for Form 5695.
Special rule.
If you are a member of a condominium management association for a condominium you own or a tenant-stockholder in a
cooperative housing corporation,
you are treated as having paid your proportionate share of any costs of such association or corporation for purposes of these
credits.
Line 48—Child tax credit.
This credit is for people who have a qualifying child as defined beginning below. It is in addition to the credit
for child and dependent care
expenses on Form 1040NR, line 45.
Three steps to take the child tax credit.
-
Make sure you have a qualifying child for the child tax credit (defined beginning below).
-
Make sure for each qualifying child you either checked the box on Form 1040NR, line 7c, column (4), or completed Form 8901
(if the child is
not your dependent).
-
Answer the questions in the Who Must Use Pub. 972 chart below to see if you can use the Child Tax Credit Worksheet on page
21 or if you must
use Pub. 972.
Qualifying child for child tax credit.
A qualifying child for purposes of the child tax credit is a child who:
-
Was under age 17 at the end of 2006.
-
Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, 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 2006.
-
Lived with you for more than half of 2006. Temporary absences, such as for school, vacation, or medical care, count as time
lived in the
home.
An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for
legal adoption.
Line 49.
Include the following credits on line 49 and check the appropriate box(es). To find out if you can take the credit,
see the form indicated.
-
Mortgage interest credit. If a state or local government gave you a mortgage credit certificate, see Form 8396.
-
Adoption credit. If you paid expenses to adopt a child or you adopted a child with special needs and the adoption became final
in 2006, see
the Instructions for Form 8839.
-
District of Columbia first-time homebuyer credit. See Form 8859.
Who Must Use Pub. 972
1.
|
Is the amount on Form 1040NR, line 36, more than the amount shown below for your filing
status?
|
|
-
Filing status 1, 2, or 6—$75,000
-
Filing status 3, 4, or 5—$55,000
|
|
□
|
Yes.Stop. You must use Pub. 972 to figure your credit.
|
|
□
|
No. Go to line 2.
|
2.
|
Are you claiming any of the following credits?
|
|
-
Residential energy efficient property credit, Form 5695, Part II.
-
Adoption credit, Form 8839.
-
Mortgage interest credit, Form 8396.
-
District of Columbia first-time homebuyer credit, Form 8859.
|
|
□
|
Yes.Stop. You must use Pub. 972 to figure your child tax credit. You also will need the form(s) listed above for any
credit(s) you are claiming.
|
|
□
|
No. Use the worksheet on page 21 to figure your child tax
credit.
|
Child Tax Credit Worksheet—Line 48
|
-
To be a qualifying child for the child tax credit, the child must be under age 17 at the end of 2006 and meet the other
requirements listed in the instructions for line 48 beginning on page 20.
-
Do not use this worksheet if you answered “Yes” to question 1 or 2 in Who Must Use Pub. 972 on page 20. Instead, use Pub.
972.
|
1.
|
Number of qualifying children:
X $1,000. Enter the result
|
|
|
1.
|
|
2.
|
Enter the amount from Form 1040NR, line 43
|
2.
|
|
|
|
3.
|
Enter the total of the amounts from Form 1040NR, lines 44 through 46, plus any nonbusiness energy property
credit from Form 5695, line 12
|
3.
|
|
|
|
4.
|
Are the amounts on lines 2 and 3 the same?
Yes.STOP. You cannot take this credit because there is no tax to reduce. However, you may be
able to take the additional child tax credit. See the TIP below.
No. Subtract line 3 from line 2
|
4.
|
|
5.
|
Is the amount on line 1 more than the amount on line 4?
Yes. Enter the amount from line 4. Also, you may be able to take the additional child tax credit.
See the TIP below.
No. Enter the amount from line 1
|
5.
|
|
|
This is your child tax credit. Enter this amount on Form 1040NR, line 48.
|
|
|
TIP: You may be able to take the additional child tax credit on Form 1040NR,
line 62, if you answered “Yes” on line 4 or line 5 above.
-
First, complete your Form 1040NR through line 61.
-
Then, use Form 8812 to figure any additional child tax credit.
|
Line 50—Other credits.
Include the following credits on line 50 and check the appropriate box(es). If box c is checked, also enter the applicable
form number. To find out
if you can take the credit, see the form or publication indicated.
-
Credit for prior year minimum tax. If you paid alternative minimum tax in a prior year, see Form 8801.
-
Qualified electric vehicle credit. If you placed a new electric vehicle in service in 2006, see Form 8834.
-
General business credit. This credit consists of a number of credits that usually apply only to individuals who are partners,
self-employed,
or who have rental property. See Form 3800 or Pub. 334.
-
Empowerment zone and renewal community employment credit. See Form 8844.
-
Credit for alcohol used as fuel. See Form 6478.
-
Renewable electricity, refined coal, and Indian coal production credit for electricity and refined coal produced at facilities
placed in
service after October 22, 2004, and Indian coal produced at facilities placed in service after August 8, 2005. See Form 8835,
Section B.
-
New York Liberty Zone business employee credit. If you have a carryforward credit from Form 8884, see the instructions for
Form
8835.
-
Clean renewable energy bond credit. See Form 8912.
-
Credit for Gulf tax credit bonds. See Form 8912.
-
Alternative motor vehicle credit. If you placed an alternative motor vehicle (such as a qualified hybrid vehicle) in service
during 2006,
see Form 8910.
-
Alternative fuel vehicle refueling property credit. See Form 8911.
Line 54—Social security and Medicare tax on tip income not reported to employer.
If you are subject to social security and Medicare tax, you received tips of $20 or more in any month, and you did
not report the full amount to
your employer, you must pay the social security and Medicare or railroad retirement (RRTA) tax on the unreported tips. You
also must pay this tax if
your Form(s) W-2 show allocated tips that you are including in your income on Form 1040NR, line 8.
To figure the social security and Medicare tax, use Form 4137. To pay the RRTA tax, contact your employer. Your employer
will figure and collect
the tax.
You may be charged a penalty equal to 50% of the social security and Medicare tax due on tips you received but did not report
to your employer.
Line 55—Additional tax on IRAs, other qualified retirement plans, etc.
If any of the following apply, see Form 5329 and its instructions to find out if you owe this tax and if you must
file Form 5329.
-
You received an early distribution from (a) an IRA or other qualified retirement plan, (b) an annuity,
or (c) a modified endowment contract entered into after June 20, 1988, and the total distribution was not rolled over in
a qualified rollover
contribution.
-
Excess contributions were made to your IRAs, Coverdell education savings accounts (ESAs), Archer MSAs, or health savings
accounts.
-
You received taxable distributions from Coverdell ESAs or qualified tuition programs.
-
You were born before July 1, 1935, and did not take the minimum required distribution from your IRA or other qualified retirement
plan.
You may not owe this tax if the distribution was made or repaid because of Hurricane Katrina, Rita, or
Wilma. See Form 8915 and its instructions for details.
Exception.
If only item (1) applies to you and distribution code 1 is correctly shown in your Form 1099-R, box 7, you do not
have to file Form 5329. Instead,
multiply the taxable amount of the distribution by 10% (.10) and enter the result on line 55. The taxable amount of the distribution
is the part of
the distribution you reported on Form 1040NR, line 16b or line 17b, or on Form 4972. Also, enter “ No” in the margin to the right of line 55 to
indicate that you do not have to file Form 5329. But if distribution code 1 is incorrectly shown in Form 1099-R, box 7, you
received a Form 1042-S for
the distribution, or you qualify for an exception for qualified higher education expenses or qualified first-time homebuyer
distributions, you must
file Form 5329.
