Nonresident aliens can claim some of the same itemized deductions that resident aliens can claim. However, nonresident aliens can claim itemized deductions only if they have income effectively connected with their U.S. trade or business.
Resident and nonresident aliens may not be able to claim all of their itemized deductions. If your adjusted gross income is more than $159,950 ($79,975 if married filing separately), use the worksheet in your income tax return instructions to figure the amount you can deduct. taxmap/pubs/p519-023.htm#en_us_publink100039203
You can claim the same itemized deductions as U.S. citizens, using Schedule A of Form 1040. These deductions include certain medical and dental expenses, state and local income taxes, real estate taxes, interest you paid on a home mortgage, charitable contributions, casualty and theft losses, and miscellaneous deductions.
If you do not itemize your deductions, you can claim the standard deduction for your particular filing status. For further information, see Form 1040 and instructions. taxmap/pubs/p519-023.htm#en_us_publink100039204
You can deduct certain itemized deductions if you receive income effectively connected with your U.S. trade or business. These deductions include state and local income taxes, charitable contributions to U.S. organizations, casualty and theft losses, and miscellaneous deductions. Use Schedule A of Form 1040NR to claim itemized deductions.
If you are filing Form 1040NR-EZ, you can only claim a deduction for state or local income taxes. If you are claiming any other itemized deduction, you must file Form 1040NR. taxmap/pubs/p519-023.htm#en_us_publink100039205
Nonresident aliens cannot claim the standard deduction. However, see Students and business apprentices from India, next. taxmap/pubs/p519-023.htm#en_us_publink100039206
A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2) of the United States–India Income Tax Treaty. You can claim the standard deduction provided you do not claim itemized deductions.
Use Worksheet 5-1 to figure your standard deduction. If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. taxmap/pubs/p519-023.htm#en_us_publink1000175769
Worksheet 5-1. 2008 Standard Deduction Worksheet for Students and Business Apprentices From India
|Caution. If you are married filing a separate return and your spouse itemizes deductions, do not complete this worksheet. You cannot take the standard deduction even if you were born before January 2, 1944, are blind, pay real estate taxes, or have a net disaster loss. |
|1.||Enter the amount shown below for your filing status.|| || || || || || |
| || |
- Single or married filing separately—$5,450
- Qualifying widow(er)—$10,900
| || ||1.|| || || |
|2.||Can you be claimed as a dependent on someone else's U.S. income tax return?|
No. Skip line 3; enter the amount from line 1 on line 4.
Yes. Go to line 3.
| || || || |
|3.||Is your earned income* more than $600? || || || || || || |
| || Yes. Add $300 to your earned income. Enter the total ||3.|| || || |
| || No. Enter $900 || || || || || || |
|4.||Enter the smaller of line 1 or line 3 ||4.|| |
|5.||If born before January 2, 1944, OR blind, enter $1,050 ($1,350 if single). If born before January 2, 1944, AND blind, enter $2,100 ($2,700 if single). Otherwise, enter -0- ||5.|| |
|6.||Enter any net disaster loss from Form 4684, line 18a. **||6.|| |
|7.||Enter the state and local real estate taxes you paid. Do not include foreign real estate taxes. See Instructions for line 7 of Worksheet 5-1.||7.|| || || |
|8.||Maximum real estate tax deduction||8.||500.00|| || |
|9.||Enter the smaller of line 7 or line 8. || 9.|| |
|10.||Add lines 4, 5, 6, and 9. Enter the total here and on Form 1040NR, line 37 (or Form 1040NR-EZ, line 11**). Print "Standard Deduction Allowed Under U.S.–India Income Tax Treaty" in the space to the left of these lines. This is your standard deduction for 2008.||10.|| |
|*Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income. Generally, your earned income is the total of the amount(s) you reported on Form 1040NR, lines 8,12,13, and 19 (or Form 1040NR-EZ, lines 3 and 5, minus any amount on line 8).|
**If the amount on line 6 of this worksheet is more than zero, you cannot file Form 1040NR-EZ; you must file Form 1040NR.
Include taxes (state and local) you paid on real estate you own that was not used for business, but only if the taxes are based on the assessed value of the property. The assessment must be made uniformly on property throughout the community, and the proceeds must be used for general community or governmental purposes. Publication 530 explains the deductions homeowners can take.
