US Internal Revenue Service: i1040nr--1996

8/14/2019 US Internal Revenue Service: i1040nr--1996

1/31

96 Department of the TreasuryInternal Revenue ServiceInstructions for Form 1040NRU.S. Nonresident Alien Income Tax ReturnSection references are to the Internal Revenue Code, unless otherwise noted.

Paperwork Reduction Act Notice. We

ask for the information on this form tocarry out the Internal Revenue laws of theUnited States. You are required to giveus the information. We need it to ensurethat you are complying with these lawsand to allow us to figure and collect theright amount of tax.

You are not required to provide theinformation requested on a form that issubject to the Paperwork Reduction Actunless the form displays a valid OMBcontrol number. Books or records relatingto a form or its instructions must beretained as long as their contents maybecome material in the administration ofany Internal Revenue law. Generally, tax

returns and return information areconfidential, as required by section 6103.The time needed to complete and file

this form will vary depending on individualcircumstances. The estimated averagetime is: Recordkeeping, 6 hr., 40 min.;Learning about the law or the form, 1hr., 41 min.; Preparing the form, 3 hr.,53 min.; and Copying, assembling, andsending the form to the IRS, 1 hr., 40min.

If you have comments concerning theaccuracy of these time estimates orsuggestions for making this form simpler,we would be happy to hear from you. Youcan write to the Tax Forms Committee,

Western Area Distribution Center, RanchoCordova, CA 95743-0001. You can alsocall the IRS with your suggestions at1-800-829-9043 and leave a recordedmessage 24 hours a day, 7 days a week.DO NOT send your return to this address.Instead, see Where To File on page 2.

General Instructions

Changes To NoteIRS Individual Taxpayer IdentificationNumbers (ITINs). The IRS will issueyou an ITIN if you do not have a socialsecurity number (SSN) and are not

eligible to get one. To apply for an ITIN,file Form W-7 with the IRS. It usuallytakes about 30 days to get an ITIN. Enteryour ITIN wherever your SSN isrequested on your tax return. If you arerequired to include another person's SSNon your return and that person does nothave and cannot get an SSN, enter thatperson's ITIN. An incorrect or missingidentifying number may increase yourtax or reduce your refund.

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.Social Security Numbers (SSNs). Youmust include on your return the SSN (orITIN) of each person, other than a childborn in December 1996, you claim as aq Dependent on Form 1040NR.q Qualifying person for the credit onForm 2441, Child and Dependent CareExpenses.

Please be sure to include the correctSSN (or ITIN) for that person. If you donot, at the time we process your return,we may disallow that person as adependent and reduce or disallow anyother tax benefits (such as the credit forchild and dependent care expensesreferred to above) based on that person.

Also, please be sure to include thecorrect SSN (or ITIN) for you and, ifapplicable, your spouse. If you do not, atthe time we process your return, we maydisallow the exemption(s).Standard Mileage Rates. The rate forbusiness use has increased to 31 centsa mile. For moving expenses, the rate hasincreased to 10 cents a mile.Direct Deposit of Refund. This yearyou do not have to file an extra form tohave your refund sent directly to yourbank account with a U.S. financialinstitution in the United States. See theinstructions for lines 60b60d on page 13.Private Delivery Services. In additionto regular postal service, private deliveryservices (to be designated by the IRS)can be used to meet the timely mailingas timely filing and paying rule (forexample, to send your tax return to theIRS). When these instructions wereprinted, no private delivery services hadbeen designated. When they are, the IRSwill make every effort to publicize theinformation.Tax Law Changes. For more details,get Pub. 553, Highlights of 1996 TaxChanges.

Items To NoteForm 1040NR-EZ. You may be able touse Form 1040NR-EZ, U.S. Income TaxReturn for Certain Nonresident AliensWith No Dependents, if your only incomefrom U.S. sources is wages, salaries, tips,taxable refunds of state and local incometaxes, and scholarship or fellowshipgrants. Also, if married, you cannot claiman exemption for your spouse. For moredetails, get Form 1040NR-EZ and itsinstructions.

Other Reporting Requirements. If you

meet the closer connection to a foreigncountry exception to the substantialpresence test or exclude days ofpresence in the United States forpurposes of that test, you must file astatement containing certain information.This rule does not apply to foreigngovernment-related individuals whoexclude days of presence in the UnitedStates. For details, get Form 8840, CloserConnection Exception Statement forAliens, or Form 8843, Statement forExempt Individuals and Individuals Witha Medical Condition. Certain dual-residenttaxpayers who claim tax treaty benefitsmust file Form 8833, Treaty-Based

Return Position Disclosure Under Section6114 or 7701(b), or a similar statement.A dual-resident taxpayer is one who is aresident of both the United States andanother country under each country's taxlaws.

Additional InformationIf you need more information, our freepublications may help you. Pub. 519, U.S.Tax Guide for Aliens, will be the mostimportant, but the following publicationsmay also help.Pub. 525, Taxable and NontaxableIncomePub. 529, Miscellaneous DeductionsPub. 552, Recordkeeping for IndividualsPub. 597, Information on the UnitedStates-Canada Income Tax TreatyPub. 901, U.S. Tax TreatiesPub. 910, Guide to Free Tax Services(includes a list of all publications)

These free publications and the formsand schedules you will need are availableon request from the Internal RevenueService. If you have a foreign address,send your order to either: Eastern AreaDistribution Center, P.O. Box 25866,Richmond, VA 23286-8107, U.S.A.; orWestern Area Distribution Center, RanchoCordova, CA 95743-0001, U.S.A.,

whichever is closer.

Resident Alien orNonresident AlienIf you are not a citizen of the UnitedStates, specific rules apply to determineif you are a resident alien or a nonresidentalien for tax purposes. Generally, you areconsidered a resident alien if you meeteither the green card test or thesubstantial presence test for 1996. Ifyou do not meet either of these tests for1996 but you meet the substantial

Cat. No. 11368V


2/31

presence test for 1997, you may be ableto choose to be treated as a resident alienfor part of 1996. But you must have beenphysically present in the United States forat least 31 days in a row during 1996 todo so. This choice does not apply if youmet either the green card test or thesubstantial presence test for 1995. Formore details, see Pub. 519.

You are considered a nonresident alienfor the year if you are not a U.S. residentunder either of these tests. You are also

considered a nonresident alien if youotherwise meet the substantial presencetest but you come under any of the threeexceptions described below.

For more details on resident andnonresident status, the tests for residenceand the exceptions to them, see Pub. 519.Green Card Test. You are a residentfor tax purposes if you were a lawfulpermanent resident (immigrant) of theUnited States at any time during 1996.Substantial Presence Test. You areconsidered a U.S. resident if you meet thesubstantial presence test for 1996. Youmeet this test if you were physicallypresent in the United States for at least:1. 31 days during 1996, and2. 183 days during the period 1996,1995, and 1994, counting all the days ofphysical presence in 1996 but only 1 / 3 thenumber of days of presence in 1995 andonly 1 / 6 the number of days in 1994.

Generally, you are treated as presentin the United States on any day that youare physically present in the country atany time during the day.Exceptions. The following areexceptions to the substantial presencetest.1. Exempt individual. You do notcount days for which you are an exempt

individual. In general, an exemptindividual is an individual who is a:a. foreign government-relatedindividual,b. teacher or trainee,c. student, ord. professional athlete who istemporarily in the United States tocompete in a charitable sports event.Note: Alien individuals with Q visas are treated as either students or teachers and trainees and, as such, are exempt individuals for purposes of the substantial presence test if they otherwise qualify.However, Q visa holders may only exclude days of presence after September 30, 1994. Q visas are issued to aliens participating in certain international cultural exchange programs.2. Medical condition. You do notcount any day that you intended to leavethe United States but were unable toleave because of a medical condition ormedical problem that arose while youwere present in the United States.Note: This exception does not apply to pre-existing medical conditions or problems. For more details, see Pub. 519.

3. Closer connection to foreigncountry. Even though you wouldotherwise meet the substantial presencetest, you are not treated as having metthat test for 1996 if you:a. were present in the United States forfewer than 183 days during 1996,b. establish that during 1996 you hada tax home in a foreign country, andc. establish that during 1996 you hada closer connection to one foreign countryin which you had a tax home than to theUnited States unless you had a closerconnection to two foreign countries.

Who Must FileFile Form 1040NR if any of the followingfour conditions applies to you.1. You were a nonresident alienengaged, or considered to be engaged, ina trade or business in the United Statesduring 1996. You must file even ifa. none of your income came from atrade or business conducted in the UnitedStates,b. you have no income from U.S.sources, orc. your income is exempt from U.S. tax.

In any of the above three cases, do notcomplete the schedules for Form1040NR. Instead, attach a list of the kindsof exclusions you claim and the amountof each.Note: If you were a nonresident alien student, teacher, or trainee who was temporarily present in the United States under an F, J, M, or Q visa, you are considered engaged in a trade or business in the United States and you must file Form 1040NR (or Form 1040NR-EZ).2. You were a nonresident alien not

engaged in a trade or business in theUnited States during 1996 and not all U.S.tax that you owe was withheld from yourincome.3. You represent a deceased personwho would have had to file Form 1040NR.4. You represent an estate or trust thathas to file Form 1040NR.Exception for Children Under Age14. If your child was under age 14 onJanuary 1, 1997, had income only frominterest and dividends that are effectivelyconnected with a U.S. trade or business,and that income totaled less than $6,500,you may be able to elect to report yourchild's income on your return. But you

must use Form 8814, Parents' ElectionTo Report Child's Interest and Dividends,to do so. If you make this election, yourchild does not have to file a return. Formore details, see Form 8814.Filing a Deceased Person's Return.The personal representative must file thereturn for a deceased person who wasrequired to file a return for 1996. Apersonal representative can be anexecutor, administrator, or anyone who isin charge of the deceased person'sproperty.