Line 56—Transportation tax.
Nonresident alien individuals are subject to a 4% tax on U.S. source gross transportation income that is not effectively
connected with a U.S.
trade or business. However, the term U.S. source gross transportation income does not include any such income that is taxable
in a possession of the
United States under the provisions of the Internal Revenue Code as applied to that possession.
For purposes of this tax,
transportation income will be treated as not effectively connected with the conduct of a trade or business in the United States
unless:
-
You had a fixed place of business in the United States involved in the earning of transportation income, and
-
At least 90% of your U.S. source gross transportation income was attributable to regularly scheduled transportation. Or, in
the case of
income from the leasing of a vessel or aircraft, it was attributable to a fixed place of business in the United States. See
sections 887 and 863 for
rules, definitions, and exceptions.
You may be exempt from this tax because of a treaty or an exchange of notes between the United States and the country
of which you are a resident.
If the country of which you are a resident does not impose tax on the shipping or aircraft income of U.S. persons, you may
also be exempt from this
tax. If you are exempt from the tax for one of these reasons, you must attach a statement to Form 1040NR identifying your
country of residence and the
treaty, note, or law and provisions under which you claim exemption from the tax.
If you owe this tax, you must attach a statement to your return that includes the information described in Pub. 519.
Line 57—Household employment taxes.
If any of the following apply, see Schedule H (Form 1040) and its instructions to find out if you owe these taxes.
-
You paid any one household employee (defined below) cash wages of $1,500 or more in 2006. Cash wages include wages paid by
check, money
order, etc.
-
You withheld federal income tax during 2006 at the request of any household employee.
-
You paid total cash wages of $1,000 or more in any calendar quarter of 2005 or 2006 to household employees.
For purposes of item 1, do not count amounts paid to an employee who was under age 18 at any time in 2006 and was a student.
Household employee.
Any person who does household work is a household employee if you can control what will be done and how it will be
done. Household work includes
work done in or around your home by babysitters, nannies, health aides, maids, yard workers, and similar domestic workers.
Line 58—Total tax.
Include in the total on line 58 any of the following taxes. To find out if you owe the tax, see the form or publication
indicated. On the dotted
line next to line 58, enter the amount of the tax and identify it as indicated.
Additional taxes on the following.
-
Health savings account distributions (see Form 8889). Identify as “HSA.”
-
Archer MSA distributions (see Form 8853). Identify as “MSA.”
-
Medicare Advantage MSA distributions (see Form 8853). Identify as “Med MSA.”
Recapture of the following credits.
-
Investment credit (see Form 4255). Identify as “ICR.”
-
Low-income housing credit (see Form 8611). Identify as “LIHCR.”
-
Qualified electric vehicle credit (see Form 8834). Identify as “QEVCR.”
-
Indian employment credit (see Form 8845). Identify as “IECR.”
-
New markets credit (see Form 8874). Identify as “NMCR.”
-
Credit for employer-provided childcare facilities and services (see Form 8882). Identify as “ECCFR.”
Recapture of federal mortgage subsidy.
If you sold your home in 2006 and it was financed (in whole or in part) from the proceeds of any tax-exempt qualified
mortgage bond or you claimed
the mortgage interest credit, see Form 8828. Identify as “ FMSR.”
Section 72(m)(5) excess benefits tax.
(See Pub. 560.) Identify as
“ Sec. 72(m)(5).”
Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance.
This tax should be shown in your Form W-2, box 12, with codes A and B or M and N. Identify as “ UT.”
Golden parachute payments.
If you received an excess parachute payment (EPP), you must pay a 20% tax on it. This tax should be shown in your
Form W-2, box 12, with code K. If
you received a Form 1099-MISC, the tax is 20% of the EPP shown in box 13. Identify as “ EPP.”
Tax on accumulation distribution of trusts.
Enter the amount from Form 4970 and identify as “ ADT.”
Excise tax on insider stock compensation from an expatriated corporation.
You may owe a 15% excise tax on the value of nonstatutory stock options and certain other stock-based compensation
held by you or a member of your
family from an expatriated corporation or its expanded affiliated group in which you were an officer, director, or more-than-10%
owner. See Internal
Revenue Code section 4985. Identify as “ ISC.”
Additional tax on income you received from a nonqualified deferred compensation plan that fails to meet certain requirements.
This income should be shown in Form W-2, box 12, with code Z, or in Form 1099-MISC, box 15b. See Internal Revenue
Code section 409A(a)(1)(B) to
figure the tax on this income. Identify as “ NQDC.”
Interest on the tax due on installment income from the sale of certain residential lots and timeshares.
Identify as “ 453(l)(3).”
Interest on the deferred tax on gain from certain installment sales with a sales price over $150,000.
Identify as “ 453A(c).”
Line 59—Federal income tax withheld.
Enter all federal income tax withheld on your effectively connected income from Forms W-2 and 1099-R. The amount withheld
should be shown in Form
W-2, box 2, and in Form 1099-R, box 4. If line 59 includes amounts withheld as shown on Form 1099-R, attach the Form 1099-R
to the front of your
return. Also, include in the total for line 59 any tax withheld from Form 1042-S, box 7, that was withheld on:
If you received a 2006 Form 1099 showing federal income tax withheld on dividends, taxable or tax-exempt interest
income, or other income you
received, include the amount withheld in the total on line 59. This should be shown in Form 1099, box 4.
Do not include on line 59 amounts withheld on income not effectively connected with a U.S. trade or business. Those amounts
should be reported in
column (a) on page 4. They are then carried over to page 2, line 66.
Line 60—2006 estimated tax payments.
Enter any estimated federal income tax payments you made using Form 1040-ES (NR) for 2006. Include any overpayment
from your 2005 return that you
applied to your 2006 estimated tax.
Name change. If you changed your name because of marriage, divorce, etc., and you made estimated tax
payments using your former name, attach a statement to the front of
Form 1040NR. On the statement, list all of the payments you made in 2006 and show the name(s) and identifying number(s) under
which you made them.
Line 61—Excess social security and tier 1 RRTA tax withheld.
If you had more than one employer for 2006 and total wages of more than $94,200, too much social security or tier
1 railroad retirement (RRTA) tax
may have been withheld. You can take a credit on this line for the amount withheld in excess of $5,840.40. But if any one
employer withheld more than
$5,840.40, you cannot claim the excess on your return. The employer should adjust the tax for you. If the employer does not
adjust the overcollection,
you can file a claim for refund using Form 843.
You cannot claim a refund for excess tier 2 RRTA tax on Form 1040NR. Instead, use Form 843.
For more details, see Pub. 505.
Line 62—Additional child tax credit.
This credit is for certain people who have at least one qualifying child as defined in the instructions for line 48
that begin on page 20. The
additional child tax credit may give you a refund even if you do not owe any tax.
To take the credit:
-
Be sure you figured the amount, if any, of your child tax credit. See the instructions for line 48 that begin on page 20.
-
Read the TIP at the end of your Child Tax Credit Worksheet on page 21. Use Form 8812 to see if you can take the additional
child tax credit,
but only if you meet the conditions given in that TIP.
Line 63—Amount paid with Form 4868 (request for extension).
