Instructions For Form 1040nr-Ez 2004 (Page 6 of 21) in pdf

•

example, amounts used for room,

Include on line 18 the $1,260 shown

Line 6. Use line 6 to report your total

board, and travel are generally taxable.

in box 7 of Form 1042-S.

effectively connected income that is

exempt from tax by a tax treaty. Do not

If you were not a degree candidate,

Example 2. The facts are the same

include this exempt income on line 7.

the full amount of the scholarship or

as in Example 1 except that you are a

Also, you must complete item J on

fellowship is generally taxable. Also,

citizen of a country that has negotiated

page 2 of Form 1040NR-EZ.

amounts received in the form of a

a tax treaty with the United States and

Line 8 — Student loan interest

scholarship or fellowship that are

you were a resident of that country

deduction. You may take this

payment for teaching, research, or

immediately before leaving for the

deduction only if all three of the

other services are generally taxable as

United States to attend ABC University.

following apply.

wages even if the services were

Also, assume that, under the terms of

required to get the grant.

1. You paid interest in 2004 on a

the tax treaty, all of your scholarship

qualified student loan (see below).

If the grant was reported on

income is exempt from tax because

2. Your filing status is single.

Form(s) 1042-S, you must generally

ABC University is a nonprofit

3. Your modified adjusted gross

include the amount shown in Form(s)

educational organization.

income (AGI) is less than $65,000. Use

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

lines 2 through 4 of the worksheet

any or all of that amount is exempt by

Note. Many tax treaties do not permit

below to figure your modified AGI.

treaty, do not include the treaty-exempt

an exemption from tax on scholarship

amount on line 5. Instead, include the

or fellowship grant income unless the

Use the worksheet below to figure

treaty-exempt amount on line 6 and

income is from sources outside the

your student loan interest deduction.

complete item J on page 2 of

United States. If you are a resident of a

Qualified student loan. This is any

Form 1040NR-EZ.

treaty country, you must know the

loan you took out to pay the qualified

terms of the tax treaty between the

Attach any Form(s) 1042-S you

higher education expenses for yourself,

United States and the treaty country to

received from the college or institution.

your spouse, or anyone who was your

claim treaty benefits on

If you did not receive a Form 1042-S,

dependent when the loan was taken

Form 1040NR-EZ. See the instructions

attach a statement from the college or

out. The person for whom the expenses

for item J, on page 9 for details.

institution (on their letterhead) showing

were paid must have been an eligible

the details of the grant.

student (see page 6). However, a loan

When completing Form 1040NR-EZ:

For more information about

•

is not a qualified student loan if (a) any

Be sure you have entered your home

scholarships and fellowships in general,

of the proceeds were used for other

country and permanent address in the

see Pub. 970.

purposes, or (b) the loan was from

space provided on page 1.

•

either a related person or a person who

Example 1. You are a citizen of a

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

borrowed the proceeds under a

country that has not negotiated a tax

reported to you in box 2 of

qualified employer plan or a contract

treaty with the United States. You are a

Form 1042-S is reported on line 6 (not

purchased under such a plan. To find

candidate for a degree at ABC

line 5).

•

out who is a related person, see Pub.

University (located in the United

Enter $9,000 on line 6.

•

970.

States). You are receiving a full

Enter $0 on line 9. Because none of

scholarship from ABC University. The

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

Qualified higher education expenses

total amounts you received from ABC

Form 1042-S is included in your

generally include tuition, fees, room and

University during 2004 are as follows:

income, you cannot exclude it on line 9.

board, and related expenses such as

•

Include on line 18 any withholding

books and supplies. The expenses

Tuition and fees

$25,000

shown in box 7 of Form 1042-S.

must be for education in a degree,

•

Books, supplies,

Provide all the required information in

certificate, or similar program at an

and equipment

1,000

item J on page 2.

eligible educational institution. An

Room and

board

9,000

Student Loan Interest Deduction Worksheet — Line 8

$35,000

(keep for your records)

The Form 1042-S you received from

Before you begin:

ABC University for 2004 shows $9,000

•

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

Complete Form 1040NR-EZ, line 9, if it applies to you.

box 7.

•

See the instructions for line 8 above.

Note. Box 2 shows only $9,000

1. Enter the total interest you paid in 2004 on qualified student

because withholding agents (such as

loans (defined above). Do not enter more than $2,500 . . . . . . . 1.

ABC University) are not required to

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

report section 117 amounts (tuition,

3. Enter the amount from Form 1040NR-EZ, line 9 3.

fees, books, supplies, and equipment)

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

on Form 1042-S.

5. Is line 4 more than $50,000?

When completing Form 1040NR-EZ:

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

•

Enter on line 5 the $9,000 shown in

and go to line 8.

box 2 of Form 1042-S.

Yes. Subtract $50,000 from line 4 . . . . . . . . 5.

•

Enter $0 on line 9. Because

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

section 117 amounts (tuition, fees,

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

books, supplies, and equipment) were

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

not included in box 2 of your

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

Form 1042-S (and are not included on

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

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

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

exclude any of the section 117 amounts

on line 9.

-5-

Instructions for Form 1040NR-EZ

Instructions For Form 1040nr-Ez 2004 Page 6

Related Articles

Related forms

Related Categories