Filing for an Estate or Trust. If youare filing Form 1040NR for a nonresidentalien estate or trust, change the form toreflect the provisions of Subchapter J,Chapter 1, of the Internal Revenue Code.You may find it helpful to refer to Form1041, U.S. Income Tax Return for Estatesand Trusts, and its instructions.

When To FileIndividuals. If you were an employeeand received wages subject towithholding, file Form 1040NR by the 15thday of the 4th month after your tax yearends. A return for the 1996 calendar yearis due by April 15, 1997.

If you did not receive wages as anemployee subject to U.S. income taxwithholding, file Form 1040NR by the 15thday of the 6th month after your tax yearends. A return for the 1996 calendar yearis due by June 16, 1997.Estates and Trusts. If you file for anonresident alien estate or trust that hasan office in the United States, file thereturn by the 15th day of the 4th monthafter the tax year ends. If you file for anonresident alien estate or trust that doesnot have an office in the United States, filethe return by the 15th day of the 6thmonth after the tax year ends.Note: If the regular due date for filing falls on a Saturday, Sunday, or legal holiday,file by the next business day.Extension of Time To File. If youcannot file your return by the due date,you should file Form 4868, Application forAutomatic Extension of Time To File U.S.Individual Income Tax Return. You mustfile Form 4868 by the regular due date ofthe return.Note: Form 4868 does not extend the time to pay your income tax. The tax is

due by the regular due date of the return.Where To FileFile Form 1040NR with the InternalRevenue Service Center, Philadelphia,PA 19255, U.S.A.

Election To Be Taxed as aResident AlienYou can elect to be taxed as a U.S.resident for the whole year if all of thefollowing apply to you:q You were married.q Your spouse was a U.S. citizen orresident alien on the last day of the taxyear.q You file a joint return for the year of theelection using Form 1040, 1040A, or1040EZ.

To make this election, you must attachthe statement described in Pub. 519 toyour return. Do not use Form 1040NR.

Your worldwide income for the wholeyear must be included and will be taxedunder U.S. tax laws. You must agree tokeep the records, books, and otherinformation needed to figure the tax. If youmade the election in an earlier year, you

Page 2 Instructions for Form 1040NR


3/31

may file a joint return or separate returnfor 1996. If you file a separate return, useForm 1040 or Form 1040A. Yourworldwide income for the whole year mustbe included whether you file a joint orseparate return.Caution: Nonresident aliens who make this election may forfeit the right to claim benefits otherwise available under a U.S.tax treaty. For more details, get Pub. 901,U.S. Tax Treaties, or refer to the specific treaty.

Dual-Status TaxpayersNote: If you elect to be taxed as a resident alien (discussed earlier), the special instructions and restrictions discussed here do not apply.

Dual-Status Tax YearA dual-status year is one in which youchange status between nonresident andresident alien. Different U.S. income taxrules apply to each status.

Most dual-status years are the yearsof arrival or departure. Before you arrivein the United States, you are a

nonresident alien. After you arrive, youmay or may not be a resident, dependingon the circumstances.

If you become a U.S. resident, you staya resident until you leave the UnitedStates. You may become a nonresidentalien when you leave, if, after leaving (orafter your last day of lawful permanentresidency if you met the green card test)and for the remainder of the calendar yearof your departure, you have a closerconnection to a foreign country than to theUnited States, and, during the nextcalendar year, you are not a U.S.resident under either the green card testor the substantial presence test. See Pub.519.

What and Where To File for aDual-Status YearIf you were a U.S. resident on the lastday of the tax year, file Form 1040, U.S.Individual Income Tax Return. WriteDual-Status Return across the top andattach a statement showing your incomefor the part of the year you were anonresident. You may use Form 1040NRas the statement; write Dual-StatusStatement across the top. File your returnand statement with the Internal RevenueService Center, Philadelphia, PA 19255,U.S.A.

If you were a nonresident on the lastday of the tax year, file Form 1040NR.Write Dual-Status Return across the topand attach a statement showing yourincome for the part of the year you werea U.S. resident. You may use Form 1040as the statement; write Dual-StatusStatement across the top. File your returnand statement with the Internal RevenueService Center, Philadelphia, PA 19255,U.S.A.Statements. Any statement you filewith your return must show your name,address, and identifying number (defined

on page 5). You do not have to sign thestatement. Your signature on the return issufficient because it also applies tosupporting statements and schedules.

Income Subject to Tax forDual-Status YearAs a dual-status taxpayer not filing a jointreturn, you are taxed on income from allsources for the part of the year you werea resident alien. Generally, you are taxedon income only from U.S. sources for thepart of the year you were a nonresidentalien. However, all income effectivelyconnected with the conduct of a trade orbusiness in the United States is taxable.

Income you received as a dual-statustaxpayer from sources outside the UnitedStates while a resident alien is taxable,even if you became a nonresident alienafter receiving it and before the close ofthe tax year. Conversely, income youreceived from sources outside the UnitedStates while a nonresident alien is nottaxable in most cases, even if youbecame a resident alien after receiving itand before the close of the tax year.Income from U.S. sources is taxable

whether you received it while anonresident alien or a resident alien.

Restrictions for Dual-StatusTaxpayersStandard Deduction. You may nottake the standard deduction.Head of Household. You may not usethe Head of Household Tax Table columnor Tax Rate Schedule.Joint Return. You may not file a jointreturn. However, see Election To BeTaxed as a Resident Alien on page 2.Tax Rates. If you were married and anonresident of the United States for all orpart of the tax year and you do not makethe election to be taxed as a resident alienas discussed earlier, you must use theTax Table column or Tax Rate Schedulefor Married Filing Separately to figure yourtax on income effectively connected witha U.S. trade or business. If married, youmay not use the Single Tax Table columnor Tax Rate Schedule.Deduction for Exemptions. As adual-status taxpayer, you usually will beentitled to your own personal exemption.Subject to the general rules forqualification, you are allowed exemptionsfor your spouse and dependents infiguring taxable income for the part of theyear you were a resident alien. Theamount you may claim for theseexemptions is limited to your taxableincome (determined without regard toexemptions) for the part of the year youwere a resident alien. You may not useexemptions (other than your own) toreduce taxable income to below zero forthat period.

Special rules apply for exemptions forthe part of the tax year a dual-statustaxpayer is a nonresident alien if thetaxpayer is a resident of Canada, Mexico,Japan, or the Republic of Korea; a U.S.

national; or a student or businessapprentice from India. See Pub. 519.

How To Figure Tax for Dual-StatusYearWhen you figure your U.S. tax for adual-status year, you are subject todifferent rules for the part of the year youwere a resident and the part of the yearyou were a nonresident.

All income for the period of residenceand all income that is effectivelyconnected with a trade or business in theUnited States for the period ofnonresidence, after allowable deductions,is added and taxed at the same rates thatapply to U.S. citizens and residents.Income that is not effectively connectedwith a trade or business in the UnitedStates for the period of nonresidence issubject to the flat 30% rate or lower treatyrate. No deductions are allowed againstthis income.

If you were a resident alien on the lastday of the tax year, add to the tax fromthe Tax Table, Tax Rate Schedules,Capital Gain Tax Worksheet, or Form8615 the tax on the noneffectivelyconnected income. Enter the total tax onForm 1040, line 38. Next to line 38 showthe two amounts. If you are filing Form1040NR, enter the tax from the Tax Table,Tax Rate Schedules, Capital Gain TaxWorksheet, or Form 8615 on line 37 andthe tax on the noneffectively connectedincome on line 44.Credits. You are allowed a creditagainst your U.S. income tax liability forcertain taxes you paid, are considered tohave paid, or that were withheld from yourincome. These include:1. Tax withheld from wages earned inthe United States and taxes withheld atthe source from various items of incomefrom U.S. sources other than wages. Thisincludes U.S. tax withheld on dispositionsof U.S. real property interests.

When filing Form 1040, show the totaltax withheld on line 52. Enter amountsfrom the attached statement (Form1040NR, lines 50, 56a, 56b, 57a, and57b) to the left of line 52 and identify andinclude in the amount on line 52.

When filing Form 1040NR, show thetotal tax withheld on lines 50, 56a, 56b,57a, and 57b. Enter the amount from theattached statement (Form 1040, line 52)to the left of line 50 and identify andinclude in the amount on line 50.2. Tax paid with Form 1040-ES,Estimated Tax for Individuals, or Form1040-ES (NR), U.S. Estimated Tax forNonresident Alien Individuals.3. Tax paid with Form 1040-C, U.S.Departing Alien Income Tax Return.When filing Form 1040, include the taxpaid with Form 1040-C with the totalpayments on line 58. Identify the paymentin the area to the left of the entry.

As a dual-status taxpayer, yougenerally may claim tax credits using thesame rules that apply to resident aliens.

Instructions for Form 1040NR Page 3


4/31

How To Report Income onForm 1040NR

Community IncomeIf either you or your spouse, or both youand your spouse, were nonresident aliensat any time during the tax year, and youhad community income during the year,treat the community income according tothe applicable community property lawsexcept as follows:q Earned income of a spouse, other thantrade or business or partnershipdistributive share income. The spousewhose services produced the incomemust report it on his or her separatereturn.q Trade or business income, other thanpartnership income. Treat this income asreceived by the husband unless the wifeexercises substantially all of themanagement over the trade or business.q Partnership income (or loss) receivedfrom a trade or business carried on by thepartnership. Treat this income (or loss) asreceived by the spouse who is the partnerand report it on that spouse's return.q Income derived from the separateproperty of one spouse that is not earnedincome, trade or business income, orpartnership distributive share income. Thespouse with the separate property mustreport this income on his or her separatereturn.