If you filed Form 4868 to get an automatic extension of time to file Form 1040NR, enter any amount you paid with that
form or by electronic funds
withdrawal or credit card. If you paid by credit card, do not include on line 63 the convenience fee you were charged.
Line 64—Other payments.
Check the box(es) on line 64 to report any credit from Form 2439, 4136, or 8885.
Line 65—Credit for amount paid with Form 1040-C.
Enter any amount you paid with Form 1040-C for 2006.
Line 66—U.S. tax withheld at source.
Enter on line 66 the amount you show on page 4, line 86. Be sure to attach a copy of all Form(s) 1042-S, SSA-1042S,
RRB-1042S, or similar form(s).
Lines 67a and 67b—U.S. tax withheld at source by partnerships under section 1446.
Enter on line 67a any tax withheld by a partnership shown on Form(s) 8805. Enter on
line 67b any tax withheld by a partnership shown on Form(s) 1042-S. Be sure to attach a copy of all Form(s) 8805 and 1042-S.
Lines 68a and 68b—U.S. tax withheld on dispositions of U.S. real property interests.
Enter on line 68a any tax withheld on dispositions of U.S. real property interests from Form(s) 8288-A. Enter on line
68b any tax withheld on
dispositions of U.S. real property interests from Form(s) 1042-S. Be sure to attach a copy of all Form(s) 8288-A and 1042-S.
Line 69—Credit for federal telephone excise tax paid.
If you were billed after February 28, 2003, and before August 1, 2006, for the federal telephone excise tax on long
distance or bundled service,
you may be able to request a credit for the tax paid. You had bundled service if your local and long distance service was
provided under a plan that
does not separately state the charge for local service.
You cannot request the credit if you already have received a credit or refund from your service provider. If you
request the credit, you cannot
ask your service provider for a credit or refund and must withdraw any request previously submitted to your provider.
You can request the standard amount or the actual amount you paid. If you believe you paid more than the standard
amount, it can be to your benefit
to request the actual amount. If you request the actual amount paid, you must attach Form 8913 showing the amount paid and
keep records to
substantiate the amount. If you were a sole proprietor, farmer, or lessor of rental real estate, you may be able to estimate
your actual expenses. See
Form 8913 for details.
Standard amount.
The standard amount you can request depends on the number of exemptions you claimed on line 7d. The standard amounts,
which include both the tax
paid and interest owed on that tax, are shown in the following table.
If you request the standard amount and you later want to change it to the actual amount, you must file an amended
return.
If you request the standard amount, you do not have to include the credit in income for any tax year.
Line 71—Amount overpaid.
If
line 71 is under $1, we will send a refund only on written request.
If the amount you overpaid is large, you may be able to decrease the amount of income tax withheld from your pay by filing
a new Form W-4. See
Income Tax Withholding and Estimated Tax Payments for Individuals for 2007 on page 30.
Refund offset.
If you owe past-due federal tax, state income tax, child support, spousal support, or certain federal nontax debts,
such as student loans, all or
part of the overpayment on line 71 may be used (offset) to pay the past-due amount. Offsets for federal taxes are made by
the IRS. All other offsets
are made by the Treasury Department's Financial Management Service (FMS). For federal tax offsets, you will receive a notice
from the IRS. For all
other offsets, you will receive a notice from FMS. To find out if you may have an offset or if you have any questions about
it, contact the
agency(ies) to which you owe the debt.
Lines 72a through 72d—Direct deposit of refund.
Why Use Direct Deposit?
-
You get your refund fast.
-
Payment is more secure—there is no check to get lost.
-
More convenient. No trip to the bank to deposit your check.
-
Saves tax dollars. A refund by direct deposit costs less than a check.
If you want us to directly deposit the amount shown on line 72a to your checking or savings account, including an
IRA, at a U.S. bank or other
financial institution (such as a mutual fund, brokerage firm, or credit union) in the United States:
-
Check the box on line 72a and attach Form 8888 if you want to split the direct deposit of your refund among two or three accounts,
or
-
Complete lines 72b through 72d if you want your refund deposited to only one account.
Otherwise, we will send you a check.
Note.
If you do not want your refund directly deposited to your account, do not check the box on line 72a. Draw a line through the
boxes on lines
72b and 72d.
The IRS is not responsible for a lost refund if you enter the wrong account information. Check with your financial institution
to get the
correct routing and account numbers and to make sure your direct deposit will be accepted.
If the direct deposit to your account(s) is different from the amount you expected, you will receive an explanation
in the mail about 2 weeks after
your refund is deposited.
Line 72a.
If you want to split the direct deposit of your refund among two or three accounts, check the box on line 72a and
attach Form 8888. If you want
your refund deposited to only one account, do not check the box on line 72a, but instead complete lines 72b through 72d.
Line 72b.
The routing number must be nine digits. The first two digits must be 01 through 12 or 21 through 32. Otherwise, the
direct deposit will be rejected
and a check sent instead. On the sample check below, the routing number is 250250025.
Your check may state that it is payable through a financial institution different from the one at which you have your
checking account. If so, do
not use the routing number on that check. Instead, contact your financial institution for the correct routing number to enter
on line 72b.
Line 72c.
Check the appropriate box for the type of account. Do not check more than one box. If the deposit is to an IRA, check
the “ Savings” box.
Line 72d.
The account number can be up to 17 characters (both numbers and letters). Include hyphens but omit spaces and special
symbols. Enter the number
from left to right and leave any unused boxes blank. On the sample check below, the account number is 20202086. Do not include
the check number.
Individual Retirement Arrangement (IRA).
You can have your refund directly deposited to a traditional IRA, Roth IRA, or SEP-IRA, but not a SIMPLE IRA. You
must establish the IRA at a bank
or other financial institution before you request direct deposit. Make sure your direct deposit will be accepted. You also
must notify the trustee of
your account of the year to which the deposit is to be applied. If you do not, the trustee can assume the deposit is for the
year during which you are
filing the return. For example, if you file your 2006 return during 2007 and do not notify the trustee in advance, the trustee
can assume the deposit
to your IRA is for 2007. If you designate your deposit to be for 2006, you must verify that the deposit actually was made
to the account by the due
date of the return (without regard to extensions). If the deposit is not made to your account by the due date of the return
(without regard to
extensions), the deposit is not an IRA contribution for 2006. You must file an amended 2006 return and reduce any IRA deduction
and any retirement
savings contributions credit you claimed.
You may be able to contribute up to $4,000 ($5,000 if age 50 or older at the end of 2006) to a traditional IRA or Roth IRA
for 2006. You may owe a
penalty if your contributions exceed these limits.
For more information on IRAs, see Pub. 590.
Line 73—Applied to 2007 estimated tax.
Enter on line 73 the amount, if any, of the overpayment on line 71 you want applied to your 2007 estimated tax. This
election cannot be changed
later.
Line 74—Amount you owe.
To save interest and penalties, pay your taxes in full by the due date. You do not have to pay if line 74 is under $1.
Include any estimated tax penalty from line 75 in the amount you enter on line 74.
You can pay by check, money order, or credit card. Do not include any estimated tax payment for 2007 in your check,
money order, or amount you
charge. Instead, make the estimated tax payment separately.
To pay by check or money order.
Make your check or money order payable to the “ United States Treasury” for the full amount due. Do not send cash. Do not attach the payment
to your return. Write “ 2006 Form 1040NR” and your name, address, daytime phone number, and SSN or ITIN on your payment.