Do not include the following amounts on line 7.
- Foreign real estate taxes.
- Taxes deductible in arriving at adjusted gross income (such as taxes on business real estate).
- Itemized charges for services to specific property or persons (for example, a $20 monthly charge per house for trash collection, a $5 charge for every 1,000 gallons of water consumed, or a flat charge for mowing a lawn that had grown higher than permitted under a local ordinance).
- Charges for improvements that tend to increase the value of your property (for example, an assessment to build a new sidewalk). The cost of a property improvement is added to the basis of the property. However, you can include a charge if it is used only to maintain an existing public facility in service (for example, a charge to repair an existing sidewalk, and any interest included in that charge).
If your mortgage payments include your real estate taxes, you can include only the amount the mortgage company actually paid to the taxing authority in 2008.
If you sold your home in 2008, any real estate tax charged to the buyer should be shown on your settlement statement and in box 5 of any Form 1099-S you received. This amount is considered a refund of real estate taxes. Any real estate taxes you paid at closing should be shown on your settlement statement.
If you received a refund or rebate in 2008 of real estate taxes you paid in 2008, reduce the amount you include by the amount of the refund or rebate.taxmap/pubs/p519-023.htm#en_us_publink100039207
If during the tax year, you receive income that is connected with a trade or business in the United States, you can deduct state and local income taxes you paid on that income. taxmap/pubs/p519-023.htm#en_us_publink100039208
You can deduct your charitable contributions or gifts to qualified organizations subject to certain limits. Qualified organizations include organizations that are religious, charitable, educational, scientific, or literary in nature, or that work to prevent cruelty to children or animals. Certain organizations that promote national or international amateur sports competition are also qualified organizations. taxmap/pubs/p519-023.htm#en_us_publink100039209
Contributions made directly to a foreign organization are not deductible. However, you can deduct contributions to a U.S. organization that transfers funds to a charitable foreign organization if the U.S. organization controls the use of the funds or if the foreign organization is only an administrative arm of the U.S. organization.
For more information about organizations that qualify to receive charitable contributions, see Publication 526, Charitable Contributions.taxmap/pubs/p519-023.htm#en_us_publink100039210
If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive.
If you pay more than the fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. taxmap/pubs/p519-023.htm#en_us_publink100039211
You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written record from the charity. The written record must include the name of the charity, date of the contribution, and the amount of the contribution.
You may deduct a cash contribution of $250 or more only if you have a written statement from the charitable organization showing:
- The amount of any money contributed,
- Whether the organization gave you any goods or services in return for your contribution, and
- A description and estimate of the value of any goods or services described in (2).
If you received only intangible religious benefits, the organization must state this, but it does not have to describe or value the benefit.
For contributions not made in cash, the records you must keep depend on the amount of your deduction. See Publication 526 for details. For example, if you make a noncash contribution and the amount of your deduction is more than $500, you must complete and attach to your tax return Form 8283, Noncash Charitable Contributions. If you deduct more than $500 for a contribution of a motor vehicle, boat, or airplane, you must also attach a statement from the charitable organization to your return. If your total deduction is over $5,000, you also may have to get appraisals of the values of the property. If the donated property is valued at more than $5,000, you must obtain a qualified appraisal. You generally must attach to your tax return an appraisal of any property if your deduction for the property is more than $500,000. See Form 8283 and its instructions for details. taxmap/pubs/p519-023.htm#en_us_publink100039213
If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. However, if you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Your basis in the property is generally what you paid for it. If you need more information about basis, get Publication 551, Basis of Assets.
Different rules apply to figuring your deduction, depending on whether the property is:
- Ordinary income property, or
- Capital gain property.
For information about these rules, see Publication 526.
The amount you can deduct in a tax year is limited in the same way it is for a citizen or resident of the United States. For a discussion of limits on charitable contributions and other information, get Publication 526. taxmap/pubs/p519-023.htm#en_us_publink100039215
You can deduct your loss from fire, storm, shipwreck, or other casualty, or theft of property even though your property is not connected with a U.S. trade or business. The property can be personal use property or income-producing property not connected with a U.S. trade or business. The property must be located in the United States at the time of the casualty or theft. You can deduct theft losses only in the year in which you discover the loss.