Get Pub. 555, Community Property, formore details.

Kinds of IncomeYou must divide your income for the taxyear into the following three categories:1. Income effectively connected with aU.S. trade or business. This income istaxed at the same rates that apply to U.S.citizens. Report it on page 1 of Form1040NR. Pub. 519 describes this incomein greater detail.2. U.S. income not effectivelyconnected with a U.S. trade or business.This income is taxed at 30% unless atreaty between your country and theUnited States has set a lower rate thatapplies to you. Report this income onpage 4 of Form 1040NR and figure the taxon it. Then, report the tax on line 44. Pub.519 describes this income more fully.Note: Use line 47 to report the 4% tax on U.S. source gross transportation income.

3. Income exempt from U.S. tax.Complete items L and M on page 5 ofForm 1040NR and line 22 if applicable.

Dispositions of U.S. Real PropertyInterestsGain or loss on the disposition of a U.S.real property interest by a nonresidentalien individual is treated as if the alienindividual were engaged in a trade orbusiness in the United States and as if thegain or loss were effectively connectedwith the conduct of that trade or business.Losses of individuals shall be taken into

account only to the extent they would betaken into account under section 165(c).See section 897 and its regulations.

Report gains and losses on thedisposition of U.S. real property interestson Schedule D (Form 1040) and Form1040NR, line 14. Also, net gains may besubject to the alternative minimum tax.See the instructions for line 43.

The nonrecognition rules (notrecognizing gain or loss) apply only whena U.S. real property interest is exchangedfor an interest the sale of which would besubject to U.S. tax.

Money and the fair market value ofproperty received in exchange for aninterest in a partnership, trust, or estate,will, to the extent attributable to a U.S.real property interest held by thepartnership, trust, or estate, beconsidered as received from the sale orexchange of the U.S. real propertyinterest.

Gains or losses from the disposition ofa U.S. real property interest by apartnership, trust, or estate generally arepassed through and must be reported onthe income tax return of each partner orbeneficiary.U.S. Real Property Interests. A U.S.real property interest is any interest (otherthan an interest solely as a creditor) inreal property located in the United Statesor the Virgin Islands, or any interest in adomestic corporation that is a U.S. realproperty holding corporation. Generally,real property includes:q Land and unsevered naturalproducts of the land, such as growingcrops and timber, and mines, wells, andother natural deposits.q Improvements on land, includingbuildings, other inherently permanentstructures, and structural components ofthese.q Personal property associated withthe use of real property, such asfarming, forestry, mining, or constructionequipment, or property used in lodgingfacilities or rented office space. See Pub.519 for exceptions.

A corporation is a U.S. real propertyholding corporation if the fair market valueof its U.S. real property interests is 50%or more of the fair market value of its U.S.real property interests, interests in foreignreal property, plus any other of its assetsthat are used or held for use in a tradeor business. For special rules, seesections 897(c)(4) and (5).

An interest in a foreign corporation is aU.S. real property interest only if thecorporation elected to be treated as adomestic corporation.

An interest in a domestic corporation isnot a U.S. real property interest if at thedate of disposition of the interest in thecorporation: (a) the corporation did nothold any U.S. real property interests, and(b) all the U.S. real property interests heldby the corporation during the shorter ofthe periods described in section897(c)(1)(A)(ii):

1. Were disposed of in a transaction inwhich all gain realized was recognized,or2. Ceased to be U.S. real propertyinterests because of the application ofsection 897(c)(1)(B) to one or more othercorporations.Stock Regularly Traded. A U.S. realproperty interest does not include anyclass of stock of a domestic corporationthat is regularly traded on an establishedsecurities market, unless you held morethan 5% of that class of stock at any timeduring the shorter of the periodsdescribed in section 897(c)(1)(A)(ii).

Section 897(h) provides special rulesfor a real estate investment trust.Virgin Islands Real Estate. Gain orloss on dispositions of real propertyinterests located in the U.S. Virgin Islandsis reported on returns filed with the VirginIslands tax authorities. Tax on thesedispositions is paid to the Virgin Islandstax authorities.

Income You May Elect To Treat asEffectively Connected With a U.S.Trade or BusinessYou may elect to treat some items ofincome as effectively connected with aU.S. trade or business. The electionapplies to all income from real property,or an interest in real property, located inthe United States and held for theproduction of income. Income from realproperty includes:q Rental income from real property.q Profit from disposing of U.S. timber,coal, or iron ore while keeping a share init.q Rents and royalties from mines, oil orgas wells, or other natural resources.

The election does not apply todispositions of U.S. real property interestsdiscussed earlier.

To make the election, attach astatement to your return for the year of theelection. Include in your statement:1. That you are making the election.2. A complete list of all your realproperty, or any interest in real property,located in the United States (includinglocation). Give the legal identification ofU.S. timber, coal, or iron ore in which youhave an interest.3. The extent of your interest in the realproperty.4. A description of any substantial

improvements on such real property.5. Your income from the property.6. The dates you owned it.7. Whether the election is under section871(d) or treaty.8. Details of any previous elections andrevocations of the real property elections.

Foreign Income Taxed by theUnited StatesYou may be required to report someincome from foreign sources on your U.S.



5/31

return if it is effectively connected with aU.S. trade or business. For this foreignincome to be treated as effectivelyconnected with a U.S. trade or business,you must have a fixed place of businessin the United States. The income, gain,or loss must result directly from the usualbusiness activities of your U.S. office. Thekinds of foreign income that may be taxedat the graduated rates are:q Interest or dividends from the U.S.business.q Income from foreign sales made byyour U.S. office.q Rents or royalties you received for theuse of intangible property located outsidethe United States or the privilege of usingit. Such property includes patents,copyrights, trademarks, and franchises.

Special Rules For FormerU.S. Citizens And FormerLong-Term U.S. ResidentsRecent amendments to section 877 mayaffect your tax liability if you are a formercitizen or former long-term resident of theUnited States. You are a former long-termresident if you were a lawful permanentresident of the United States (i.e., you hada green card) for at least 8 out of the 15consecutive tax years ending with theyear your residency ended. In determiningif you are a former long-term resident, donot count any year that you were treatedas a resident of another country under atax treaty and did not waive treatybenefits.

If you were a former citizen or formerlong-term resident and you relinquishedyour citizenship or terminated yourresidency after February 5, 1995, you aresubject to the provisions of section 877on your U.S. source income if one of theprincipal purposes of your action was toavoid U.S. taxes.

You are considered to have taxavoidance as a principal purpose if (1)your average annual net income tax forthe last 5 tax years ending before the dateof your action to relinquish yourcitizenship or terminate your residencywas more than $100,000, or (2) your networth on the date of your action was$500,000 or more.

Although there are exceptions to theserules, you will qualify for an exception onlyif you have obtained a ruling from the IRSthat your renunciation of U.S. citizenshipor termination of U.S. residency did nothave as one of its principal purposes theavoidance of U.S. tax. For more detailsabout these exceptions, see sections877(c) and 877(e).

If the rules of section 877 apply to you,you are subject to tax on U.S. sourceincome and gains on either (1) a net basisat the graduated rates applicable toindividuals with allowable deductions, or(2) a gross basis at a rate of 30% underthe rules of section 871(a). See Chapter4 of Pub. 519 for more details on the taximposed under section 871(a).

If you have items of U.S. source incomethat are subject to tax under section871(a), you will be taxed at a rate of 30%on your gross income only if this taxexceeds a tax at the regular graduatedrates on your net income. If the 30% taxon your gross income exceeds thegraduated tax on your net income, reportthose items on the appropriate lines onpage 4 of Form 1040NR. If the graduatedtax on your net income exceeds the 30%tax on your gross income, report your

income on the appropriate lines on page1 of Form 1040NR and attach a statementdescribing the items and amounts ofincome that are subject to tax by reasonof section 877.

If you have other items of U.S. sourceincome that are not subject to tax undersection 871(a), you will be taxed on a netbasis at the regular graduated ratesapplicable to individuals. Report thisincome on the the appropriate lines onpage 1 of Form 1040NR.

For purposes of computing the tax dueunder section 877, the following items ofincome are treated as U.S. source:1. Gains on the sale or exchange of

personal property located in the UnitedStates.2. Gains on the sale or exchange ofstock issued by a domestic corporationor debt obligations of the United States,U.S. persons, a state or politicalsubdivision thereof, and the District ofColumbia.3. Income or gain derived from stock ina foreign corporation if you owned, eitherdirectly or indirectly (through the rules ofsection 958(a) and 958(b)) more than50% of the vote or value of the stock ofthe corporation on the date of yourrenunciation of citizenship or terminationof residency or at any time during the 2years preceding such date. Such incomeor gain is considered U.S. source only tothe extent of your share of the earningsand profits earned or accumulated priorto the date of renunciation of U.S.citizenship or termination of residency.

For information regarding reportingrequirements, see Pub. 519.

Line Instructions forForm 1040NR

Name, Identifying Number,and AddressName. If you are filing Form 1040NRfor an estate or trust, enter the name ofthe estate or trust, and your name, title,and address. Also, give the name andaddress of any U.S. grantors andbeneficiaries.Identifying Number. If you are anindividual, you are generally required toenter your social security number (SSN).Apply for your SSN using Form SS-5,which you can get at Social Security

Administration (SSA) offices. Fill in FormSS-5 and return it to the SSA.

