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1040nr Tax Form

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1040nr Tax Form

1040nr tax form 1. 1040nr tax form   Traditional IRAs Table of Contents What's New for 2013 What's New for 2014 Introduction Who Can Open a Traditional IRA?What Is Compensation? When Can a Traditional IRA Be Opened? How Can a Traditional IRA Be Opened?Individual Retirement Account Individual Retirement Annuity Individual Retirement Bonds Simplified Employee Pension (SEP) Employer and Employee Association Trust Accounts Required Disclosures How Much Can Be Contributed?Limit. 1040nr tax form When repayment contributions can be made. 1040nr tax form No deduction. 1040nr tax form Reserve component. 1040nr tax form Figuring your IRA deduction. 1040nr tax form Reporting the repayment. 1040nr tax form Example. 1040nr tax form General Limit Kay Bailey Hutchison Spousal IRA Limit Filing Status Less Than Maximum Contributions More Than Maximum Contributions When Can Contributions Be Made? How Much Can You Deduct?Kay Bailey Hutchison Spousal IRA. 1040nr tax form Are You Covered by an Employer Plan? Limit if Covered by Employer Plan Reporting Deductible Contributions Nondeductible Contributions Examples — Worksheet for Reduced IRA Deduction for 2013 What if You Inherit an IRA?Treating it as your own. 1040nr tax form Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. 1040nr tax form Trustee-to-Trustee Transfer Rollovers Transfers Incident To Divorce Converting From Any Traditional IRA Into a Roth IRA Recharacterizations When Can You Withdraw or Use Assets?Contributions Returned Before Due Date of Return When Must You Withdraw Assets? (Required Minimum Distributions)IRA Owners IRA Beneficiaries Which Table Do You Use To Determine Your Required Minimum Distribution? What Age(s) Do You Use With the Table(s)? Miscellaneous Rules for Required Minimum Distributions Are Distributions Taxable?January 2013 QCDs treated as made in 2012. 1040nr tax form 2013 Reporting. 1040nr tax form Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. 1040nr tax form One-time transfer. 1040nr tax form Testing period rules apply. 1040nr tax form More information. 1040nr tax form Distributions Fully or Partly Taxable Figuring the Nontaxable and Taxable Amounts Recognizing Losses on Traditional IRA Investments Other Special IRA Distribution Situations Reporting and Withholding Requirements for Taxable Amounts What Acts Result in Penalties or Additional Taxes?Prohibited Transactions Investment in Collectibles Excess Contributions Early Distributions Excess Accumulations (Insufficient Distributions) Reporting Additional Taxes What's New for 2013 Traditional IRA contribution and deduction limit. 1040nr tax form  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. 1040nr tax form If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. 1040nr tax form For more information, see How Much Can Be Contributed? in this chapter. 1040nr tax form Modified AGI limit for traditional IRA contributions increased. 1040nr tax form  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. 1040nr tax form If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. 1040nr tax form If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. 1040nr tax form See How Much Can You Deduct? in this chapter. 1040nr tax form Net Investment Income Tax. 1040nr tax form  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). 1040nr tax form However, these distributions are taken into account when determining the modified adjusted gross income threshold. 1040nr tax form Distributions from a nonqualified retirement plan are included in net investment income. 1040nr tax form See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. 1040nr tax form What's New for 2014 Modified AGI limit for traditional IRA contributions increased. 1040nr tax form  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. 1040nr tax form If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. 1040nr tax form If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. 1040nr tax form Introduction This chapter discusses the original IRA. 1040nr tax form In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. 1040nr tax form ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. 1040nr tax form The following are two advantages of a traditional IRA: You may be able to deduct some or all of your contributions to it, depending on your circumstances. 1040nr tax form Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. 1040nr tax form Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. 1040nr tax form You can have a traditional IRA whether or not you are covered by any other retirement plan. 1040nr tax form However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. 1040nr tax form See How Much Can You Deduct , later. 1040nr tax form Both spouses have compensation. 1040nr tax form   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. 1040nr tax form You cannot both participate in the same IRA. 1040nr tax form If you file a joint return, only one of you needs to have compensation. 1040nr tax form What Is Compensation? Generally, compensation is what you earn from working. 1040nr tax form For a summary of what compensation does and does not include, see Table 1-1. 1040nr tax form Compensation includes all of the items discussed next (even if you have more than one type). 1040nr tax form Wages, salaries, etc. 1040nr tax form   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. 1040nr tax form The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). 1040nr tax form Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. 1040nr tax form Commissions. 1040nr tax form   An amount you receive that is a percentage of profits or sales price is compensation. 1040nr tax form Self-employment income. 