This discussion covers tax credits and payments for resident
aliens, followed by a discussion of the credits and payments for
nonresident aliens.
Resident Aliens
Resident aliens generally claim tax credits and report tax
payments, including withholding, using the same rules that apply to
U.S. citizens.
The following items are some of the credits you may be able to
claim.
Child and dependent care credit.
You may be able to take this credit if you pay someone to care for
your dependent who is under age 13, or your disabled dependent or
disabled spouse, so that you can work or look for work. Generally, you
must be able to claim an exemption for your dependent.
For more information, get Publication 503,
Child and Dependent
Care Expenses, and Form 2441, Child and Dependent Care
Expenses.
Credit for the elderly or the disabled.
You may qualify for this credit if you are 65 or over or if you
retired on permanent and total disability. For more information on
this credit, get Publication 524,
Credit for the Elderly or the
Disabled, and Schedule R (Form 1040).
Child tax credit.
You may be able to take this credit if you have a qualifying child.
For this credit, a qualifying child:
- Is a U.S. citizen, national, or resident alien,
- Is claimed as a dependent on your tax return,
- Is your son, daughter, adopted child, grandchild, stepchild,
or foster child, and
- Was under age 17 at the end of the year.
Use the Child Tax Credit Worksheet in your form
instructions to figure the amount of your credit.
Education credits.
You may qualify for these credits if you paid qualified tuition and
related expenses for yourself, your spouse, or your dependent. There
are two education credits: the Hope credit and the lifetime learning
credit. You cannot claim these credits if you are married filing
separately. Use Form 8863, Education Credits (Hope and Lifetime
Learning Credits), to figure the credit. For more information,
see Publication 970.
Foreign tax credit.
You can claim a credit, subject to certain limits, for income tax
you paid or accrued to a foreign country on foreign source income. You
cannot claim a credit for taxes paid or accrued on excluded foreign
earned income. To claim a credit for income taxes paid or accrued to a
foreign country, you generally will file Form 1116, Foreign Tax
Credit (Individual, Estate, Trust or Nonresident Alien Individual),
with your Form 1040.
For more information, get Publication 514,
Foreign Tax Credit
for Individuals.
Earned income credit.
You may qualify for an earned income credit of up to $2,353 if your
child lived with you in the United States and your earned income and
modified adjusted gross income were each less than $27,413. If two or
more children lived with you in the United States and your earned
income and modified adjusted gross income were each less than $31,152
your credit could be as much as $3,888. If you do not have a
qualifying child and your earned income and modified adjusted gross
income were each less than $10,380, your credit could be as much as
$353. If you are married, you must file a joint return to qualify
unless you lived apart from your spouse during the last 6 months of
the year and you are eligible to file as head of household.
You and your spouse (if filing a joint return) and any qualifying
child must have work-related SSNs. You cannot claim this credit using
an ITIN or a social security card that says "NOT VALID FOR
EMPLOYMENT." See Identification Number, earlier.
Advance earned income credit.
You may be able to get advance payments of part of the credit for
one child in 2001 instead of waiting until you file your 2001 tax
return. Fill out the 2001 Form W-5, Earned Income Credit
Advance Payment Certificate. If you expect to qualify for the
credit in 2001, give the bottom part of the form to your employer.
Your employer will include part of the credit regularly in your pay
during 2001.
If you received advance payments of the earned income credit in
2000, you must file a 2000 tax return to report the payments. Your
Form W-2 will show the amount you received.
Other information.
There are other eligibility rules that are not discussed here. For
more information, get Publication 596,
Earned Income Credit.
Adoption credit.
You may qualify to take a tax credit of up to $5,000 for qualifying
expenses paid to adopt an eligible child. The credit can be as much as
$6,000 if the expenses are for the adoption of a child with special
needs. To claim the adoption credit, file Form 8839, Qualified
Adoption Expenses, with your Form 1040 or Form 1040A. For more
information, get Publication 968,
Tax Benefits for
Adoption.
Nonresident Aliens
You can claim some of the same credits that resident aliens can
claim. You can also report certain taxes you paid, are considered to
have paid, or that were withheld from your income.
Credits
Credits are allowed only if you receive effectively connected
income. You may be able to claim some of the following credits.
Child and dependent care credit.
You may qualify for this credit if you pay someone to care for your
dependent who is under age 13, or your disabled dependent or disabled
spouse, so that you can work or look for work. Generally, you must be
able to claim an exemption for your dependent.
Married nonresident aliens can claim the credit only if they choose
to file a joint return with a U.S. citizen or resident spouse as
discussed in chapter 1,
or if they qualify as certain married
individuals living apart (see Married Persons Who Live Apart
under Filing Status in the Form 1040NR instructions).
The amount of your child and dependent care expense that qualifies
for the credit in any tax year cannot be more than your earned income
from the United States for that tax year. Earned income generally
means wages, salaries, and professional fees for personal services
performed.
For more information, get Publication 503.
Child tax credit.
You may be able to take this credit if you have a qualifying child.