If you do not have an SSN and are noteligible to get one, you must get an ITIN.To apply for an ITIN, file Form W-7 withthe IRS. It usually takes about 30 days toget an ITIN.

If you are filing Form 1040NR for anestate or trust, enter the employeridentification number of the estate or trust.

An incorrect or missing identifyingnumber may increase your tax or reduceyour refund.P.O. Box. Enter your box number onlyif your post office does not deliver mail toyour home.Foreign Address. Enter theinformation in the following order: city,province or state, and country. Do notabbreviate the country name. Include thepostal code where applicable.

Filing StatusThe amount of your tax depends on yourfiling status. Before you decide which boxto check, read the following explanations.

Were You Single or Married? If youwere married on December 31, consideryourself married for the whole year. If youwere single, divorced, or legally separatedunder a decree of divorce or separatemaintenance on December 31, consideryourself single for the whole year. If youmeet the tests described under MarriedPersons Who Live Apart below, youmay consider yourself single for the wholeyear.

If your spouse died in 1996, consideryourself married to that spouse for thewhole year, unless you remarried beforethe end of 1996.Married Persons Who Live Apart.Some married persons who have a childand who do not live with their spouse mayfile as single. If you meet all five of thefollowing tests and you are a marriedresident of Canada or Mexico, or a U.S.national, check the box on line 1. If youmeet the tests and you are a marriedresident of Japan or the Republic ofKorea, check the box on line 2.1. You file a separate return from yourspouse.2. You paid more than half the cost tokeep up your home in 1996.3. You lived apart from your spouseduring the last 6 months of 1996.4. Your home was the principal homeof your child, stepchild, adopted child, orfoster child for more than half of 1996.5. You claim this child as yourdependent or the child's other parentclaims him or her as a dependent underthe rules for Children of Divorced orSeparated Parents on page 6.Line 6Qualifying Widow(er) WithDependent Child. You may check thebox on line 6 and use joint return tax ratesfor 1996 if all seven of the followingapply.



6/31

1. You were a resident of Canada,Mexico, Japan, or the Republic of Korea,or a U.S. national.2. Your spouse died in 1994 or 1995and you did not remarry in 1996.3. You have a child, stepchild, adoptedchild, or foster child whom you can claimas a dependent.4. This child lived in your home for allof 1996. Temporary absences, such as forschool, vacation, or medical care, countas time lived in the home.5. You paid over half the cost ofkeeping up your home.6. You were a resident alien or U.S.citizen the year your spouse died. Thisrefers to your actual status, not theelection that some nonresident aliens canmake to be taxed as U.S. residents.7. You could have filed a joint returnwith your spouse the year he or she died,even if you did not actually do so.

ExemptionsExemptions for estates and trusts aredescribed in the instructions for line 35.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 7bSpouse. If you checked filingstatus box 3 or 4, you can take anexemption for your spouse only if yourspouse had no gross income for U.S. taxpurposes and cannot be claimed as adependent on another U.S. taxpayer'sreturn. (You can do this even if yourspouse died in 1996.) In addition, if youchecked filing status box 4, your spousemust have lived with you in the UnitedStates at some time during 1996. Finally,your spouse must have an SSN or anITIN. If your spouse is not eligible toobtain an SSN, he or she can file FormW-7 with the IRS to apply for an ITIN. Seepage 5 for additional information.Line 7cDependents. Only residentsof Canada, Mexico, Japan, the Republicof Korea, and U.S. nationals may claimexemptions for their dependents. If youwere a resident of Canada or Mexico, ora U.S. national (American Samoan), youcan claim exemptions for your childrenand other dependents on the same termsas U.S. citizens. Get Pub. 501,Exemptions, Standard Deduction, andFiling Information, for more details. If youwere a resident of Japan or the Republicof Korea, you may claim an exemption forany of your children who lived with you inthe United States at some time during1996.

You can take an exemption for each ofyour dependents who was alive duringsome part of 1996. This includes a babyborn in 1996 or a person who died in1996.

If you have more than fivedependents, attach a statement to yourreturn with the required information.

Line 7c, Column (2). You must entereach dependent's identifying number(SSN or ITIN) unless he or she was bornin December 1996 or was born and diedin 1996. If you do not enter the correctidentifying number, at the time we processyour return, we may disallow theexemption claimed for the dependent. Ifyour dependent was born in December1996 and does not have an identifyingnumber, enter 12/96 in column (2). Ifyour dependent was born and died in

1996 and did not have an identifyingnumber, enter Died in column (2).You should apply for an identifying

number number (SSN or ITIN) for yourdependent in time to receive it before yourreturn is due. If your dependent does nothave an identifying number by the dateyour return is due, see Extension ofTime To File on page 2.

Line 7c, Column (4). Enter the numberof months your dependent lived with youin 1996. Count temporary absences suchas for school or vacation as time lived inyour home. If your dependent was bornor died in 1996, enter 12 in this column.

Children Who Did Not Live With YouDue to Divorce or Separation. If you areclaiming a child who did not live with youunder the rules for Children of Divorcedor Separated Parents below, attachForm 8332 or similar statement to yourreturn. But see Exception below. If yourdivorce decree or separation agreementwent into effect after 1984 and it statesyou can claim the child as your dependentwithout regard to any condition, such aspayment of support, you may attach acopy of certain pages from the decree oragreement instead. Get Pub. 504,Divorced or Separated Individuals, fordetails.Note: You must attach the required

information even if you filed it in an earlier year.Exception. You do not have to attach

Form 8332 or similar statement if yourdivorce decree or written separationagreement went into effect before 1985and it states that you can claim this childas your dependent.

Other Dependent Children. Enter thetotal number of dependent children whodid not live with you for reasons otherthan divorce or separation on the linelabeled Dependents on 7c not enteredabove.

Children of Divorced or SeparatedParents. The parent who had custody ofa child for most of the year (the custodialparent) can generally claim the child asa dependent if both parents together paidover half of the child's support. Thisgeneral rule also applies to parents wholived apart during the last 6 months of theyear. But the parent who did not havecustody, or who had the child for theshorter time (the noncustodial parent),may claim the child as a dependent if bothparents together paid over half of thechild's support and either 1 or 2 belowapplies:

1. The custodial parent signs Form8332 or a similar statement agreeing notto claim the child's exemption for 1996,or2. A decree of divorce or separatemaintenance (or a written agreement) thatwas in effect before 1985 states that thenoncustodial parent can claim the childas a dependent and he or she gave atleast $600 for the child's support in 1996.This rule does not apply if the decree oragreement was changed after 1984 to say

that the noncustodial parent cannot claimthe child as a dependent.

Rounding Off to WholeDollarsTo round off cents to the nearest wholedollar on your forms and schedules, dropamounts under 50 cents and increaseamounts from 50 to 99 cents to the nextdollar. If you do round off, do so for allamounts. But if you have to add two ormore amounts to figure the amount toenter on a line, include cents when addingand only round off the total.

Income EffectivelyConnected With U.S. Tradeor BusinessPub. 519 explains how income isclassified and what income you shouldreport here. The instructions for thissection assume you have decided that theincome involved is effectively connectedwith a U.S. trade or business in which youwere engaged. But your decision may notbe easy. Interest, for example, may beeffectively connected with a U.S. trade orbusiness, it may not be, or it may be tax

exempt. The tax status of income alsodepends on its source. Under somecircumstances, items of income fromforeign sources are treated as effectivelyconnected with a U.S. trade or business.Other items are reportable as effectivelyconnected or not effectively connectedwith a U.S. trade or business, dependingon how you elect to treat them.Line 8Wages, Salaries, Tips, etc.Enter the total of your effectivelyconnected wages, salaries, tips, etc. But,do not include amounts exempted undera tax treaty and reported in Item M onpage 5 of Form 1040NR. Also include inthis total:q

Tip income you did not report to youremployer. Also include allocated tipsshown on your W-2 form(s) unless youcan prove that you received less.Allocated tips should be shown in box 8of your W-2 form(s). They are notincluded in box 1. Get Pub. 531,Reporting Tip Income, for more details.Caution: You may owe social security and Medicare tax on unreported or allocated tips. See the instructions for line 45.q Dependent care benefits, whichshould be shown in box 10 of your W-2



7/31

form(s). But first complete Form 2441,Child and Dependent Care Expenses, tosee if you may exclude part or all of thebenefits.q Excess salary deferrals. The amountdeferred should be shown in box 13 ofyour W-2 form and the DeferredCompensation box in box 15 should bechecked. If the total amount you deferredfor 1996 under all plans was more than$9,500, include the excess on line 8. Buta different limit may apply if amounts were

deferred under a tax-sheltered annuityplan or an eligible plan of a state or localgovernment or tax-exempt organization.Get Pub. 575, Pension and AnnuityIncome, for details.Caution: You may not deduct the amount deferred. It is not included as income in box 1 of your W-2 form.q Corrective distributions shown onForm 1099-R of (1) excess salarydeferrals and (2) excess contributions toa retirement plan. But do not includedistributions from an IRA on line 8.Instead, report them on lines 16a and16b.q Disability pensions shown on Form1099-R if you have not reached theminimum retirement age set by youremployer. Disability pensions receivedafter you reach that age and otherpensions shown on Form 1099-R (otherthan payments from an IRA) are reportedon lines 17a and 17b.