1040nr tax form   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deduction allowed for the deductible part of your self-employment taxes. 1040nr tax form   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. 1040nr tax form Self-employment loss. 1040nr tax form   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. 1040nr tax form Alimony and separate maintenance. 1040nr tax form   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. 1040nr tax form Nontaxable combat pay. 1040nr tax form   If you were a member of the U. 1040nr tax form S. 1040nr tax form Armed Forces, compensation includes any nontaxable combat pay you received. 1040nr tax form This amount should be reported in box 12 of your 2013 Form W-2 with code Q. 1040nr tax form Table 1-1. 1040nr tax form Compensation for Purposes of an IRA Includes . 1040nr tax form . 1040nr tax form . 1040nr tax form Does not include . 1040nr tax form . 1040nr tax form . 1040nr tax form   earnings and profits from property. 1040nr tax form wages, salaries, etc. 1040nr tax form     interest and dividend income. 1040nr tax form commissions. 1040nr tax form     pension or annuity income. 1040nr tax form self-employment income. 1040nr tax form     deferred compensation. 1040nr tax form alimony and separate maintenance. 1040nr tax form     income from certain  partnerships. 1040nr tax form nontaxable combat pay. 1040nr tax form     any amounts you exclude from income. 1040nr tax form     What Is Not Compensation? Compensation does not include any of the following items. 1040nr tax form Earnings and profits from property, such as rental income, interest income, and dividend income. 1040nr tax form Pension or annuity income. 1040nr tax form Deferred compensation received (compensation payments postponed from a past year). 1040nr tax form Income from a partnership for which you do not provide services that are a material income-producing factor. 1040nr tax form Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. 1040nr tax form Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. 1040nr tax form When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. 1040nr tax form However, the time for making contributions for any year is limited. 1040nr tax form See When Can Contributions Be Made , later. 1040nr tax form How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. 1040nr tax form You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. 1040nr tax form You can also open an IRA through your stockbroker. 1040nr tax form Any IRA must meet Internal Revenue Code requirements. 1040nr tax form The requirements for the various arrangements are discussed below. 1040nr tax form Kinds of traditional IRAs. 1040nr tax form   Your traditional IRA can be an individual retirement account or annuity. 1040nr tax form It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. 1040nr tax form Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. 1040nr tax form The account is created by a written document. 1040nr tax form The document must show that the account meets all of the following requirements. 1040nr tax form The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. 1040nr tax form The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. 1040nr tax form However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. 1040nr tax form Contributions, except for rollover contributions, must be in cash. 1040nr tax form See Rollovers , later. 1040nr tax form You must have a nonforfeitable right to the amount at all times. 1040nr tax form Money in your account cannot be used to buy a life insurance policy. 1040nr tax form Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. 1040nr tax form You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. 1040nr tax form See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 1040nr tax form Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. 1040nr tax form An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. 1040nr tax form An individual retirement annuity must meet all the following requirements. 1040nr tax form Your entire interest in the contract must be nonforfeitable. 1040nr tax form The contract must provide that you cannot transfer any portion of it to any person other than the issuer. 1040nr tax form There must be flexible premiums so that if your compensation changes, your payment can also change. 1040nr tax form This provision applies to contracts issued after November 6, 1978. 1040nr tax form The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. 1040nr tax form Distributions must begin by April 1 of the year following the year in which you reach age 70½. 1040nr tax form See When Must You Withdraw Assets? (Required Minimum Distributions) , later. 1040nr tax form Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. 1040nr tax form The bonds have the following features. 1040nr tax form They stop earning interest when you reach age 70½. 1040nr tax form If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. 1040nr tax form You cannot transfer the bonds. 1040nr tax form If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. 1040nr tax form See Age 59½ Rule under Early Distributions, later. 1040nr tax form You can roll over redemption proceeds into IRAs. 1040nr tax form Simplified Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. 1040nr tax form Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. 1040nr tax form See Publication 560 for more information about SEPs. 1040nr tax form Employer and Employee Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. 1040nr tax form The requirements for individual retirement accounts apply to these traditional IRAs. 1040nr tax form Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. 1040nr tax form However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. 1040nr tax form The disclosure statement must explain certain items in plain language. 