To help process your payment, enter the amount on the right side of the check like this: $ 1040NR.XX. Do not use dashes
or lines (for example, do not
enter “ 1040NR-” or “ 1040NR XX/100”).
To pay by credit card.
You can use your American Express® Card, Discover® Card, MasterCard® card, or Visa® card. To pay by credit card,
call toll-free or
visit the website of either service provider listed on the next page and follow the instructions. You will be asked to provide
your social security
number (SSN). If you do not have and are not eligible to get an SSN, use your IRS-issued individual taxpayer identification
number (ITIN) instead.
A convenience fee will be charged by the service provider based on the amount you are paying. Fees may vary between
the providers. You will be told
what the fee is during the transaction and you will have the option to either continue or cancel the transaction. You also
can find out what the fee
will be by calling the provider's toll-free automated customer service number or visiting the provider's website shown below.
If you pay by credit card before filing your return, please enter on page 1 of Form 1040NR in the upper left corner
the confirmation number you
were given at the end of the transaction and the amount you charged (not including the convenience fee).
|
Official Payments Corporation
1-800-2PAY-TAX
SM (1-800-272-9829)
1-877-754-4413 (Customer Service)
www.officialpayments.com |
|
Link2Gov Corporation
1-888-PAY-1040
SM (1-888-729-1040)
1-888-658-5465 (Customer Service)
www.PAY1040.com |
You may need to (a) increase the amount of income tax withheld from your pay by filing a new Form W-4, or (b) make estimated
tax payments for 2007.
See Income Tax Withholding and Estimated Tax Payments for Individuals for 2007 on page 30.
What if you cannot pay? If you cannot pay the full amount shown on line 74 when you file, you can
ask to make monthly installment payments for the full or a partial amount. You may have up to 60 months to pay. However,
even if your request to pay
in installments is granted, you will be charged interest and may be charged a late payment penalty on the tax not paid by
the date due. You also must
pay a fee. To limit the interest and penalty charges, pay as much of the tax as possible when you file. But before requesting
an installment
agreement, you should consider other less costly alternatives, such as a bank loan or credit card payment.
To ask for an installment agreement, you can apply online or use Form 9465. To apply online, go to
www.irs.gov, use the pull-down menu under “ I need to...” and select “ Set Up a
Payment Plan.” If you use Form 9465, you should receive a response to your request for installments within 30 days. But if you file your
return
after March 31, it may take us longer to reply.
Line 75—Estimated tax penalty.
You may owe this penalty if:
-
Line 74 is at least $1,000 and it is more than 10% of the tax shown on your return, or
-
You did not pay enough estimated tax by any of the due dates. This is true even if you are due a refund.
For most people, the “ tax shown on your return” is the amount on line 58 minus the total of any amounts shown on line 62 and Forms 8828, 4137,
4136, 5329 (Parts III through VIII only), and 8885. Also, subtract from line 58 any tax on an excess parachute payment and
any excise tax on insider
stock compensation of an expatriated corporation. When figuring the amount on line 58, include the amount on line 57 only
if line 59 is more than zero
or you would owe the penalty even if you did not include those taxes. But if you entered an amount on Schedule H (Form 1040),
line 7, include the
total of that amount plus the amount on Form 1040NR, line 57.
Exception.
You will not owe the penalty if your 2005 tax return was for a tax year of 12 full months and either of the following
applies.
-
You had no tax shown on your 2005 return and you were a U.S. citizen or resident for all of 2005, or
-
The total of lines 59, 60, 61, and 65 through 68b on your 2006 return is at least as much as the tax shown on your 2005 return.
Your
estimated tax payments for 2006 must have been made on time and for the required amount.
If your 2005 adjusted gross income was over $150,000 (over $75,000 if you checked filing status box 3, 4, or 5 for 2006),
item (2) applies only if
the total of lines 59, 60, 61, and 65 through 68b on your 2006 tax return is at least 110% of the tax shown on your 2005 return.
This rule does not
apply to farmers and fishermen.
Figuring the penalty.
If the Exception above does not apply and you choose to figure the penalty yourself, see Form 2210 (or Form 2210-F for farmers and
fishermen) to find out if you owe the penalty. If you do, you can use the form to figure the amount.
Enter the penalty on line 75. Add the penalty to any tax due and enter the total on line 74. If you are due a refund,
subtract the penalty from the
overpayment you show on line 71. Do not file Form 2210 with your return unless Form 2210 indicates that you must do so. Instead,
keep it for your
records.
Because Form 2210 is complicated, you can leave line 75 blank and the IRS will figure the penalty and send you a bill. We
will not charge you
interest on the penalty if you pay by the date specified on the bill. If your income varied during the year, the annualized
income installment method
may reduce the amount of your penalty. But you must file Form 2210 because the IRS cannot figure your penalty under this method.
See the Instructions
for Form 2210 for other situations in which you may be able to lower your penalty by filing Form 2210.
If you want to allow a friend, family member, or any other person you choose to discuss your 2006 tax return with the IRS,
check the “Yes” box
in the “Third Party Designee” area of your return. Also, enter the designee's name, U.S. phone number, and any five numbers the designee chooses
as his or her personal identification number (PIN). But if you want to allow the paid preparer who signed your return to discuss
it with the IRS, just
enter “Preparer” in the space for the designee's name. You do not have to provide the other information requested.
If you check the “Yes” box, you are authorizing the IRS to call the designee to answer any questions that may arise during the processing of
your return. You also are authorizing the designee to:
-
Give the IRS any information that is missing from your return,
-
Call the IRS for information about the processing of your return or the status of your refund or payment(s),
-
Receive copies of notices or transcripts related to your return, upon request, and
-
Respond to certain IRS notices about math errors, offsets, and return preparation.
You are not authorizing the designee to receive any refund check, bind you to anything (including any additional tax liability),
or otherwise
represent you before the IRS. If you want to expand the designee's authorization, see Pub. 947.
The authorization will end automatically no later than the due date (without regard to extensions) for filing your 2007 tax
return (see When
To File on page 4). If you wish to revoke the authorization before it ends, see Pub. 947.
See Reminders beginning on page 30 after you complete pages 3, 4, and 5 of the form.
Instructions for Schedule A, Itemized Deductions
Do not include on Schedule A items deducted elsewhere such as on Form 1040NR or Schedule C, C-EZ, E, or F (Form 1040).
State and Local Income Taxes
You can deduct state and local income taxes you paid or that were withheld from your salary during 2006 on income connected
with a U.S. trade or
business. If, during 2006, you received any refunds of, or credits for, income tax paid in earlier years, do not subtract
them from the amount you
deduct here. Instead, see the instructions for
Form 1040NR, line 11, beginning on page 11.
You can deduct contributions or gifts you gave to U.S. organizations that are religious, charitable, educational, scientific,
or literary in
purpose. You also can deduct what you gave to organizations that work to prevent cruelty to children or animals.
To verify an organization's charitable status, you can:
-
Check with the organization to which you made the donation. The organization should be able to provide you with verification
of its
charitable status.
-
See Pub. 78 for a list of most qualified organizations. You can access Pub. 78 at
www.irs.gov under Charities and Non-Profits.
-
If in the United States, call our Tax Exempt/Government Entities Customer Account Services at 1-877-829-5500.
Examples of U.S. qualified charitable organizations include the following.
-
Churches, mosques, synagogues, temples, etc.
-
Boy Scouts, Boys and Girls Clubs of America, CARE, Girl Scouts, Goodwill Industries, Red Cross, Salvation Army, United Way,
etc.