Missing or Incorrect Form W-2. If youdo not get a Form W-2 by January 31,1997, ask your employer for it. Even if youdo not get a Form W-2, you must stillreport your earnings. If you lose yourForm W-2 or it is incorrect, ask youremployer for a new one.Line 9aTaxable Interest Income.Report on line 9a all of your taxableinterest income from assets effectivelyconnected with a U.S. trade or business.

If you received interest not effectivelyconnected with a U.S. trade or business,report it on page 4 of Form 1040NR,unless it is tax exempt under a treaty. GetPub. 901, U.S. Tax Treaties. In addition,interest from a U.S. bank, savings andloan association, or similar institution, andfrom certain deposits with U.S. insurancecompanies, is tax exempt if it is noteffectively connected with a U.S. trade orbusiness.

Interest credited in 1996 on depositsyou could not withdraw because of thebankruptcy or insolvency of the financialinstitution may not have to be included inyour 1996 income. For details, get Pub.550, Investment Income and Expenses.Line 9bTax-Exempt Interest. If youreceived any tax-exempt interest income,such as from municipal bonds, report iton line 9b. Include any exempt-interestdividends from a mutual fund or otherregulated investment company. Do notinclude interest earned on your IRA.Line 10Dividend Income. Enter yourtotal ordinary dividends from assetseffectively connected with a U.S. trade or

business. If you received capital gaindistributions, see the instructions for line14.

Nontaxable Distributions. Somedistributions are nontaxable because theyare a return of your cost. They will not betaxed until you recover your cost. Youmust reduce your cost (or other basis) bythese distributions. After you get back allof your cost (or other basis), you mustreport these distributions as capital gains.Line 11Taxable Refunds, Credits, orOffsets of State and Local IncomeTaxes.Tip: None of your refund is taxable if, in the year you paid the tax, you did not itemize deductions.

If you received a refund, credit, or offsetof state or local income taxes in 1996, youmay receive a Form 1099-G. If you choseto apply part or all of the refund to your1996 estimated state or local income tax,the amount applied is treated as receivedin 1996.

For details on how to figure the amountyou must report as income, seeRecoveries in Pub. 525, Taxable andNontaxable Income.Line 12Scholarship and FellowshipGrants. If you received a scholarshipor fellowship, part or all of it may betaxable.

If you were a degree candidate, theamounts you used for expenses otherthan tuition and course-related expensesare generally taxable. For example,amounts used for room, board, and travelare generally taxable.

If you were not a degree candidate, thefull amount of the scholarship orfellowship is generally taxable. Also,amounts received as a scholarship orfellowship that are payment for teaching,research, or other services are taxableeven if the services were required to getthe grant.

Report the total amount of the grant online 12 and show any nontaxable part online 29. If the grant was reported on Form1042-S, enter the gross amount fromcolumn (b) on line 12. But do not includeamounts exempted under a tax treaty andreported in item M on page 5 of Form1040NR. Attach a statement that shows:the amount of your grant, the dates itcovers, the grantor's name, expenses thegrant covers, and the conditions underwhich it was given to you. Explain howmuch was taxable, how much was taxexempt, and why.

Attach any Form 1042-S or Form W-2you received from the college orinstitution. If you did not receive a 1042-Sor W-2 form, attach a statement from thecollege or institution (on their letterhead)showing the details of the grant.Line 13Business Income or (Loss).If you operated your own business orpracticed your profession as a soleproprietor, report your income andexpenses on Schedule C or ScheduleC-EZ (Form 1040).

Include any income you received as adealer in stocks, securities, andcommodities through your U.S. office. Ifyou dealt in these items through anindependent agent, such as a U.S. broker,custodian, or commissioned agent, yourincome may not be considered effectivelyconnected with a U.S. business. Forgeneral information on business incomeor loss, see the Instructions for ScheduleC (Form 1040) and get Pub. 334, TaxGuide for Small Business.

Line 14Capital Gain or (Loss). Seethe Instructions for Schedule D (Form1040). Enter the effectively connectedgain or (loss) from Schedule D. You mayneed Pub. 544, Sales and OtherDispositions of Assets. But if you receivedcapital gain distributions and do notneed Schedule D for other capitaltransactions, enter those distributions online 14. Write CGD on the dotted linenext to line 14.

Gains and losses from disposing ofU.S. real property interests are taxed asif you were engaged in a U.S. trade orbusiness and are treated as effectivelyconnected with that trade or business.

See Dispositions of U.S. Real PropertyInterests on page 4.Note: Your tax may be less if you can use the Capital Gain Tax Worksheet on page 11. You can use it if your taxable income (Form 1040NR, line 36) is more than $48,450 if you checked filing status box 3, 4, or 5; $58,150 if you checked filing status box 1 or 2; or $96,900 if you checked filing status box 6.Line 15Other Gains or (Losses). Ifyou sold or exchanged assets used in aU.S. trade or business, see theinstructions for Form 4797.Lines 16a and 16bIRADistributions. You should receive aForm 1099-R showing the amount of thedistribution from your individual retirementarrangement (IRA). Leave line 16a blankand enter the total distribution on line 16b.

Exception: Do not enter your total IRAdistribution on line 16b if either 1 or 2below applies.1. You made nondeductiblecontributions to any of your IRAs for 1996or an earlier year. Instead, get Form 8606to figure the amount to enter on line 16b;enter the total distribution on line 16a. Ifyou made nondeductible contributions for1996, also get Pub. 590, IndividualRetirement Arrangements (IRAs).2. You rolled your IRA distribution overinto another IRA. Enter the totaldistribution on line 16a. If the total on line16a was rolled over, enter zero on line16b. If the total was not rolled over, enterthe part not rolled over on line 16b. But if1 above also applies, use Form 8606 tofigure the taxable part.Caution: You may have to pay an additional tax if (1) you received an early distribution from your IRA and the total distribution was not rolled over, (2) you received a distribution in excess of $155,000, or (3) you were born before



8/31

July 1, 1925, and received less than the minimum required distribution. See the instructions for line 46 for details.Lines 17a and 17bPensions andAnnuities. Use lines 17a and 17b toreport effectively connected pension andannuity payments you received, includingpayments (distributions) from retirementplans, life insurance annuity contracts,profit-sharing plans, andemployee-savings plans. See page 9 fordetails on rollovers and lump-sum

distributions. But if this income is noteffectively connected with your U.S. tradeor business, report it on line 70.

Do not include the following paymentson lines 17a and 17b. Instead, reportthem on line 8.q Disability pensions received before youreach the minimum retirement age set byyour employer.q Corrective distributions of excess salarydeferrals or excess contributions toretirement plans.

Some annuities are tax-exempt. Seesection 871(f).Note: If you perform services in the

United States, your income is effectively connected with the conduct of a U.S.trade or business. When you receive a pension in a later year as a result of these services, the pension is also considered effectively connected with the conduct of a U.S. trade or business.

In general, you should receive a Form1099-R showing the amount youreceived. Attach Form 1099-R to Form1040NR if any Federal income tax waswithheld.

Fully Taxable Pensions andAnnuities. If your pension or annuity isfully taxable, enter it on line 17b; do notmake an entry on line 17a. Yourpayments are fully taxable if either of thefollowing applies:1. You did not contribute to the cost ofyour pension or annuity, or2. You got your entire cost back taxfree before 1996.

Fully taxable pensions and annuitiesalso include military retirement pay shownon Form 1099-R. For details on militarydisability pensions, get Pub. 525, Taxableand Nontaxable Income. If you receiveda Form RRB-1099-R, get Pub. 575,Pension and Annuity Income, to see howto report your benefits.

Partially Taxable Pensions andAnnuities. If your pension or annuity ispartially taxable and your Form 1099-Rdoes not show the taxable part, you mustuse the General Rule to figure the taxablepart. The General Rule is explained inPub. 939, Pension General Rule.However, if your annuity starting date(defined below) was after July 1, 1986,and before November 19, 1996, you maybe able to use the Simplified GeneralRule, explained below. If your annuity

starting date was after November 18,1996, do not use these instructions tofigure the taxable part of your pension orannuity. Instead, see Pub. 575 or Pub.721, Tax Guide to U.S. Civil ServiceRetirement Benefits.

You can ask the IRS to figure thetaxable part for you for a $50 fee. Fordetails, see Pub. 939.

If your Form 1099-R shows a taxableamount, you may report that amount online 17b. But you may be able to report alower taxable amount by using theGeneral Rule or, if you qualify, theSimplified General Rule.

Once you have figured the taxable partof your pension or annuity, enter thatamount on line 17b and the total on line17a.

Annuity Starting Date. Your annuitystarting date is the later of the first day ofthe first period for which you received apayment, or the date the plan'sobligations became fixed.

Simplified General Rule. This methodwill usually give you the same amount ormore of the pension or annuity tax freeeach year as the General Rule or asfigured by the IRS. You can use thissimpler method if all four of the followingapply.1. Your annuity starting date (definedabove) was after July 1, 1986, andbefore November 19, 1996.2. The payments are for (a) your life or(b) your life and that of your beneficiary.3. The payments are from a qualifiedemployee plan, a qualified employeeannuity, or a tax-sheltered annuity.4. At the time the pension or annuitypayments began, either you were underage 75 or the number of years ofguaranteed payments was fewer than 5.

If all four apply, use the worksheet onthis page to figure the taxable part of yourpension or annuity. For more details onthe Simplified General Rule, see Pub. 575or Pub. 721.Caution: If you received U.S. Civil Service retirement benefits and you chose the lump-sum credit option, use the worksheet in Pub. 721. Do not use the one on this page.