1040nr tax form For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. 1040nr tax form This explanation must appear at the beginning of the disclosure statement. 1040nr tax form If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. 1040nr tax form The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. 1040nr tax form These requirements apply to all sponsors. 1040nr tax form How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. 1040nr tax form These limits and rules are explained below. 1040nr tax form Community property laws. 1040nr tax form   Except as discussed later under Kay Bailey Hutchison Spousal IRA Limit , each spouse figures his or her limit separately, using his or her own compensation. 1040nr tax form This is the rule even in states with community property laws. 1040nr tax form Brokers' commissions. 1040nr tax form   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. 1040nr tax form For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. 1040nr tax form Trustees' fees. 1040nr tax form   Trustees' administrative fees are not subject to the contribution limit. 1040nr tax form For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. 1040nr tax form Qualified reservist repayments. 1040nr tax form   If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined later under Early Distributions) you received. 1040nr tax form You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. 1040nr tax form To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. 1040nr tax form Limit. 1040nr tax form   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. 1040nr tax form When repayment contributions can be made. 1040nr tax form   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. 1040nr tax form No deduction. 1040nr tax form   You cannot deduct qualified reservist repayments. 1040nr tax form Reserve component. 1040nr tax form   The term “reserve component” means the: Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. 1040nr tax form Figuring your IRA deduction. 1040nr tax form   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. 1040nr tax form Reporting the repayment. 1040nr tax form   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. 1040nr tax form Example. 1040nr tax form   In 2013, your IRA contribution limit is $5,500. 1040nr tax form However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. 1040nr tax form You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). 1040nr tax form In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. 1040nr tax form   For 2013, you can contribute a total of $8,500 to your IRA. 1040nr tax form This is made up of the maximum deductible contribution of $3,500; a nondeductible contribution of $2,000; and a $3,000 qualified reservist repayment. 1040nr tax form You contribute the maximum allowable for the year. 1040nr tax form Since you are making a nondeductible contribution ($2,000) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $5,000 ($2,000 + $3,000) on line 1 of Form 8606. 1040nr tax form The qualified reservist repayment is not deductible. 1040nr tax form Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. 1040nr tax form See chapter 2 for information about Roth IRAs. 1040nr tax form General Limit For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year. 1040nr tax form Note. 1040nr tax form This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). 1040nr tax form This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. 1040nr tax form (See Nondeductible Contributions , later. 1040nr tax form ) Qualified reservist repayments do not affect this limit. 1040nr tax form Examples. 1040nr tax form George, who is 34 years old and single, earns $24,000 in 2013. 1040nr tax form His IRA contributions for 2013 are limited to $5,500. 1040nr tax form Danny, an unmarried college student working part time, earns $3,500 in 2013. 1040nr tax form His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. 1040nr tax form More than one IRA. 1040nr tax form   If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. 1040nr tax form Annuity or endowment contracts. 1040nr tax form   If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,500 ($6,500 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. 1040nr tax form If more than this amount is contributed, the annuity or endowment contract is disqualified. 1040nr tax form Kay Bailey Hutchison Spousal IRA Limit For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: $5,500 ($6,500 if you are age 50 or older), or The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. 1040nr tax form Your spouse's IRA contribution for the year to a traditional IRA. 1040nr tax form Any contributions for the year to a Roth IRA on behalf of your spouse. 1040nr tax form This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older or $13,000 if both of you are age 50 or older). 1040nr tax form Note. 1040nr tax form This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). 1040nr tax form Example. 1040nr tax form Kristin, a full-time student with no taxable compensation, marries Carl during the year. 1040nr tax form Neither of them was age 50 by the end of 2013. 1040nr tax form For the year, Carl has taxable compensation of $30,000. 1040nr tax form He plans to contribute (and deduct) $5,500 to a traditional IRA. 1040nr tax form If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. 1040nr tax form This is because Kristin, who has no compensation, can add Carl's compensation, reduced by the amount of his IRA contribution ($30,000 − $5,500 = $24,500), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. 1040nr tax form In her case, $5,500 is her contribution limit, because $5,500 is less than $24,500 (her compensation for purposes of figuring her contribution limit). 