2001 Instructions for Form 1040NR - Uncle Fed's Tax*Board

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trade or business. Each payer should complete item M on page 5 of Form United States and the treaty country to send you a Form 1099-DIV. 1040NR. claim treaty benefits on Form 1040NR. Capital Gain Distributions. If you Attach any Form(s) 1042-S you See the instructions for item M on page received any capital gain distributions, received from the college or institution. 24 for details. see the instructions for line 14 that If you did not receive a 1042-S form, When completing Form 1040NR: begin on this page. attach a statement from the college or • Be sure you have entered your home Nontaxable Distributions. Some institution (on their letterhead) showing country and permanent address in the distributions are nontaxable because the details of the grant. space provided on page 1. they are a return of your cost (or other • Enter $0 on line 12. The $9,000 For more information about basis). They will not be taxed until you reported to you in box 2 of Form scholarships and fellowships in general, recover your cost (or other basis). You 1042-S is reported on line 22 (not line see Pub. 520. must reduce your cost (or other basis) 12). by these distributions. After you get Example 1. You are a citizen of a • Enter $9,000 on line 22. back all of your cost (or other basis), country that has not negotiated a tax • Enter $0 on line 31. Because none of you must report these distributions as treaty with the United States. You are a the $9,000 you received from the capital gains on Schedule D (Form candidate for a degree at ABC scholarship is included in your income, 1040). For details, see Pub. 550. University (located in the United you cannot exclude it on line 31. States). You are receiving a full • Include on line 55 the $1,260 shown Dividends on insurance policies scholarship from ABC University. The in box 7 of Form 1042-S. TIP are a partial return of the total amounts you received from ABC • Provide all the required information in premiums you paid. Do not University during 2001 are as follows: item M on page 5. report them as dividends. Include them in income only if they exceed the total Line 13—Business Income or of all net premiums you paid for the Tuition and fees $25,000 (Loss). If you operated a business or contract. Books, supplies, practiced your profession as a sole and equipment 1,000 Line 11—Taxable Refunds, Credits, proprietor, report your effectively Room and or Offsets of State and Local Income connected income and expenses on board 9,000 Taxes. Schedule C or Schedule C-EZ (Form $35,000 1040). None of your refund is taxable if, TIP in the year you paid the tax, you The Form 1042-S you received from Include any income you received as did not itemize deductions. ABC University for 2001 shows $9,000 a dealer in stocks, securities, and in box 2 and $1,260 (14% of $9,000) in commodities through your U.S. office. If If you received a refund, credit, or box 7. you dealt in these items through an offset of state or local income taxes in Note: Box 2 shows only $9,000 independent agent, such as a U.S. 2001, you may receive a Form 1099-G. because withholding agents (such as broker, custodian, or commissioned If you chose to apply part or all of the ABC University) are no longer required agent, your income may not be refund to your 2001 estimated state or to report section 117 amounts (tuition, considered effectively connected with a local income tax, the amount applied is fees, books, supplies, and equipment) U.S. business. treated as received in 2001. on Form 1042-S. For details on how to figure the Line 14—Capital Gain or (Loss). If amount you must report as income, see When completing Form 1040NR: you had effectively connected capital Recoveries in Pub. 525. • Enter on line 12 the $9,000 shown in gains or losses, including any box 2 of Form 1042-S. effectively connected capital gain Line 12—Scholarship and • Enter $0 on line 31. Because section distributions from a mutual fund, you Fellowship Grants. If you received a 117 amounts (tuition, fees, books, must complete and attach Schedule D scholarship or fellowship, part or all of it supplies, and equipment) are not (Form 1040). But see the Exception may be taxable. included in box 2 of your Form 1042-S below. Enter the effectively connected If you were a degree candidate, the (and are not included on line 12 of gain or (loss) from Schedule D (Form amounts you used for expenses other Form 1040NR), you cannot exclude any 1040) on line 14. than tuition and course-related of the section 117 amounts on line 31. expenses (fees, books, supplies, and • Include on line 55 the $1,260 shown Gains and losses from disposing of equipment) are generally taxable. For in box 7 of Form 1042-S. U.S. real property interests are taxed as example, amounts used for room, Example 