Age at Annuity Starting Date. If youare the retiree, use your age on theannuity starting date. If you are thesurvivor of a retiree, use the retiree's ageon his or her annuity starting date. If youare the beneficiary of an employee who

died, see Pub. 575. If there is more thanone beneficiary, see Pub. 575 or Pub. 721to figure each beneficiary's taxableamount.

Changing Methods. If your annuitystarting date was after July 1, 1986, youmay be able to change the way you figurethe taxable part of your pension. Fordetails, see Pub. 575 or Pub. 721.

Death Benefit Exclusion. If you arethe beneficiary of a deceased employeeor former employee, amounts paid to youby, or on behalf of, an employer becauseof the death of the employee may qualify

Simplified General Rule WorksheetLines 17a and 17b (keep for your records)

Enter the total pension or annuity payments received this year. Also,enter this amount on Form 1040NR, line 17a

1.1.

Enter your cost in the plan at the annuity starting dateplus any death benefit exclusion (see this page)

2.2.

Age at annuity starting date(see this page):

3.Enter:

300260240170120

55 and under56606165667071 and older

3.

Divide line 2 by line 3 4.4.

Multiply line 4 by the number of months for which thisyears payments were made. If your annuity startingdate was before 1987, skip lines 6 and 7 and enterthis amount on line 8. Otherwise, go to line 6

5.

5.

Enter the amount, if any, recovered tax free in yearsafter 1986 6.

6.

Subtract line 6 from line 2 7.7.

Enter the smaller of line 5 or line 78. 8.

Taxable amount. Subtract line 8 from line 1. Enter the result, but notless than zero. Also, enter this amount on Form 1040NR, line 17b. Ifyour Form 1099-R shows a larger amount, use the amount on this lineinstead of the amount from Form 1099-R

9.

9.

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 1996 on Form 1040NR, line 17a.

Note: Do not use this worksheet if your annuity starting date (see this page) was after November 18, 1996. Instead, see Pub. 575 ( Pub. 721 for U.S. Civil Service retirement).



9/31

for a death benefit exclusion of up to$5,000. If you are entitled to thisexclusion, add it to the amount you enteron line 2 of the worksheet on page 8. Dothis even if the Form 1099-R shows ataxable amount. The payer of the annuitycannot add the death benefit exclusion toyour cost when figuring the taxableamount.

Special rules apply if you are thesurvivor under a joint and survivor'sannuity. For details, see Pub. 575.

Caution: The death benefit exclusion was repealed for individuals who died after August 20, 1996.

Rollovers. A rollover is a tax-freedistribution of cash or other assets fromone retirement plan that is contributed toanother plan. Use lines 17a and 17b toreport a rollover, including a directrollover, from one qualified employer'splan to another or to an IRA.

Enter on line 17a the total distributionbefore income tax or other deductionswere withheld. This amount should beshown in box 1 of Form 1099-R. From thetotal on line 17a, subtract anycontributions (usually shown in box 5) thatwere taxable to you when made. Fromthat result, subtract the amount that wasrolled over either directly or within 60 daysof receiving the distribution. Enter theremaining amount, even if zero, on line17b.

Special rules apply to partial rolloversof property. For more details on rollovers,including distributions under qualifieddomestic relations orders, see Pub. 575.

Lump-Sum Distributions. If youreceived a lump-sum distribution from aprofit-sharing or retirement plan, yourForm 1099-R should have the Totaldistribution box in box 2b checked. Youmay owe an additional tax if you (1)received an early distribution from aqualified retirement plan and the totalamount was not rolled over, or (2)received a distribution in excess of$155,000 from a qualified retirement plan.For details, see the instructions for line46.

Enter the total distribution on line 17aand the taxable part on line 17b.Tip: You may pay less tax on the distribution if you were at least age 59 1 / 2 on the date of the distribution, you meet certain other conditions, and you chose to use Form 4972, Tax on Lump-Sum Distributions, to figure the tax on any part of the distribution. You may also be able to use Form 4972 if you are the beneficiary of a deceased employee who was either age 59 1 / 2 or older on the date of death or was born before 1936. For details, see Form 4972.Line 20UnemploymentCompensation.Tip: If you expect to receive unemployment compensation in 1997,you may ask the state unemployment office to withhold Federal income tax from those payments.

You should receive a Form 1099-Gshowing the total unemploymentcompensation amount paid to you in1996.

If you received an overpayment ofunemployment compensation in 1996 andyou repaid any of it in 1996, subtract theamount you repaid from the total amountyou received. Enter the result on line 20.Also, enter Repaid and the amount yourepaid on the dotted line next to line 20.If, in 1996, you repaid unemployment

compensation that you reported in anearlier year, see Repayments in Pub.525, Taxable and Nontaxable Income, fordetails on how to report the repayment.Line 21Other Income. Use line 21to report any other income effectivelyconnected with your U.S. business that isnot reported on your return or otherschedules. List the type and amount ofincome. If necessary, show the requiredinformation on an attached statement. Formore details, see MiscellaneousTaxable Income in Pub. 525.

Examples of income to report on line21 are:q Repayments of expenses you deductedin an earlier year if they reduced your tax.q Fees received as a nonprofessionalfiduciary, such as an executor oradministrator of the estate of a deceasedfriend or relative.q Recapture of clean-fuel vehiclededuction. See Pub. 535, BusinessExpenses.

Report other income on page 4 of Form1040NR if not effectively connected witha U.S. trade or business.

Net Operating Loss. If you had a netoperating loss in an earlier year to carryforward to 1996, include it as a negativeamount in parentheses on line 21. Attacha statement showing how you figured theamount. Get Pub. 536, Net OperatingLosses, for more details.Line 22. Use line 22 to report your totaleffectively connected income that isexempt from tax by a tax treaty. Do notinclude this exempt income on line 23.Also, you must complete item M on page5 of Form 1040NR.

AdjustmentsAdjustments are amounts you cansubtract from your income effectivelyconnected with a U.S. trade or business.Line 24IRA Deduction. Use line 24to deduct contributions to your individualretirement arrangement (IRA).Caution: If you were covered by a retirement plan (qualified pension,profit-sharing (including 401(k)), annuity,Keogh, SEP, etc.) at work or through self-employment, your IRA deduction may be reduced or eliminated. Earnings on contributions to your IRA are not taxed until they are distributed to you.

Special Rule for Married Individuals.If you checked filing status box 3, 4, or 5and you were not covered by a retirement

plan but your spouse was, you areconsidered covered by a plan unless youlived apart from your spouse for all of1996.

Not Covered by a Retirement Plan. Ifyou were not covered by a retirementplan, you can take a full IRA deduction.

Covered by a Retirement Plan. YourForm W-2 should have the Pensionplan box in box 15 checked if you werecovered by your employer's plan even ifyou were not vested in the plan. You arealso covered by a plan if you wereself-employed and had a Keogh or SEPretirement plan.

Get Pub. 590, Individual RetirementArrangements (IRAs), for more details.Line 25Moving Expenses.Employees and self-employed persons(including partners) can deduct certainmoving expenses. The move must be inconnection with employment thatgenerates effectively connected income.

You can take this deduction if youmoved in connection with your job orbusiness and your new workplace is atleast 50 miles farther from your old homethan your old home was from your oldworkplace. If you had no formerworkplace, your new workplace must beat least 50 miles from your old home. Thededuction is generally limited to moves toor within the United States or itspossessions. If you meet theserequirements, get Pub. 521, MovingExpenses. Use Form 3903, MovingExpenses, to figure the amount to enteron this line.Line 26Self-Employed HealthInsurance Deduction. If you wereself-employed and had a net profit for theyear, you may be able to deduct part ofthe amount paid for health insurance onbehalf of yourself, your spouse, anddependents. But if you were also eligibleto participate in any subsidized healthplan maintained by your or your spouse'semployer for any month or part of a monthin 1996, amounts paid for healthinsurance coverage for that month cannotbe used to figure the deduction. For moredetails, get Pub. 535, BusinessExpenses.

If you qualify to take the deduction, usethe Self-Employed Health InsuranceDeduction Worksheet on page 10 to figurethe amount you can deduct.Line 27Keogh & Self-Employed SEPPlans. If you are self-employed or apartner, deduct payments to your Keogh(HR 10) plan or Simplified EmployeePension (SEP) on line 27. Deductpayments for your employees onSchedule C or F (Form 1040). Get Pub.560, Retirement Plans for theSelf-Employed, for more details, includinglimits on the amount you can deduct. Ifyou are deducting payments to a SEP, besure to check the box on line 27.Line 28Penalty on Early Withdrawalof Savings. The Form 1099-INT orForm 1099-OID you received will showthe amount of any penalty you werecharged.



10/31

Self-Employed Health Insurance Deduction WorksheetLine 26(keep for your records)

1. Enter total payments made in 1996 for health insurance coveragefor 1996 for you, your spouse, and dependents. But do not includeamounts for any month you were eligible to participate in anemployer-sponsored health plan 1.

2. Multiply line 1 by 30% (.30) 2.3. Enter your net profit and any other earned income* from the

business under which the insurance plan is established, minusany deduction you claim on Form 1040NR, line 27 3.

4. Self-employed health insurance deduction. Enter the smallerof line 2 or line 3 here and on Form 1040NR, line 26 4.

*Earned income includes net earnings and gains from the sale, transfer, or licensing ofproperty you created. It does not include capital gain income.

Line 35Deduction for Exemptions.You can claim exemptions only to theextent of your income that is effectivelyconnected with a U.S. trade or business.