1040nr tax form Filing Status Generally, except as discussed earlier under Kay Bailey Hutchison Spousal IRA Limit , your filing status has no effect on the amount of allowable contributions to your traditional IRA. 1040nr tax form However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. 1040nr tax form See How Much Can You Deduct , later. 1040nr tax form Example. 1040nr tax form Tom and Darcy are married and both are 53. 1040nr tax form They both work and each has a traditional IRA. 1040nr tax form Tom earned $3,800 and Darcy earned $48,000 in 2013. 1040nr tax form Because of the Kay Bailey Hutchison Spousal IRA limit rule, even though Tom earned less than $6,500, they can contribute up to $6,500 to his IRA for 2013 if they file a joint return. 1040nr tax form They can contribute up to $6,500 to Darcy's IRA. 1040nr tax form If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. 1040nr tax form Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. 1040nr tax form Example. 1040nr tax form Rafael, who is 40, earns $30,000 in 2013. 1040nr tax form Although he can contribute up to $5,500 for 2013, he contributes only $3,000. 1040nr tax form After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). 1040nr tax form He cannot contribute $2,500 more than the limit for any later year. 1040nr tax form More Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. 1040nr tax form However, a penalty or additional tax may apply. 1040nr tax form See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. 1040nr tax form When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). 1040nr tax form Contributions must be in the form of money (cash, check, or money order). 1040nr tax form Property cannot be contributed. 1040nr tax form Although property cannot be contributed, your IRA may invest in certain property. 1040nr tax form For example, your IRA may purchase shares of stock. 1040nr tax form For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. 1040nr tax form You may be able to transfer or roll over certain property from one retirement plan to another. 1040nr tax form See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . 1040nr tax form You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. 1040nr tax form For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). 1040nr tax form Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. 1040nr tax form For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. 1040nr tax form See Who Can Open a Traditional IRA , earlier. 1040nr tax form Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. 1040nr tax form Contributions can resume for any years that you qualify. 1040nr tax form Contributions must be made by due date. 1040nr tax form   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. 1040nr tax form For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015. 1040nr tax form Age 70½ rule. 1040nr tax form   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. 1040nr tax form   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. 1040nr tax form If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. 1040nr tax form Designating year for which contribution is made. 1040nr tax form   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. 1040nr tax form If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). 1040nr tax form Filing before a contribution is made. 1040nr tax form    You can file your return claiming a traditional IRA contribution before the contribution is actually made. 1040nr tax form Generally, the contribution must be made by the due date of your return, not including extensions. 1040nr tax form Contributions not required. 1040nr tax form   You do not have to contribute to your traditional IRA for every tax year, even if you can. 1040nr tax form How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed . 1040nr tax form However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. 1040nr tax form See Limit if Covered by Employer Plan , later. 1040nr tax form You may be able to claim a credit for contributions to your traditional IRA. 1040nr tax form For more information, see chapter 4. 1040nr tax form Trustees' fees. 1040nr tax form   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. 1040nr tax form However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). 1040nr tax form For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. 1040nr tax form Brokers' commissions. 1040nr tax form   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. 1040nr tax form Full deduction. 1040nr tax form   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older), or 100% of your compensation. 1040nr tax form   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. 1040nr tax form Kay Bailey Hutchison Spousal IRA. 1040nr tax form   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of: $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older), or The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. 1040nr tax form The IRA deduction for the year of the spouse with the greater compensation. 1040nr tax form Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. 1040nr tax form Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. 1040nr tax form   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. 1040nr tax form Note. 1040nr tax form If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. 1040nr tax form After a divorce or legal separation, you can deduct only the contributions to your own IRA. 1040nr tax form Your deductions are subject to the rules for single individuals. 1040nr tax form Covered by an employer retirement plan. 1040nr tax form   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. 1040nr tax form This is discussed later under Limit if Covered by Employer Plan . 1040nr tax form Limits on the amount you can deduct do not affect the amount that can be contributed. 1040nr tax form Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. 