-
Fraternal orders, if the gifts will be used for the purposes listed above.
-
Veterans' and certain cultural groups.
-
Nonprofit schools, hospitals, and organizations whose purpose is to find a cure for, or help people who have, arthritis, asthma,
birth
defects, cancer, cerebral palsy, cystic fibrosis, diabetes, heart disease, hemophilia, mental illness or retardation, multiple
sclerosis, muscular
dystrophy, tuberculosis, etc.
-
Federal, state, and local governments if the gifts are solely for public purposes.
Contributions you can deduct.
Contributions can be in cash (keep canceled checks, receipts, or other reliable written records showing the name of
the organization and the date
and amount given), property, or out-of-pocket expenses you paid to do volunteer work for the kinds of organizations described
earlier. If you drove to
and from the volunteer work, you can take the actual cost of gas and oil or
14 cents a mile. But, if the volunteer work was to provide relief related to Hurricane Katrina, the amount
is 32 cents a mile. Add parking and tolls to the amount you claim under either method. But do not deduct any amounts that
were repaid to you.
Gifts from which you benefit.
If you made a gift and received a benefit in return, such as food, entertainment, or merchandise, you generally can
deduct only the amount that is
more than the value of the benefit. But this rule does not apply to certain membership benefits provided in return for an
annual payment of $75 or
less. For details, see Pub. 526.
Example.
You paid $70 to a charitable organization to attend a fund-raising dinner and the value of the dinner was $40. You can deduct
only $30.
Gifts of $250 or more.
You can deduct a gift of $250 or more only if you have a statement from the charitable organization showing the information
in (1) and (2) below.
-
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. If you did receive
any goods or
services, a description and estimate of the value must be included. If you received only intangible religious benefits (such
as admission to a
religious ceremony), the organization must state this, but it does not have to describe or value the benefit.
In figuring whether a gift is $250 or more, do not combine separate donations. For example, if you gave your church
$25 each week for a total of
$1,300, treat each $25 payment as a separate gift. If you made donations through payroll deductions, treat each deduction
from each paycheck as a
separate gift. See Pub. 526 if you made a separate gift of $250 or more through payroll deduction.
You must get the statement by the date you file your return or the due date (including extensions) for filing your return,
whichever is earlier. Do
not attach the statement to your return. Instead, keep it for your records.
Limit on the amount you can deduct.
See Pub. 526 to figure the amount of your deduction if any of the following applies.
-
Your cash contributions or contributions of ordinary income property are more than 30% of the amount on Form 1040NR, line
36.
-
Your gifts of capital gain property are more than 20% of the amount on
Form 1040NR, line 36.
-
You gave gifts of property that increased in value or gave gifts of the use of property.
Contributions you cannot deduct.
-
Travel expenses (including meals and lodging) while away from home, unless there was no significant element of personal pleasure,
recreation, or vacation in the travel.
-
Political contributions.
-
Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups.
-
Cost of raffle, bingo, or lottery tickets.
-
Cost of tuition. But you may be able to deduct this expense on line 9. See page 27.
-
Value of your time or services.
-
Value of blood given to a blood bank.
-
The transfer of a future interest in tangible personal property (generally, until the entire interest has been transferred).
-
Gifts to individuals and groups that are run for personal profit.
-
Gifts to foreign organizations. But you may be able to deduct gifts to certain U.S. organizations that transfer funds to foreign
charities
and certain Canadian, Israeli, and Mexican charities. See Pub. 526 for details.
-
Gifts to organizations engaged in certain political activities that are of direct financial interest to your trade or business.
See section
170(f)(9).
-
Gifts to groups whose purpose is to lobby for changes in the laws.
-
Gifts to civic leagues, social and sports clubs, labor unions, and chambers of commerce.
-
Value of benefits received in connection with a contribution to a charitable organization. See Pub. 526 for exceptions.
Enter the total gifts you made in cash or by check (including out-of-pocket expenses).
Enter your contributions of property. If you gave used items, such as clothing or furniture, deduct their fair market value
at the time you gave
them. Fair market value is what a willing buyer would pay a willing seller when neither has to buy or sell and both are aware
of the conditions of the
sale. For more details on determining the value of donated property, see Pub. 561.
If the amount of your deduction is more than $500, you must complete and attach Form 8283. For this purpose, the “amount of your deduction”
means your deduction before applying any income limits that could result in a carryover of contributions. If you deduct more
than $500 for a
contribution of a motor vehicle, boat, or airplane, you also must 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 donated property. This amount is $500 for
certain contributions
after August 17, 2006, of clothing and household items (see below). See Form 8283 and its instructions for details.
Contributions of clothing and household items after August 17, 2006.
A deduction for these contributions will be allowed only if the items are in good used condition or better. However,
this rule does not apply to a
contribution of any single item for which a deduction of more than $500 is claimed and for which you include a qualified appraisal
and Form 8283 with
your tax return.
Recordkeeping.
If you gave property, you should keep a receipt or written statement from the organization you gave the property to,
or a reliable written record,
that shows the organization's name and address, the date and location of the gift, and a description of the property. For
each gift of property, you
also should keep reliable written records that include:
-
How you figured the property's value at the time you gave it. If the value was determined by an appraisal, keep a signed copy
of the
appraisal.
-
The cost or other basis of the property if you must reduce it by any ordinary income or capital gain that would have resulted
if the
property had been sold at its fair market value.
-
How you figured your deduction if you chose to reduce your deduction for gifts of capital gain property.
-
Any conditions attached to the gift.
If your total deduction for gifts of property is over $500, you gave less than your entire interest in the property, or you
made a “qualified
conservation contribution,” your records should contain additional information. See Pub. 526 for details.
Enter any carryover of contributions that you could not deduct in an earlier year because they exceeded your adjusted gross
income limit. See
Pub. 526 for details.
Casualty and Theft Losses
Complete and attach Form 4684 to figure the amount of your loss to enter on line 8.
You may be able to deduct part or all of each loss caused by theft, vandalism, fire, storm, or similar causes, and car, boat,
and other accidents.
You also may be able to deduct money you had in a financial institution but lost because of the insolvency or bankruptcy of
the institution.
You can deduct nonbusiness casualty or theft losses only to the extent that:
-
The amount of each separate casualty or theft loss is more than $100, and
-
The total amount of all losses during the year (reduced by the $100 limit discussed in (1) above) is more than 10% of the
amount shown on
Form 1040NR, line 36.
The limits in items (1) and (2) above do not apply to casualty and theft losses that occurred in the
Hurricane Katrina, Rita, or Wilma disaster areas, if the loss was caused by Hurricane Katrina, Rita, or Wilma. See Form 4684
and its instructions for
details.
Special rules apply if you had both gains and losses from nonbusiness casualties or thefts. See Form 4684 and its instructions
for details.
Use Schedule A, line 11, to deduct the costs of proving that you had a property loss. Examples of these costs are appraisal
fees and photographs
used to establish the amount of your loss.
For information on federal disaster area losses, see Pub. 547. For information on tax benefits related to Hurricanes Katrina,
Rita, and Wilma, see
Pub. 4492.
Job Expenses and Certain Miscellaneous Deductions
Note.
Miscellaneous deductions are allowed only if and to the extent they are directly related to your effectively connected income.
You can deduct
only the part of these expenses that exceeds 2% of the amount on Form 1040NR, line 36.