If you file as an individual, multiply$2,550 by the total number of exemptionsentered on line 7d. (If you were a residentof Japan or the Republic of Korea, youmust figure the exemptions for yourspouse and children according to theproportion your U.S. income bears to yourtotal income. For details, see Pub. 519.)

But use the worksheet below to figure theamount, if any, to enter on line 35 if youradjusted gross income from line 32 ismore than $88,475 ($117,950 if youchecked filing status box 1 or 2; $176,950if you checked filing status box 6).

If you are filing for an estate, enter$600 on line 35. If you are filing for a trustwhose governing instrument requires it todistribute all its income currently, enter$300 on line 35. Any other trust is allowedan exemption of $100.Line 37Tax. Use one of the followingmethods to figure your tax. Also, includeon line 37 any tax from Form 4972, Taxon Lump-Sum Distributions, and Form8814, Parents' Election To Report Child'sInterest and Dividends. Be sure to checkthe appropriate box.

Tax Table. If your taxable income (line36) is less than $100,000, you must usethe Tax Table to find your tax unless youare required to use Form 8615 or you usethe Capital Gain Tax Worksheet onpage 11. The Tax Table starts on page18. Be sure you use the correct column.If you checked filing status box 3, 4, or 5,

Line 29Scholarship and FellowshipGrants Excluded. If you were a degreecandidate, enter amounts used for tuitionand course-related expenses (fees,books, etc.). Do not include any amountshown on line 22.Line 30. Include in the total on line 30any of the following adjustments that arerelated to your effectively connectedincome. On the dotted line next to line

30, enter the amount of your deductionand identify it as indicated.Qualified Performing Artists. Include

on line 30 your performing-arts-relatedexpenses from line 10 of Form 2106,Employee Business Expenses, or line 6of Form 2106-EZ, UnreimbursedEmployee Business Expenses. Identify asQPA.

Reforestation Amortization. If youcan claim this deduction and you do nothave to file Schedule C, C-EZ, or F(Form 1040) for this activity, include yourdeduction on line 30. Identify as RFST.

Repayment of Sub-Pay Under theTrade Act of 1974. If you repaidsupplemental unemployment benefits(sub-pay) that you previously reported inincome because you became eligible forpayments under the Trade Act of 1974,include on line 30 the amount you repaidin 1996. Identify as Sub-pay TRA. Or,you may be able to claim a credit againstyour tax instead. Get Pub. 525 for moredetails.

Contributions to Section 501(c)(18)Pension Plans. The amount youcontributed should be identified with codeH in box 13 of your W-2 form. You maydeduct this amount subject to the limitsexplained on page 7 for excess salarydeferrals. Identify as 501(c)(18).

Deduction for Clean-Fuel Vehicles. Ifyou placed a vehicle in service in 1996that uses a clean-burning fuel, you maybe able to take this deduction. For details,get Pub. 535, Business Expenses. But ifpart of your deduction is claimed onSchedule C, C-EZ, E, or F (Form 1040),subtract that part from your totaldeduction and include only the balanceon line 30. Identify as Clean-Fuel.Line 31Adjusted Gross Income. Ifline 31 is less than zero, you may have anet operating loss that you can carry to

another tax year. If you carry the lossback to earlier years, see Form 1045,Application for Tentative Refund. Formore details, get Pub. 536, Net OperatingLosses.

Tax Computation on IncomeEffectively Connected With a

U.S. Trade or BusinessLine 33Itemized Deductions. Entertotal itemized deductions from ScheduleA.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.

Deduction for Exemptions WorksheetLine 35 (keep for your records)See the instructions for line 35.

2. Multiply $2,550 by the total number of exemptions claimed onForm 1040NR, line 7d

3. Enter the amount from Form 1040NR, line 324. Enter $117,950 ($88,475 if you checked filing status

box 3, 4, or 5; $176,950 if you checked filing statusbox 6)

5. Subtract line 4 from line 3. If zero or less, stop; enterthe amount from line 2 above on Form 1040NR,line 35Note: If line 5 is more than $122,500 (more than $61,250 if you checked filing status box 3, 4, or 5),stop; you cannot take a deduction for exemptions.Enter -0- on Form 1040NR, line 35.

6. Divide line 5 by $2,500 ($1,250 if you checked filingstatus box 3, 4, or 5). If the result is not a wholenumber, round it up to the next higher whole number(for example, round 0.0004 to 1)

7. Multiply line 6 by 2% (.02) and enter the result as adecimal amount

8. Multiply line 2 by line 79. Deduction for exemptions. Subtract line 8 from line 2. Enter the result

here and on Form 1040NR, line 35

2.

8.

9.

3.

4.

5.

6.

7.

Is the amount on Form 1040NR, line 32, more than the dollar amount shown on line 4below for your filing status?

.

No. Stop. Multiply $2,550 by the total number of exemptions claimed on Form 1040NR,line 7d, and enter the result on line 35.

Yes. Go to line 2.

1.



11/31

you must use the Married filing separately column.

Tax Rate Schedules. You must usethe Tax Rate Schedules on page 30 tofigure your tax if your taxable income is$100,000 or more, OR you are filing foran estate or trust, unless you are requiredto use Form 8615 or you use the CapitalGain Tax Worksheet.

Capital Gain Tax Worksheet. If youhad a net capital gain on Schedule D oryou reported capital gain distributions onForm 1040NR, line 14, your tax may beless if you figure it using the worksheeton this page.

Form 8615. You must generally useForm 8615 to figure the tax for any childwho was under age 14 on January 1,1997, and who had more than $1,300 ofinvestment income, such as taxableinterest or dividends, that is effectivelyconnected with a U.S. trade or business.But if neither of the child's parents wasalive on December 31, 1996, do not useForm 8615 to figure the child's tax.

CreditsLine 38Credit for Child andDependent Care Expenses. You maybe able to take this credit if you paidsomeone to care for your child under age13 or your dependent who could not carefor himself or herself. But to do so, thecare must have been provided so that youcould work or look for work and you musthave had effectively connected incomefrom a job or through self-employment.For details, see the Instructions for Form2441.Line 39Foreign Tax Credit.Form1116 explains when you can take thiscredit for payment of income tax to aforeign country. To take it, you mustreport income from foreign sources. SeeForeign Income Taxed by the UnitedStates on page 4. You also must havepaid or owe foreign tax on that income.Also, get Pub. 514, Foreign Tax Credit forIndividuals.Line 40Other Credits. Include in thetotal on line 40 any of the following creditsand check the appropriate box. If box d ischecked, also enter the form number. Tosee if you can take the credit, get the formor publication indicated.q Mortgage interest credit. If a state orlocal government gave you a mortgagecredit certificate, get Form 8396.q

Credit for prior year minimum tax. If youpaid alternative minimum tax in a prioryear, get Form 8801.q Qualified electric vehicle credit. If youplaced a new electric vehicle in service in1996, get Form 8834.q General business credit. This creditconsists of a number of credits thatusually apply only to individuals who arepartners, shareholders in an Scorporation, self-employed, or who have

Capital Gain Tax WorksheetLine 37 (keep for your records)Use this worksheet to figure your tax only if (a) you are filing Schedule D and bothlines 17 and 18 of Schedule D are gains, or (b) you reported capital gain distributionsdirectly on Form 1040NR, line 14, and:

You checkedfiling status box:

3, 4, or 5 $48,4506 $96,900

Enter the amount from Form 1040NR, line 36If you are filing Schedule D, enter the smaller ofSchedule D, line 17 or line 18. Otherwise, enter thecapital gain distributions reported on Form 1040NR,line 14

Subtract line 4 from line 1Enter $24,000 ($20,050 if you checked filing status box 3, 4, or 5;$40,100 if you checked filing status box 6)Enter the greater of line 5 or line 6Subtract line 7 from line 1Figure the tax on the amount on line 7. Use the Tax Table or Tax

Rate Schedules, whichever appliesMultiply line 8 by 28% (.28)Add lines 9 and 10

1 or 2 $58,150AND

Form 1040NR,line 36, is over:

You checkedfiling status box: AND

Form 1040NR,line 36, is over:

1.2.

3.

4.

5.6.

7.8.9.

1.

2.

3.

4.5.

6.7.8.

9.10.11.

Figure the tax on the amount on line 1. Use the Tax Table or TaxRate Schedules, whichever appliesTax. Enter the smaller of line 11 or line 12 here and on Form1040NR, line 37

10.11.

If you are filing Form 4952, enter the amount fromForm 4952, line 4eSubtract line 3 from line 2. If zero or less, stop; you cannot usethis worksheet to figure your tax. Instead, use the Tax Table or TaxRate Schedules, whichever applies

13.13.

12.12.

rental property. Get Form 3800 or Pub.334, Tax Guide for Small Business.q Empowerment zone employment credit.Get Form 8844.Line 41. If you sold fuel produced froma nonconventional source, see section 29to find out if you can take thenonconventional source fuel credit. Ifyou can, attach a schedule showing howyou figured the credit. Include the creditin the total for line 41. Enter the amountand FNS next to line 41.

Other TaxesLine 43Alternative Minimum Tax.The tax law gives special treatment tosome kinds of income and allows specialdeductions and credits for some kinds ofexpenses. If you benefit from theseprovisions, you may have to pay aminimum amount of tax through thealternative minimum tax. This tax is

figured on Form 6251 for individuals. Ifyou are filing for an estate or trust, getSchedule I (Form 1041) and itsinstructions to see if you owe this tax.

