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report income that is exempt from U.S.

student loan if (a) any of the proceeds

Room and

tax.

were used for other purposes, or (b) the

board

9,000

loan was from either a related person

$35,000

Line 8 — Scholarship and fellowship

or a person who borrowed the

grants excluded. If you received a

The Form 1042-S you received from

proceeds under a qualified employer

scholarship or fellowship grant and

ABC University for 2011 shows $9,000

plan or a contract purchased under

were a degree candidate, enter

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

such a plan. To find out who is a

amounts used for tuition and

box 9.

related person, see Pub. 970.

course-related expenses (fees, books,

Note. Box 2 shows only $9,000

Qualified higher education

supplies, and equipment), but only to

because withholding agents (such as

expenses. Qualified higher education

the extent the amounts are included on

ABC University) are not required to

expenses generally include tuition,

line 5. See the examples in the

report section 117 amounts (tuition,

fees, room and board, and related

instructions for line 5, earlier.

fees, books, supplies, and equipment)

expenses such as books and supplies.

Line 9 — Student loan interest

on Form 1042-S.

The expenses must be for education in

deduction. You can take this

a degree, certificate, or similar program

When completing Form 1040NR-EZ:

deduction if all of the following apply.

at an eligible educational institution. An

•

Enter on line 5 the $9,000 shown in

1. You paid interest in 2011 on a

eligible educational institution includes

box 2 of Form 1042-S.

qualified student loan (defined next).

most colleges, universities, and certain

•

Enter $0 on line 8. Because

2. Your filing status is single.

vocational schools. You must reduce

section 117 amounts (tuition, fees,

3. Your modified AGI is less than

the expenses by the following benefits.

books, supplies, and equipment) were

$75,000. Use lines 2 through 4 of the

•

Employer-provided educational

not included in box 2 of your

worksheet on this page to figure your

assistance benefits that are not

Form 1042-S (and are not included on

modified AGI.

included in box 1 of Form(s) W-2.

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

•

Excludable U.S. series EE and I

exclude any of the section 117 amounts

Use the Student Loan Interest

savings bond interest from Form 8815.

on line 8.

Deduction Worksheet on this page to

•

Any nontaxable distribution of

•

Include on line 18b the $1,260 shown

figure your student loan interest

qualified tuition program earnings.

in box 9 of Form 1042-S.

deduction.

•

Any nontaxable distribution of

Qualified student loan. This is any

Example 2. The facts are the same

Coverdell education savings account

loan you took out to pay the qualified

as in Example 1 except that you are a

earnings.

•

higher education expenses for any of

citizen of a country that has an income

Any scholarship, educational

tax treaty in force with the United

the following individuals.

assistance allowance, or other payment

States that includes a provision that

1. Yourself or your spouse.

(but not gifts, inheritances, etc.)

exempts scholarship income and you

2. Any person who was your

excluded from income.

were a resident of that country

dependent when the loan was taken

For more details on these expenses,

immediately before leaving for the

out.

see Pub. 970.

United States to attend ABC University.

3. Any person you could have

Eligible student. An eligible

Also, assume that, under the terms of

claimed as a dependent for the year the

student is a person who:

the tax treaty, all of your scholarship

loan was taken out except that:

•

Was enrolled in a degree, certificate,

income is exempt from tax because

a. The person filed a joint return.

or other program (including a program

ABC University is a nonprofit

b. The person had gross income

of study abroad that was approved for

educational organization.

that was equal to or more than the

credit by the institution at which the

exemption amount for that year ($3,700

Note. Many tax treaties do not permit

student was enrolled) leading to a

for 2011), or

an exemption from tax on scholarship

recognized educational credential at an

c. You could be claimed as a

or fellowship grant income unless the

eligible educational institution, and

dependent on someone else’s return.

income is from sources outside the

•

Carried at least half the normal

United States. If you are a resident of a

full-time workload for the course of

The person for whom the expenses

treaty country, you must know the

study he or she was pursuing.

were paid must have been an eligible

terms of the tax treaty between the

Line 11 — Itemized deductions.

student (see Eligible student, later).

United States and the treaty country to

However, a loan is not a qualified

Enter the total state and local income

claim treaty benefits on Form

1040NR-EZ. For details, see the

instructions for item J of Schedule OI,

later.

Student Loan Interest Deduction

Worksheet—Line 9

Keep for Your Records

When completing Form 1040NR-EZ:

•

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

reported to you in box 2 of Form

See the instructions for line 9 before you begin.

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

•

Enter $9,000 on line 6.

1. Enter the total interest you paid in 2011 on qualified student

•

Enter $0 on line 8. Because none of

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

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

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

Form 1042-S is included in your

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

income, you cannot exclude it on line 8.

•

Include on line 18b any withholding

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

shown in box 9 of Form 1042-S.

5. Is line 4 more than $60,000?

•

Provide all the required information in

No.

Skip lines 5 and 6, enter -0- on line 7,

item J of Schedule OI on page 2 of

and go to line 8.

Form 1040NR-EZ.

Yes. Subtract $60,000 from line 4 . . . . . . . . 5.

Line 6 – Treaty-exempt income.

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

Report on line 6 the total of all your

income that is exempt from tax by an

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

income tax treaty, including both

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

effectively connected income and not

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

effectively connected income. Do not

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

include this exempt income on line 7.

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

You must complete item J of Schedule

OI on page 2 of Form 1040NR-EZ to

-6-

Instructions for Form 1040NR-EZ (2011)

Instructions For Form 1040nr-Ez - U.s. Income Tax Return For Certain Nonresident Aliens With No Dependents - 2011 Page 6

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