Pub. 529 discusses the types of expenses you can and cannot deduct.
Examples of Expenses You Cannot Deduct
-
Political contributions.
-
Legal expenses for personal matters that do not produce taxable income.
-
Lost or misplaced cash or property.
-
Expenses for meals during regular or extra work hours.
-
The cost of entertaining friends.
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Commuting expenses. See Pub. 529 for the definition of commuting.
-
Travel expenses for employment away from home if that period of employment exceeds 1 year.
-
Travel as a form of education.
-
Expenses of attending a seminar, convention, or similar meeting unless it is related to your employment.
-
Club dues. See Pub. 529 for exceptions.
-
Expenses of adopting a child. But you may be able to take a credit for adoption expenses. See Form 8839 for details.
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Fines and penalties.
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Expenses of producing tax-exempt income.
Enter the total ordinary and necessary job expenses you paid for which you were not reimbursed. (Amounts your employer included
in box 1 of your
Form W-2 are not considered reimbursements.)
An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense
is one that is helpful
and appropriate for your business. An expense does not have to be required to be considered necessary.
But you must fill in and attach
Form 2106 if either (1) or (2) below applies.
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You claim any travel, transportation, meal, or entertainment expenses for your job.
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Your employer paid you for any of your job expenses that you otherwise would report on line 9.
If you used your own vehicle and item (2) above does not apply, you may be able to file Form 2106-EZ instead.
If you do not have to file Form 2106 or 2106-EZ, list the type and amount of each expense on the dotted lines next to line
9. If you need more
space, attach a statement showing the type and amount of each expense. Enter one total on line 9.
Do not include on line 9 any educator expenses you deducted on Form 1040NR, line 24.
Examples of other expenses to include on line 9 are:
-
Safety equipment, small tools, and supplies needed for your job.
-
Uniforms required by your employer that are not suitable for ordinary wear.
-
Protective clothing required in your work, such as hard hats, safety shoes, and glasses.
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Physical examinations required by your employer.
-
Dues to professional organizations and chambers of commerce.
-
Subscriptions to professional journals.
-
Fees to employment agencies and other costs to look for a new job in your present occupation, even if you do not get a new
job.
-
Certain business use of part of your home. For details, including limits that apply, see Pub. 587.
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Certain educational expenses. For details, see Pub. 970.
Enter the fees you paid for preparation of your tax return. If you paid your tax by credit card, do not include the convenience
fee you were
charged.
Enter the total amount you paid to produce or collect taxable income and manage or protect property held for earning income.
But do not include any
personal expenses. List the type and amount of each expense on the dotted lines next to line 11. If you need more space, attach
a statement showing
the type and amount of each expense. Enter one total on line 11.
Examples of expenses to include on line 11 are:
-
Certain legal and accounting fees.
-
Clerical help and office rent.
-
Custodial (for example, trust account) fees.
-
Your share of the investment expenses of a regulated investment company.
-
Certain losses on nonfederally insured deposits in an insolvent or bankrupt financial institution. For details, including
limits that apply,
see Pub. 529.
-
Casualty and theft losses of property used in performing services as an employee from Form 4684, lines 35 and 41b, or Form
4797, line
18a.
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Deduction for repayment of amounts under a claim of right if $3,000 or less.
Other Miscellaneous Deductions
List the type and amount of each expense on the dotted lines next to line 16. Enter one total on line 16. Examples of these
expenses are:
-
Casualty and theft losses of income-producing property from Form 4684, lines 35 and 41b, or Form 4797, line 18a.
-
Loss from other activities from Schedule K-1 (Form 1065-B), box 2.
-
Deduction for repayment of amounts under a claim of right if over $3,000. See Pub. 525 for details.
-
Certain unrecovered investment in a pension.
-
Impairment-related work expenses of a disabled person.
For more details, see Pub. 529.
Total Itemized Deductions
Use the worksheet on this page to figure the amount to enter on line 17 if the amount on Form 1040NR, line 36, is over $150,500
($75,250 if you
checked filing status box 3, 4, or 5).
Itemized Deductions Worksheet—Line 17
1.
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Add the amounts on Schedule A, lines 3, 7, 8, 15, and 16
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1.
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2.
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Enter the total of the amount on Schedule A, line 8, plus any casualty or theft losses included on line
16
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2.
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Caution: Be sure your casualty or theft losses are clearly identified on the dotted lines next to
line 16. |
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3.
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Is the amount on line 2 less than the amount on line 1?
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□
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No. Stop. Your deduction is not limited. Enter the amount from line 1 above on Schedule A, line
17.
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□
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Yes. Subtract line 2 from line 1
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3.
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4.
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Multiply line 3 above by 80% (.80)
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4.
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5.
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Enter the amount from Form 1040NR, line 36
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5.
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6.
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Enter: $150,500 ($75,250 if you checked filing status box 3, 4, or 5)
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6.
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7.
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Is the amount on line 6 less than the amount on line 5?
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□
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No. Stop. Your deduction is not limited. Enter the amount from line 1 above on Schedule A, line
17.
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□
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Yes. Subtract line 6 from line 5
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7.
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8.
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Multiply line 7 above by 3% (.03)
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8.
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9.
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Enter the smaller of line 4 or line 8
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9.
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10.
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Divide line 9 by 3
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10.
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11.
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Subtract line 10 from line 9
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11.
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12.
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Total itemized deductions. Subtract line 11 from line 1. Enter the result here and on Schedule
A, line 17
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12.
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Tax on Income Not Effectively Connected With a U.S. Trade or Business (Page 4)
The following items are generally taxed at 30% if they are not effectively connected with your U.S. trade or business. The
rate may be lower if
your country of residence and the United States have a treaty setting lower rates. Table 1 in Pub. 901 summarizes which countries
have such treaties
and what the rates are.
The 30% tax applies only to amounts included in gross income. For example, the tax applies only to the part of a periodic
annuity or pension
payment that is subject to tax; it does not apply to the part that is a return of your cost.
The following list gives only a general idea of the type of income to include on page 4. (For more information, see Pub. 519.)
Include the
following only to the extent the amount received is not effectively connected with the conduct of a trade or business in the
United States.
-
Income that is fixed or periodic, such as
interest (other than original issue discount),
dividends,
rents,
salaries,
wages, premiums,
annuities, other compensation, or alimony received. Other items of income, such as
royalties, also may be subject to the 30% tax.
Exceptions.
The following items of interest and dividend income that you received as a nonresident alien generally are exempt from the
30% tax.
-
Interest from a U.S. bank, savings and loan association, or similar institution, and from certain deposits with U.S. insurance
companies.
-
Portfolio interest on obligations issued after July 18, 1984.
-
Interest-related dividends received from a mutual fund.
-
Short-term capital gain dividends from a mutual fund only if you were present in the United States for less than 183 days
during the tax
year.
-
U.S. source dividends paid by certain foreign corporations.
For more information, see Pub. 519.
-
Gains, other than capital gains, from the sale or exchange of patents, copyrights, and other intangible property.
-
Original
issue discount (OID). If you sold or exchanged the obligation, include in income the OID that accrued
while you held the obligation minus the amount previously included in income. If you received a payment on an OID obligation,
see Pub.
519.
-
Capital gains in excess of capital losses from U.S. sources during 2006. Include these gains only if you were in the United
States at least
183 days during 2006. They are not subject to U.S. tax if you were in the United States less than 183 days during the tax
year. In determining your
net gain, do not use the capital loss carryover.