If you are claiming a net operating lossdeduction or the foreign tax credit, youmust complete Form 6251. Otherwise, tosee if you should complete Form 6251,add the amounts on Form 1040NR, lines33 and 35, plus the total of all adjustmentsand tax preference items that apply to you(see the list that begins below). If the total

is more than the dollar amount shownbelow that applies to you, fill in Form6251.q $33,750 if you checked filing status box1 or 2.q $22,500 if you checked filing status box3, 4, or 5.q

$45,000 if you checked filing status box6.Disposition of U.S. Real Property

Interests. If you disposed of U.S. realproperty interests at a gain, you mustmake a special computation to see if youowe this tax. For details, see theInstructions for Form 6251.

Adjustments and Preferences:1. Accelerated depreciation.2. Income from incentive stock options.3. Tax-exempt interest from privateactivity bonds.4. Intangible drilling, circulation,research, experimental, or miningexploration/development costs.5. Amortization of pollution-controlfacilities or depletion.6. Income or (loss) from tax-shelterfarm activities or passive activies.7. Percentage-of-completion incomefrom long-term contracts.8. Installment sale income.Note: Form 6251 should be filled in for a child under age 14 if the total of the child's adjusted gross income from Form 1040NR, line 32, exceeds the child's earned income by more than $1,300.



12/31

Line 45Social Security and MedicareTax on Tip Income Not Reported toEmployer. If you are subject to socialsecurity and Medicare tax, you receivedtips of $20 or more in any month, and youdid not report the full amount to youremployer, you must pay the socialsecurity and Medicare or railroadretirement (RRTA) tax on the unreportedtips. You must also pay this tax if yourW-2 form(s) shows allocated tips that youare including in your income on Form

1040NR, line 8.To figure the tax, get Form 4137,Social Security and Medicare Tax onUnreported Tip Income. To pay the RRTAtax, contact your employer. Youremployer will figure and collect the tax.Caution: 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 46Tax on Qualified RetirementPlans, Including IRAs. If any of thefollowing apply, get Form 5329 and itsinstructions to see if you owe this tax andif you must file Form 5329.1. You received any early distributionsfrom (a) a qualified retirement plan(including your IRA), (b) an annuity, or (c)a modified endowment contract enteredinto after June 20, 1988.2. You made excess contributions toyour IRA.3. You were born before July 1, 1925,and did not take the minimum requireddistribution from your qualified retirementplan.4. You received a distribution in excessof $155,000 from a qualified retirementplan.

Exception. If only item 1 above appliesto you and distribution code 1 is shown inbox 7 of your Form 1099-R, you do nothave to file Form 5329. Instead, multiplythe taxable amount of the distribution by10% (.10) and enter the result on line 46.The taxable amount of the distribution isthe part of the distribution you reportedon line 16b or line 17b of Form 1040NRor on Form 4972. Also, enter No on thedotted line next to line 46 to indicate thatyou do not have to file Form 5329. But ifdistribution code 1 is incorrectly shown inbox 7, you must file Form 5329.Line 47Transportation Tax.Nonresident alien individuals are subjectto a 4% tax on U.S. source grosstransportation income that is noteffectively connected with a U.S. trade orbusiness. However, the term U.S. sourcegross transportation income does notinclude any such income that is taxable ina possession of the United States underthe provisions of the Internal RevenueCode as applied to that possession.

For purposes of this tax, transportationincome will not be treated as effectivelyconnected with the conduct of a trade orbusiness in the United States unless:1. You had a fixed place of business inthe United States involved in the earningof transportation income, and

2. Substantially all of your U.S. sourcegross transportation income wasattributable to regularly scheduledtransportation. Or, in the case of incomefrom the leasing of a vessel or aircraft, itwas attributable to a fixed place ofbusiness in the United States. Seesections 887 and 863 for rules, definitions,and exceptions.

You may be exempt from this taxbecause of a treaty or an exchange ofnotes between the United States and the

country of which you are a resident. If thecountry of which you are a resident doesnot impose tax on the shipping or aircraftincome of U.S. persons, you may also beexempt from this tax. If you are exemptfrom the tax for one of these reasons, youmust attach a statement to Form 1040NRidentifying your country of residence andthe treaty, note, or law and provisionsunder which you claim exemption from thetax.

If you owe this tax, you must attach astatement to your return that includes theinformation described in Pub. 519.Line 48Household EmploymentTaxes. If any of the following apply, getSchedule H (Form 1040) and itsinstructions to see if you owe these taxes.1. You paid any one householdemployee (defined below) cash wages of$1,000 or more in 1996.2. You withheld Federal income during1996 at the request of any householdemployee.3. You paid total cash wages of $1,000or more in any calendar quarter of 1995or 1996 to household employees.Tip: For purposes of item 1, do not count amounts paid to an employee who was under age 18 at any time in 1996 and was a student.

Household Employee. Any personwho does household work is a householdemployee if you can control what will bedone and how it will be done. Householdwork includes work done in or aroundyour home by babysitters, nannies, healthaides, maids, yard workers, and similardomestic workers.Line 49Total Tax. Include in the totalon line 49 any of the following taxes. Tofind out if you owe the tax, see the formor publication indicated. On the dotted linenext to line 49, enter the amount of the taxand identify it as indicated.

Recapture of the following credits.q Investment credit (get Form 4255 ).

Identify as ICR.q Low-income housing credit (get Form8611 ). Identify as LIHCR.q Qualified electric vehicle credit (getPub. 535 ). Identify as QEVCR.q Indian employment credit. Identify asIECR.

Recapture of Federal Mortgage Subsidy. If you sold your home in 1996and it was financed (in whole or in part)from the proceeds of any tax-exemptqualified mortgage bond or you claimedthe mortgage interest credit, get Form8828. Identify as FMSR.

Section 72(m)(5) Excess Benefits Tax (get Pub. 560). Identify as Sec.72(m)(5).

Uncollected Employee Social Security and Medicare or RRTA Tax on Tips or Group-Term Life Insurance.This tax should be shown in box 13 ofyour Form W-2 with codes A and B or Mand N. Identify as UT.

Golden Parachute Payments. If youreceived an excess parachute payment(EPP), you must pay a 20% tax on it. Thistax should be shown in box 13 of yourW-2 form with code K. If you received aForm 1099-MISC, the tax is 20% of theEPP shown on that form. Identify asEPP.

Tax on Accumulation Distribution of Trusts. Enter the amount from Form4970 and identify as ADT.

PaymentsLine 50Federal Income TaxWithheld. Add the amounts shown asFederal income tax withheld on yourForms W-2, W-2G, and 1099-R. Enter the

total on line 50. The amount of Federalincome tax withheld should be shown inbox 2 of Form W-2 or W-2G, and in box4 of Form 1099-R. If line 50 includesamounts withheld as shown on Form1099-R, attach the Form 1099-R. Also,include in the total for line 50 any taxwithheld on scholarship or fellowshipgrants from Form 1042-S.

If you received a 1996 Form 1099showing Federal income tax withheld ondividends, interest income, or otherincome you received, include the amountwithheld in the total on line 50. Thisshould be shown in box 2 of Form1099-DIV and box 4 of the other 1099forms.Line 511996 Estimated TaxPayments. Enter any payments youmade on your estimated Federal incometax (Form 1040-ES (NR)) for 1996.Include any overpayment from your 1995return that you applied to your 1996estimated tax.

Name Change. If you changed yourname because of marriage, divorce, etc.,and you made estimated tax paymentsusing your former name, attach astatement to the front of Form 1040NRexplaining all the payments you made in1996 and the name and social securitynumber or ITIN under which you made the

payments.Line 52Amount Paid With Form 4868(Request for Extension). If you filedForm 4868 to get an automatic extensionof time to file Form 1040NR, enter anyamount you paid with that form. Also,include any amounts paid with Form2688.Line 53Excess Social Security andRRTA Tax Withheld. If you had morethan one employer for 1996 and your totalwages were over $62,700, too muchsocial security tax may have beenwithheld. If you had more than one



13/31

1234

S A M P

L EPAUL MAPLELILIAN MAPLE123 Main StreetAnyplace, NY 10000

15-0000/0000

PAY TO THEORDER OF

19

$DOLLARS

ANYPLACE BANKAnyplace, NY 10000

For

| :250250025 | :202020 " 86 " . 1234

Note: The routing and account numbers may appear in different places on your check.

(line 60b) (line 60d)

RoutingNumber

AccountNumber

for 1997. See 1997 Income Tax Withholding and Estimated Tax Payments for Individuals on page 16.

Installment Payments. If you cannotpay the full amount shown on line 62when you file, you may ask to makemonthly installment payments. However,you will be charged interest and may becharged a late payment penalty on the taxnot paid by the date due, even if yourrequest to pay in installments is granted.You must also pay a fee. To limit the

interest and penalty charges, pay asmuch of the tax as possible. But beforerequesting an installment agreement, youshould consider other less costlyalternatives, such as a bank loan.

To ask for an installment agreement,use Form 9465, Installment AgreementRequest.Line 63Estimated Tax Penalty. Youmay owe this penalty if:q Line 62 (minus line 48) is at least $500and it is more than 10% of the tax shownon your return, orq You did not pay enough estimated taxby any of the due dates. This is true evenif you are due a refund.

Figuring the Penalty. If you choose tofigure the penalty yourself, get Form 2210(or Form 2210-F for farmers andfishermen) to see if you owe the penalty.If so, you can use the form to figure theamount. In certain situations, you may beable to lower your penalty. For details,see the Instructions for Form 2210 (or2210-F). Enter the penalty on Form1040NR, line 63. Add the penalty to anytax due and enter the tot

Documents

US Internal Revenue Service: i1040nr--1996