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mutual fund or other regulated

total amounts you received from ABC

terms of the tax treaty between the

investment company. But do not

University during 2008 are as follows:

United States and the treaty country to

include interest earned on your

claim treaty benefits on Form

individual retirement arrangement

1040NR-EZ. See the instructions for

Tuition and fees

$25,000

(IRA), health savings account, Archer

item J, on page 9, for details.

Books, supplies,

or Medicare Advantage MSA, or

and equipment

1,000

When completing Form 1040NR-EZ:

Coverdell education savings account.

Room and

•

Enter $0 on line 5. The $9,000

Also, do not include interest from a U.S.

board

9,000

reported to you in box 2 of Form

bank, savings and loan association,

$35,000

1042-S is reported on line 6 (not line 5).

credit union, or similar institution (or

•

Enter $9,000 on line 6.

The Form 1042-S you received from

from certain deposits with U.S.

•

ABC University for 2008 shows $9,000

Enter $0 on line 8. Because none of

insurance companies) that is exempt

in box 2 and $1,260 (14% of $9,000) in

the $9,000 reported to you in box 2 of

from tax under a tax treaty or under

box 9.

Form 1042-S is included in your

section 871(i) because the interest is

income, you cannot exclude it on line 8.

not effectively connected with a U.S.

Note. Box 2 shows only $9,000

•

Include on line 18 any withholding

trade or business. Do not add any

because withholding agents (such as

shown in box 9 of Form 1042-S.

tax-exempt interest to your line 3 total.

ABC University) are not required to

•

Provide all the required information in

report section 117 amounts (tuition,

Line 4 — Taxable refunds, credits, or

item J on page 2 of Form 1040NR-EZ.

fees, books, supplies, and equipment)

offsets of state and local income

on Form 1042-S.

taxes. If you received a refund, credit,

Line 6. Use line 6 to report your total

or offset of state or local income taxes

effectively connected income that is

When completing Form 1040NR-EZ:

•

in 2008, you may receive a

exempt from tax by a tax treaty. Do not

Enter on line 5 the $9,000 shown in

Form 1099-G. If you chose to apply

include this exempt income on line 7.

box 2 of Form 1042-S.

•

part or all of the refund to your 2008

Also, you must complete item J on

Enter $0 on line 8. Because

estimated state or local income tax, the

page 2 of Form 1040NR-EZ.

section 117 amounts (tuition, fees,

amount applied is treated as received

books, supplies, and equipment) were

Line 8 — Scholarship and fellowship

in 2008.

not included in box 2 of your

grants excluded. If you received a

For details on how to figure the

Form 1042-S (and are not included on

scholarship or fellowship grant and

amount you must report as income, see

line 5 of Form 1040NR-EZ), you cannot

were a degree candidate, enter

Recoveries in Pub. 525.

exclude any of the section 117 amounts

amounts used for tuition and

on line 8.

Line 5 — Scholarship and fellowship

•

course-related expenses (fees, books,

Include on line 18 the $1,260 shown

grants. If you received a scholarship

supplies, and equipment), but only to

in box 9 of Form 1042-S.

or fellowship, part or all of it may be

the extent the amounts are included on

taxable.

Example 2. The facts are the same

line 5. See the examples in the

as in Example 1 except that you are a

If you were a degree candidate, the

instructions for line 5 on this page.

citizen of a country that has negotiated

amounts you used for expenses other

Line 9 — Student loan interest

a tax treaty with the United States and

than tuition and course-related

deduction. You can take this

you were a resident of that country

expenses (fees, books, supplies, and

deduction only if all of the following

immediately before leaving for the

equipment) are generally taxable. For

apply.

United States to attend ABC University.

example, amounts used for room,

Also, assume that, under the terms of

1. You paid interest in 2008 on a

board, and travel are generally taxable.

the tax treaty, all of your scholarship

qualified student loan (see page 6).

If you were not a degree candidate,

income is exempt from tax because

2. Your filing status is single.

the full amount of the scholarship or

ABC University is a nonprofit

3. Your modified adjusted gross

fellowship is generally taxable. Also,

educational organization.

income (AGI) is less than $70,000. Use

amounts received in the form of a

lines 2 through 4 of the worksheet on

Note. Many tax treaties do not permit

scholarship or fellowship that are

this page to figure your modified AGI.

an exemption from tax on scholarship

payment for teaching, research, or

or fellowship grant income unless the

other services are generally taxable as

income is from sources outside the

Use the worksheet on this page to

wages even if the services were

United States. If you are a resident of a

figure your student loan interest

required to get the grant.

treaty country, you must know the

deduction.

If the grant was reported on

Form(s) 1042-S, you must generally

include the amount shown in Form(s)

Student Loan Interest Deduction

1042-S, box 2, on line 5. However, if

Worksheet — Line 9

Keep for Your Records

any or all of that amount is exempt by

treaty, do not include the treaty-exempt

See the instructions for line 9 before you begin.

amount on line 5. Instead, include the

treaty-exempt amount on line 6 and

1. Enter the total interest you paid in 2008 on qualified student

complete item J on page 2 of

loans (defined on page 6). Do not enter more than $2,500 . . . . 1.

Form 1040NR-EZ.

2. Enter the amount from Form 1040NR-EZ, line 7 2.

Attach any Form(s) 1042-S you

3. Enter the amount from Form 1040NR-EZ, line 8 3.

received from the college or institution.

If you did not receive a Form 1042-S,

4. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . 4.

attach a statement from the college or

5. Is line 4 more than $55,000?

institution (on their letterhead) showing

❏ No. Skip lines 5 and 6, enter -0- on line 7,

the details of the grant.

and go to line 8.

For more information about

❏ Yes. Subtract $55,000 from line 4 . . . . . . . . 5.

scholarships and fellowships in general,

see Pub. 970.

6. Divide line 5 by $15,000. Enter the result as a decimal (rounded

to at least three places). If the result is 1.000 or more, enter

Example 1. You are a citizen of a

country that has not negotiated a tax

1.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

treaty with the United States. You are a

7. Multiply line 1 by line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

candidate for a degree at ABC

8. Student loan interest deduction. Subtract line 7 from line 1.

University (located in the United

Enter the result here and on Form 1040NR-EZ, line 9 . . . . . . . . 8.

States). You are receiving a full

scholarship from ABC University. The

-5-

Instructions for Form 1040NR-EZ

Instructions For Form 1040nr-Ez - U.s. Income Tax Return For Certain Nonresident Aliens With No Dependents - 2008 Page 5

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