Losses from sales or exchanges of capital assets in excess of similar gains are not allowed.
If you had a gain or loss on disposing of a U.S. real property interest, see Dispositions of U.S. Real Property Interests on page 6.
-
Prizes,
awards, and certain gambling winnings. Proceeds from lotteries,
raffles, etc., are gambling winnings (see section 871(j) for exceptions). You must report the full amount of your winnings.
You cannot offset losses
against winnings and report the difference.
Note.
Residents of Canada may claim gambling losses, but only to the extent of gambling winnings. They should report both their
total gambling winnings
and their total gambling losses on the dotted line on line 85 (or attach a separate schedule if more space is needed). If
they have net gambling
winnings (after offsetting their total gambling losses against their total gambling winnings), they should include this net
amount on line 85, column
(d).
Social security benefits (and tier 1 railroad retirement benefits treated as social security).
85% of the U.S. social security and equivalent railroad retirement benefits you received are taxable. This amount
is treated as U.S. source income
not effectively connected with a U.S. trade or business. It is subject to the 30% tax rate, unless exempt or taxed at a reduced
rate under a U.S. tax
treaty. Social security benefits include any monthly benefit under title II of the Social Security Act or the part of a tier
1 railroad retirement
benefit treated as a social security benefit. They do not include any Supplemental Security Income (SSI) payments.
You should receive a Form SSA-1042S showing the total social security benefits paid to you in 2006 and the amount
of any benefits you repaid in
2006. If you received railroad retirement benefits treated as social security, you should receive a Form RRB-1042S.
Enter 85% of the total amount from box 5 of all of your Forms SSA-1042S and Forms RRB-1042S in the appropriate column
of line 83 of
Form 1040NR. Enter any federal tax withheld in column (a) of line 83. Attach a copy of each Form SSA-1042S and RRB-1042S
to Form 1040NR.
Withholding of tax at the source.
Tax must be withheld at the source on certain income from U.S. sources paid to nonresident aliens. The withholding
is generally at the 30% rate.
There are exceptions to the general rule, and tax treaties with various countries may provide a lower rate or exempt certain
income from withholding.
The tax must be withheld by the person who pays fixed or determinable annual or periodic income to nonresident aliens. The
income subject to this
withholding should be reported on page 4 of Form 1040NR. For details, see Pub. 519, Pub. 515, and section 1441 and its regulations.
Other Information (Page 5)
Enter the type of U.S. visa (for example, F, J, M, etc.) you used to enter the United States. Also enter your current nonimmigrant
status. For
example, enter your current nonimmigrant status shown on your current U.S. Citizenship and Immigration Services (USCIS) Form
I-94, Arrival-Departure
Record. If your status has changed while in the United States, enter the date of change. If your status has not changed, enter
“N/A.”
You are generally required to enter your date of entry into the United States that pertains to your current nonimmigrant status
(for example, the
date of arrival shown on your most recent USCIS Form I-94).
Exception.
If you are claiming a tax treaty benefit that is determined by reference to more than one date of arrival, enter the
earlier date of arrival. For
example, you are currently claiming treaty benefits (as a teacher) under article 20 of the tax treaty between the United States
and the Republic of
Korea (South Korea). You previously claimed treaty benefits (as a student) under article 21 of that treaty. Under article
21, paragraph 4, of that
treaty, the combination of consecutive exemptions under articles 20 and 21 may not extend beyond 5 tax years from the date
you entered the United
States as a student. If article 21, paragraph 4, of that treaty applies, enter in item E the date you entered the United States
as a student.
If you are a resident of a treaty country (that is, you qualify as a resident of that country within the meaning of the tax
treaty between the
United States and that country), you must know the terms of the tax treaty between the United States and the treaty country
to properly complete item
M. You may download the complete text of most U.S. tax treaties at
www.irs.gov. Technical explanations for many of those treaties are also available at that site. Also, see Pub. 901 for a
quick reference guide to the provisions of U.S. tax treaties.
If you are claiming treaty benefits on Form 1040NR, you must provide all of the information requested in item M.
If you are claiming tax treaty benefits and you failed to submit adequate documentation to a withholding agent, you must attach
all information
that otherwise would have been required on the withholding document (for example, all information required on Form W-8BEN
or
Form 8233).
Treaty-based return position disclosure.
If you take the position that a treaty of the United States overrides or modifies any provision of the Internal Revenue
Code and that position
reduces (or potentially reduces) your tax, you must report certain information on Form 8833 and attach it to Form 1040NR.
You can be charged a $1,000 penalty for each failure to report the required information. For more details, see Form 8833 and
Regulations section
301.6114-1.
Exceptions.
You do not have to file Form 8833 for any of the following situations.
-
You claim a treaty reduces the withholding tax on interest, dividends, rents, royalties, or other fixed or determinable annual
or periodic
income ordinarily subject to the 30% rate.
-
You claim a treaty reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social
security and
other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship
and fellowship
grants.
-
You claim an International Social Security Agreement or a Diplomatic or Consular Agreement reduces or modifies the taxation
of
income.
-
You are a partner in a partnership or a beneficiary of an estate or trust and the partnership, estate, or trust reports the
required
information on its return.
-
The payments or items of income that otherwise are required to be disclosed total no more than $10,000.
If you expatriated, see Special Rules for Former U.S. Citizens and Former U.S. Long-Term Residents beginning on page 7 for details on
how to answer the question in item P and for information that must be included in the annual information statement, if required.
If you are a former
U.S. long-term resident filing a dual-status return for your last year of U.S. residency, you must also attach Form 8854.
See Dual-Status
Taxpayers that begins on page 5.
If you received total compensation of $250,000 or more for 2006 and you are using an alternative basis to determine the source,
check the box in
item R. Total compensation includes all compensation from sources within and without the United States.
If you are required to check the box in item R, you must attach a statement to your return. For details about the statement
and the alternative
basis, see Services performed partly inside and partly outside the United States on page 10.
Sign and Date Your Return
Form 1040NR is not considered a valid return unless you sign it. You can have an agent in the United States prepare and sign
your return if you
could not do so for one of the following reasons:
-
You were ill.
-
You were not in the United States at any time during the 60 days before the return was due.
-
For other reasons that you explained in writing to the Internal Revenue Service Center, Austin, TX 73301-0215, U.S.A., and
that the IRS
approved.
A return prepared by an agent must be accompanied by a power of attorney. Form 2848 may be used for this purpose.
Be sure to date your return and show your occupation(s) in the United States in the space provided. If you have someone prepare
your return, you
are still responsible for the correctness of the return.
Child's return.
If your child cannot sign the return, you can sign the child's name in the space provided. Then, add “ By (your signature), parent for minor
child.”
Paid preparer must sign your return.
Generally, anyone you pay to prepare your return must sign it in the space provided. The preparer must give you a
copy of the return for your
records. Someone who prepares your return but does not charge you should not sign your return.
Income Tax Withholding and Estimated Tax Payments for Individuals for 2007
If the amount you owe or the amount you overpaid is large, you may be able to file a new Form W-4 with your employer to change
the amount of income
tax withheld from your 2007 pay. For details on how to complete Form W-4, see the Instructions for Form 8233.