The amount of the loss is the fair market value of the property immediately before the casualty or theft less its fair market value immediately after the casualty or theft (but not more than its cost or adjusted basis) less any insurance or other reimbursement. The fair market value of property immediately after a theft is considered zero, because you no longer have the property.
If your property is covered by insurance, you should file a timely insurance claim for reimbursement. If you do not, you cannot deduct this loss as a casualty or theft loss.
Figure your deductible casualty and theft losses on Form 4684, Casualties and Thefts.taxmap/pubs/p519-023.htm#en_us_publink100039216
You cannot deduct the first $100 of each casualty or theft loss to property held for personal use. You can deduct only the total of these losses for the year (reduced by the $100 limit) that is more than 10% of your adjusted gross income (line 36, Form 1040NR) for the year. These limits do not apply to certain disaster losses as discussed in the Instructions for Form 4684.taxmap/pubs/p519-023.htm#en_us_publink100039217
These losses are not subject to the limitations that apply to personal use property. Use Section B of Form 4684 to figure your deduction for these losses.taxmap/pubs/p519-023.htm#en_us_publink100039218
You can deduct job expenses, such as allowable unreimbursed travel expenses (discussed next), and other miscellaneous deductions. Generally, the allowable deductions must be related to effectively connected income. Deductible expenses include:
- Union dues,
- Safety equipment and small tools needed for your job,
- Dues to professional organizations,
- Subscriptions to professional journals,
- Tax return preparation fees, and
- Casualty and theft losses of property used in performing services as an employee (employee property).
Most miscellaneous itemized deductions are deductible only if they are more than 2% of your adjusted gross income (line 36, Form 1040NR). For more information on miscellaneous deductions, see the instructions for Form 1040NR. taxmap/pubs/p519-023.htm#en_us_publink100039219
You may be able to deduct your ordinary and necessary travel expenses while you are temporarily performing personal services in the United States. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for one year or less. You must be able to show you were present in the United States on an activity that required your temporary absence from your regular place of work.
For example, if you have established a "tax home" through regular employment in a foreign country, and intend to return to similar employment in the same country at the end of your temporary stay in the United States, you can deduct reasonable travel expenses you paid. You cannot deduct travel expenses for other members of your family or party. taxmap/pubs/p519-023.htm#en_us_publink100039220
If you qualify, you can deduct your expenses for:
- Transportation—airfare, local transportation, including train, bus, etc.,
- Lodging—rent paid, utilities (do not include telephone), hotel or motel room expenses, and
- Meal expenses—actual expenses allowed if you keep records of the amounts, or, if you do not wish to keep detailed records, you are generally allowed a standard meal allowance amount depending on the date and area of your travel. You generally can deduct only 50% of unreimbursed meal expenses. The standard meal allowance rates for high-cost areas are in Publication 1542, Per Diem Rates (For Travel Within the Continental United States), which is available only on the Internet at www.irs.gov/pub/irs-pdf/p1542.pdf. The rates for other areas are in Publication 463.
Use Form 2106 or 2106-EZ to figure your allowable expenses that you claim on line 9 of Schedule A (Form 1040NR).taxmap/pubs/p519-023.htm#en_us_publink100039221
You cannot deduct an expense, or part of an expense, that is allocable to U.S. tax-exempt income, including income exempt by tax treaty. taxmap/pubs/p519-023.htm#en_us_publink100039222
Irina Oak, a citizen of Poland, resided in the United States for part of the year to acquire business experience from a U.S. company. During her stay in the United States, she received a salary of $8,000 from her Polish employer. She received no other U.S. source income. She spent $3,000 on travel expenses, of which $1,000 were for meals. None of these expenses were reimbursed. Under the tax treaty with Poland, $5,000 of her salary is exempt from U.S. income tax. In filling out Form 2106-EZ, she must reduce her deductible meal expenses by half ($500). She must reduce the remaining $2,500 of travel expenses by 62.5% ($1,563) because 62.5% ($5,000 ÷ $8,000) of her salary is exempt from tax. She enters the remaining total of $937 on line 9 of Schedule A (Form 1040NR). She completes the remaining lines according to the instructions for Schedule A. taxmap/pubs/p519-023.htm#en_us_publink100039223
For more information about deductible expenses, reimbursements, and recordkeeping, get Publication 463.