2. The facts are the same if you were engaged in a U.S. trade or board, and travel are generally taxable. as in Example 1 except that you are a business and are treated as effectively citizen of a country that has negotiated connected with that trade or business. If you were not a degree candidate, a tax treaty with the United States and See Dispositions of U.S. Real the full amount of the scholarship or you were a resident of that country Property Interests on page 5. fellowship is generally taxable. Also, amounts received in the form of a immediately before leaving for the Exception. You do not have to file scholarship or fellowship that are United States to attend ABC University. Schedule D (Form 1040) if both of the payment for teaching, research, or Also, assume that, under the terms of following apply. other services are generally taxable as the tax treaty, you may exempt from tax 1. The only amounts you have to wages even if the services were all of your scholarship income because report on Schedule D (Form 1040) are required to get the grant. ABC University is a nonprofit effectively connected capital gain If the grant was reported on Form(s) educational organization. distributions. (These amounts should 1042-S, you must generally include the Note: Many tax treaties do not permit be shown in box 2a of Forms 1099-DIV amount shown in box 2 of Form(s) an exemption from tax on scholarship or substitute statements.) 1042-S on line 12. However, if any or or fellowship grant income unless the 2. Those distributions do not include all of that amount is exempt by treaty, income is from sources outside the 28% rate gains, qualified 5-year gains, do not include the treaty-exempt United States. If you are a resident of a unrecaptured section 1250 gains, or amount on line 12. Instead, include the treaty country, you must know the section 1202 gains. (These amounts treaty-exempt amount on line 22 and terms of the tax treaty between the should be shown in boxes 2b through -10- Instructions for Form 1040NR
2e of Forms 1099-DIV or substitute • You converted part or all of a Some annuities are tax-exempt. See statements.) traditional, SEP, or SIMPLE IRA to a section 871(f). Roth IRA in 2001. If both of the above apply, enter your Note: If you perform services in the • You had a 2000 or 2001 IRA or effectively connected capital gain United States, your income is generally Coverdell ESA contribution returned to distributions on line 14 and check the effectively connected with the conduct you, with the related earnings or less box on that line. Also, be sure you use of a U.S. trade or business. (See any loss, by the due date (including the Capital Gain Tax Worksheet on section 864 and Regulations section extensions) of your tax return for that page 17 to figure your tax. 1.864-2 for details and exceptions.) year. When you receive a pension in a later Line 15—Other Gains or (Losses). If • You made excess contributions to year as a result of effectively connected you sold or exchanged assets used in a your IRA for an earlier year and had services, the pension is also considered U.S. trade or business, see the them returned to you in 2001. effectively connected with the conduct Instructions for Form 4797. • You recharacterized part or all of a of a U.S. trade or business. contribution to a Roth IRA as a Lines 16a and 16b—IRA traditional IRA contribution, or vice Fully Taxable Pensions and Distributions. versa. Annuities. If your pension or annuity is Note: If you converted part or all of an fully taxable, enter it on line 17b; do Note: If you received more than one individual retirement arrangement (IRA) not make an entry on line 17a. Your distribution, figure the taxable amount to a Roth IRA in 1998 and you chose to payments are fully taxable if either of of each distribution and enter the total report the taxable amount over 4 years, the following applies. of the taxable amounts on line 16b. see 1998 Roth IRA Conversions on • You did not contribute to the cost Enter the total amount of those this page. (see page 12) of your pension or distributions on line 16a. annuity or You should receive a Form 1099-R You may have to pay an • You got your entire cost back tax free showing the amount of any distribution additional tax if (a) you received before 2001. ! from your IRA or Coverdell education CAUTION an early distribution from your If you received a Form savings account (ESA). Unless IRA and the total was not rolled over or RRB-1099-R, see Pub. 575 for otherwise noted in the line 16a and 16b (b) you were born before July 1, 1930, information on how to report your instructions, an IRA includes a and received less than the minimum benefits. traditional IRA, Roth IRA, Coverdell required distribution from your education savings account (ESA), traditional, SEP, and SIMPLE IRAs. Partially Taxable Pensions and simplified employee pension (SEP) See the instructions for line 51 on page Annuities. Enter the total pension or IRA, and a savings incentive match 18 for details annuity payments you received in 2001 plan for employees (SIMPLE) IRA. on line 17a. If your Form 1099-R does 1998 Roth IRA Conversions. If you Except as provided below, leave line not show the taxable amount, you must converted an IRA to a Roth IRA in 1998 16a blank and enter the total use the General Rule explained in Pub. and you chose to report the taxable distribution on line 16b. 939 to figure the taxable part to enter amount over 4 years, leave line 16a on line 17b. But if your annuity starting Exception 1. Enter the total blank and enter on line 16b the amount date (defined on this page) was after distribution on line 16a if you rolled over from your 1998 Form 8606, line 17. July 1, 1986, see below to find out if part or all of the distribution from one: But see the 2001 Instructions for Form you must use the Simplified Method to • IRA to another IRA of the same type 8606 for the amount to enter on line figure the taxable part. (for example, from one traditional IRA 16b if (a) you rounded the amount on to another traditional IRA), line 17 of your 1998 Form 8606 to the You can ask the IRS to figure the • Coverdell ESA to another, or next higher whole dollar or (b) you taxable part for you for an $85 fee. For • SEP or SIMPLE IRA to a traditional received a distribution from a Roth IRA details, see Pub. 939. IRA. in 1998, 1999, or 2000. If your Form 1099-R shows a taxable Also, put “Rollover” next to line 16b. Lines 17a and 17b—Pensions and amount, you may report that amount on If the total distribution was rolled over, Annuities. Use lines 17a and 17b to line 17b. But you may be able to report enter zero on line 16b. If the total was report effectively connected pension a lower taxable amount by using the not rolled over, enter the part not rolled and annuity payments you received. General Rule or the Simplified Method. over on line 16b unless Exception 2 You should receive a Form 1099-R Annuity Starting Date. Your annuity applies to the part not rolled over. showing the amount you received. For starting date is the later of the first day details on rollovers, see page 12. If you rolled over the distribution (a) of the first period for which you Details on lump-sum distributions begin in 2002 or (b) from a conduit IRA into a received a payment, or the date the on page 12. But if this income is not qualified plan, attach a statement plan’s obligations became fixed. effectively connected with your U.S. explaining what you did. trade or business, report it on line 76. Simplified Method.You must use Exception 2. If any of the following the Simplified Method if (a) your annuity Do not include the following apply, enter the total distribution on line starting date (defined above) was after payments on lines 17a and 17b. 16a and use Form 8606 and its July 1, 1986, and you used this method Instead, report them on line 8. instructions to figure the amount to last year to figure the taxable part or (b) enter on line 16b. • Disability pensions received before your annuity starting date was after • You received a distribution from an you reach the minimum retirement age November 18, 1996, and all three of IRA (other than a Roth IRA) and you set by your employer. the following apply. made nondeductible contributions to • Corrective distributions of excess 1. The payments are for (a) your life any of your traditional or SEP IRAs for salary deferrals or excess contributions or (b) your life and that of your 2001 or an earlier year. If you made to retirement plans. beneficiary. nondeductible contributions to these If you received a Form 1099-R 2. The payments are from a IRAs for 2001, also see Pub. 590. TIP that shows Federal income tax qualified employee plan, a qualified • You received a distribution from a withheld, attach it to Form employee annuity, or a tax-sheltered Roth IRA or Coverdell ESA. 1040NR. annuity. Instructions for Form 1040NR -11-
Page 1 and 2: 2001 Instructions for Form 1040NR U
Page 3 and 4: • You were not engaged in a trade
Page 5 and 6: Special rules apply for exemptions
Page 7 and 8: Inflation-Adjusted Amounts for Expa
Page 9: • Is a U.S. citizen or resident a
Page 13 and 14: You may be able to pay less tax Wer
Page 15 and 16: Deduction for Exemptions Worksheet
Page 17 and 18: Capital Gain Tax Worksheet—Line 3
Page 19 and 20: the country of which you are a resi
Page 21 and 22: 2001 must have been made on time
Page 23 and 24: Itemized Deductions Worksheet—Lin
Page 25 and 26: periodic income ordinarily subject
Page 27 and 28: 2001 Tax Table For persons with tax
Page 29 and 30: 2001 Tax Table—Continued Caution:
Page 39 and 40: 2001 Tax Rate Schedules These tax r

2001 Instructions for Form 1040NR - Uncle Fed's Tax*Board

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