In general, you do not have to make estimated tax payments if you expect that your 2007 Form 1040NR will show a tax refund
or a tax balance due
the IRS of less than $1,000. If your total estimated tax (including any household employment taxes or alternative minimum
tax) for 2007 is $1,000 or
more, see Form 1040-ES(NR). It has a worksheet you can use to see if you have to make estimated tax payments. However, if
you expect to be a resident
of Puerto Rico during all of 2007 and you must pay estimated tax, use Form 1040-ES.
If you believe someone has assumed your identity to file federal income tax returns, or to commit other tax fraud, complete
Form 3949-A,
Information Referral, and send it to Internal Revenue Service, Fresno, CA 93888. Victims of identity theft who are suffering
economic harm,
experiencing a systemic problem, or seeking help in resolving tax problems that have not been resolved through normal channels
may be eligible for
Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling toll-free 1-877-777-4778 or TTY/TTD 1-800-829-4059.
For additional
information about identity theft prevention and victim assistance, you can access the IRS Identity Theft page at
www.irs.gov by entering keyword “identity theft.”
The IRS does not send out unsolicited emails requesting personal taxpayer information. If you receive this type of request,
it may be an attempt by
identity thieves to get your private tax information. Send a copy of the fraudulent email to
[email protected]. For more information on how to forward one of these emails, go to
www.irs.gov and enter keyword “phishing.” Once there, see the article titled “How to Protect Yourself From
Suspicious E-Mails or Phishing Schemes.”
Gift To Reduce Debt Held By the Public
If you wish to make such a gift, make a check payable to “Bureau of the Public Debt.” You can send it to: Bureau of the Public Debt,
Department G, P.O. Box 2188, Parkersburg, WV 26106-2188. Or you can enclose the check with your income tax return when you
file. Do not add your gift
to any tax you may owe. See page 24 for details on how to pay any tax you owe.
You may be able to deduct this gift on your 2007 tax return as a charitable contribution.
If you move after filing your return, always notify the IRS of your new address. To do this, use Form 8822.
How Long Should Records Be Kept?
Keep a copy of your tax return, worksheets you used, and records of all items appearing on it (such as Forms W-2, 1099, and
1042-S) until the
statute of limitations runs out for that return. Usually, this is 3 years from the date the return was due or filed, or 2
years from the date the tax
was paid, whichever is later. You should keep some records longer. For example, keep property records (including those on
your home) as long as they
are needed to figure the basis of the original or replacement property. For more details, see Pub. 552.
File Form 1040X to change a return you already filed. Also, use
Form 1040X if you filed Form 1040NR and you should have filed a Form 1040, 1040A, or 1040EZ, or vice versa. Generally, Form
1040X must be filed
within 3 years after the date the original return was filed, or within 2 years after the date the tax was paid, whichever
is later. But you may have
more time to file Form 1040X if you are physically or mentally unable to manage your financial affairs. See Pub. 556 for details.
Requesting a Copy of Your Tax Return
If you need a copy of your tax return, use Form 4506. There is a $39 fee for each return requested. If your main home, principal
place of business,
or tax records are located in a Presidentially declared disaster area, this fee will be waived. If you want a free transcript
of your tax return or
account, use Form 4506-T or call us at 1-800-829-1040.
You do not have to figure the amount of any interest or penalties you may owe. Because figuring these amounts can be complicated,
we will do it for
you if you want. We will send you a bill for any amount due.
If you include interest or penalties (other than the estimated tax penalty) with your payment, identify and enter the amount
in the bottom margin
of Form 1040NR, page 2. Do not include interest or penalties (other than the estimated tax penalty) in the amount you owe
on line 74.
Interest.
We will charge you interest on taxes not paid by their due date, even if an extension of time to file is granted.
We also will charge you interest
on penalties imposed for failure to file, negligence, fraud, substantial valuation misstatements, substantial understatements
of tax, and reportable
transaction understatements. Interest is charged on the penalty from the due date of the return (including extensions).
Penalty for late filing.
If you do not file your return by the due date (including extensions), the penalty is usually 5% of the amount due
for each month or part of a
month your return is late, unless you have a reasonable explanation. If you do, attach it to your return. The penalty can
be as much as 25% of the tax
due. The penalty is 15% per month, up to a maximum of 75%, if the failure to file is fraudulent. If your return is more than
60 days late, the minimum
penalty will be $100 or the amount of any tax you owe, whichever is smaller.
Penalty for late payment of tax.
If you pay your taxes late, the penalty is usually ½ of 1% of the unpaid amount for each month or part of a month
the tax is not
paid. The penalty can be as much as 25% of the unpaid amount. It applies to any unpaid tax on the return. This penalty is
in addition to interest
charges on late payments.
Penalty for frivolous return.
In addition to any other penalties, the law imposes a penalty of $500 for filing a frivolous return. A frivolous return
is one that does not
contain information needed to figure the correct tax or shows a substantially incorrect tax because you take a frivolous position
or desire to delay
or interfere with the tax laws. This includes altering or striking out the preprinted language above the space where you sign.
Other penalties.
Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements,
and fraud. Criminal
penalties may be imposed for willful failure to file, tax evasion, or making a false statement. See Pub. 519 for details on
some of these penalties.
IRS assistance is available to help you prepare your return. But you should know that you are responsible for the accuracy
of your return. If we do
make an error, you are still responsible for the payment of the correct tax.
In the United States, you may call 1-800-829-1040. For TTY/TDD help, call 1-800-829-4059. If overseas, you may call 215-516-2000
(English-speaking
only). This number is not toll free. The hours of operation are from 6:00 a.m. to 11:00 p.m. Eastern time. These hours are
subject to change.
If you wish to write instead of call, please address your letter to: Internal Revenue Service, International Section, P.O.
Box 920, Bensalem, PA
19020-8518. Make sure you include your identifying number (defined on page 8) when you write.
Assistance in answering tax questions and filling out tax returns is also available in person from IRS offices in London,
Paris, and Frankfurt. The
offices generally are located in the U.S. embassies or consulates.
The IRS conducts an overseas taxpayer assistance program during the filing season (January to mid-June). To find out if IRS
personnel will be in
your area, contact the consular office at the nearest U.S. embassy.
Solving problems.
You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee
can explain IRS letters,
request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an
appointment. To find the
number, go to
www.irs.gov/localcontacts or look in a U.S. phone book under
“ United States Government, Internal Revenue Service.”
How can you get IRS tax forms and publications?
-
You can download them from the IRS website at
www.irs.gov.
-
In the United States, you can call 1-800-TAX-FORM (1-800-829-3676).
-
You can send your order to the National Distribution Center, P.O. Box 8903, Bloomington, IL 61702-8903, U.S.A.
-
You can pick them up in person from our U.S. embassies and consulates abroad (but only during the tax return filing period).
Help With Unresolved Tax Issues
The Taxpayer Advocate Service is an independent organization within the IRS whose employees assist taxpayers who are experiencing
economic harm,
who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an
IRS system or procedure is
not working as it should.
You can contact the Taxpayer Advocate Service by calling their toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059
to see if you
are eligible for assistance. If overseas, call 01-787-622-8940 (English-speaking only) or 01-787-622-8930 (Spanish-speaking
only). These numbers are
not toll free. You also can call or write to your local taxpayer advocate, whose phone number and address are listed in your
local telephone directory
and in Pub. 1546, The Taxpayer Advocate Service of the IRS - How to Get Help With Unresolved Tax Problems. You can file Form
911, Application for
Taxpayer Assistance Order, or ask an IRS employee to complete it on your behalf. For more information, go to
www.irs.gov/advocate.
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