For this credit, a qualifying child:
- Is a U.S. citizen, national, or resident alien,
- Is claimed as a dependent on your tax return,
- Is your son, daughter, adopted child, grandchild, stepchild,
or foster child, and
- Was under age 17 at the end of the year.
Use the Child Tax Credit Worksheet in the Form 1040
instructions to figure the amount of your credit.
Education credits.
If you are a nonresident alien for any part of the year, you
generally cannot claim the education credits. However, if you are
married and choose to file a joint return with a U.S. citizen or
resident spouse as discussed in chapter 1,
you may be eligible for
these credits.
Foreign tax credit.
If you receive income from sources outside the United States that
is effectively connected with a trade or business in the United
States, you can claim a credit for any income taxes paid or accrued to
any foreign country or U.S. possession on that income.
If you do not have foreign source income effectively connected with
a U.S. trade or business, you cannot claim credits against your U.S.
tax for taxes paid or accrued to a foreign country or U.S. possession.
You cannot take any credit for taxes imposed by a foreign country
or U.S. possession on your U.S. source income if those taxes were
imposed only because you are a citizen or resident of the foreign
country or possession.
If you claim a foreign tax credit, you generally will have to
attach to your return a Form 1116 which contains additional
information about the credit and limits. See Publication 514
for more
information.
Credit for prior year minimum tax.
If you paid alternative minimum tax in a prior year, get Form 8801,
Credit for Prior Year Minimum Tax--Individuals, Estates, and
Trusts, to see if you qualify for this credit.
Earned income credit.
If you are a nonresident alien for any part of the tax year, you
generally cannot get the earned income credit. However, if you are
married and choose to file a joint return with a U.S. citizen or
resident spouse as discussed in chapter 1,
you may be eligible for the
credit.
You and your spouse (if filing a joint return) and any qualifying
child must have work-related SSNs. If your social security card says
"NOT VALID FOR EMPLOYMENT," you cannot claim the earned income
credit. You cannot claim this credit using an ITIN. See
Identification Number, earlier.
See Publication 596
for more information on the credit.
Adoption credit.
You may qualify to take a tax credit of up to $5,000 for qualifying
expenses paid to adopt an eligible child. The credit can be as much as
$6,000 if the expenses are for the adoption of a child with special
needs. To claim the adoption credit, file Form 8839 with your Form
1040NR. For more information, get Publication 968.
Married nonresident aliens can claim the credit only if they choose
to file a joint return with a U.S. citizen or resident spouse as
discussed in chapter 1,
or if they qualify as certain married
individuals living apart (see Married Persons Who Live Apart
under Filing Status in the Form 1040NR instructions).
Tax Withheld
You can claim the tax withheld during the year as a payment against
your U.S. tax. You claim it in the "Payments" section on page 2
of Form 1040NR. The tax withheld reduces any tax you owe with Form
1040NR.
Withholding from wages.
Any federal income tax withheld from your wages during the tax year
while you were a nonresident alien is allowed as a payment against
your U.S. income tax liability for the same year. You can claim the
income tax withheld whether or not you were engaged in a trade or
business in the United States during the year, and whether or not the
wages (or any other income) were connected with a trade or business in
the United States.
Excess social security tax withheld.
If you have two or more employers, you may be able to claim a
credit against your U.S. income tax liability for social security tax
withheld in excess of the maximum required. See Social Security
and Medicare Taxes in chapter 8
for more information.
Regulated investment company credit.
If you are a shareholder in a regulated investment company or
mutual fund, you can claim a credit for your share of any taxes paid
by the company on its undistributed capital gains. You will receive
information on Form 2439, Notice to Shareholder of Undistributed
Long-Term Capital Gains, which you must attach to your return.
Tax withheld at the source.
You can claim as a payment any tax withheld at the source on
investment and other fixed or determinable annual or periodic income
paid to you. Fixed or determinable income includes interest, dividend,
rental, and royalty income that you do not claim to be effectively
connected income. Wage or salary payments can be fixed or determinable
income to you, but usually are subject to withholding as discussed
above. Taxes on fixed or determinable income are withheld at a 30%
rate or at a lower treaty rate.
Tax withheld on partnership income.
If you are a foreign partner in a partnership, the partnership will
withhold tax on your share of effectively connected taxable income
from the partnership. The partnership will give you a statement on
Form 8805, Foreign Partner's Information Statement of Section
1446 Withholding Tax, showing the tax withheld. A partnership
that is publicly traded may withhold on your actual distributions of
effectively connected income. In this case, the partnership will give
you a statement on Form 1042-S. In either case, claim the tax
withheld as a payment on line 62b of Form 1040NR.
Claiming tax withheld on your return.
When you fill out your tax return, take extra care to enter the
correct amount of any tax withheld shown on your information
documents. The following table lists some of the more common
information documents and shows where to find the amount of tax
withheld.
| Form Number |
Location of
Tax Withheld |
| RRB-1042S |
Box 12 |
| SSA-1042S |
Box 9 |
| W-2 |
Box 2 |
| W-2c |
Line 2 |
| 1042-S |
Column (g) |
| 8805 |
Line 11 |
| 8288-A |
Box 2 |
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