1040nr tax form The “Retirement Plan” box should be checked if you were covered. 1040nr tax form Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. 1040nr tax form If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. 1040nr tax form Federal judges. 1040nr tax form   For purposes of the IRA deduction, federal judges are covered by an employer plan. 1040nr tax form For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. 1040nr tax form These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. 1040nr tax form Tax year. 1040nr tax form   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. 1040nr tax form For almost all people, the tax year is the calendar year. 1040nr tax form Defined contribution plan. 1040nr tax form   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. 1040nr tax form However, also see Situations in Which You Are Not Covered , later. 1040nr tax form   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. 1040nr tax form In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. 1040nr tax form The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. 1040nr tax form Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. 1040nr tax form Example. 1040nr tax form Company A has a money purchase pension plan. 1040nr tax form Its plan year is from July 1 to June 30. 1040nr tax form The plan provides that contributions must be allocated as of June 30. 1040nr tax form Bob, an employee, leaves Company A on December 31, 2012. 1040nr tax form The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. 1040nr tax form Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. 1040nr tax form   A special rule applies to certain plans in which it is not possible to determine if an amount will be contributed to your account for a given plan year. 1040nr tax form If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. 1040nr tax form If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. 1040nr tax form Example. 1040nr tax form Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. 1040nr tax form The plan year runs from July 1 to June 30. 1040nr tax form Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. 1040nr tax form Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. 1040nr tax form As of June 30, 2013, no contributions were made that were allocated to the June 30, 2013, plan year, and no forfeitures had been allocated within the plan year. 1040nr tax form In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. 1040nr tax form On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. 1040nr tax form That contribution was made on February 15, 2014. 1040nr tax form Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. 1040nr tax form No vested interest. 1040nr tax form   If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. 1040nr tax form Defined benefit plan. 1040nr tax form   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. 1040nr tax form This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. 1040nr tax form   A defined benefit plan is any plan that is not a defined contribution plan. 1040nr tax form In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. 1040nr tax form The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. 1040nr tax form Defined benefit plans include pension plans and annuity plans. 1040nr tax form Example. 1040nr tax form Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. 1040nr tax form Nick leaves Company B on December 31, 2012. 1040nr tax form Because Nick is eligible to participate in the plan for its year ending June 30, 2013, he is covered by the plan for his 2013 tax year. 1040nr tax form No vested interest. 1040nr tax form   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. 1040nr tax form Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. 1040nr tax form Social security or railroad retirement. 1040nr tax form   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. 1040nr tax form Benefits from previous employer's plan. 1040nr tax form   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. 1040nr tax form Reservists. 1040nr tax form   If the only reason you participate in a plan is because you are a member of a reserve unit of the Armed Forces, you may not be covered by the plan. 1040nr tax form You are not covered by the plan if both of the following conditions are met. 1040nr tax form The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. 1040nr tax form You did not serve more than 90 days on active duty during the year (not counting duty for training). 1040nr tax form Volunteer firefighters. 1040nr tax form   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. 1040nr tax form You are not covered by the plan if both of the following conditions are met. 1040nr tax form The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. 1040nr tax form Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. 1040nr tax form Limit if Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. 1040nr tax form Your deduction is also affected by how much income you had and by your filing status. 1040nr tax form Your deduction may also be affected by social security benefits you received. 1040nr tax form Reduced or no deduction. 1040nr tax form   If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. 1040nr tax form   Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. 1040nr tax form These amounts vary depending on your filing status. 1040nr tax form   To determine if your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout . 1040nr tax form Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies. 1040nr tax form Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. 1040nr tax form You received social security benefits. 1040nr tax form You received taxable compensation. 1040nr tax form Contributions were made to your traditional IRA. 1040nr tax form You or your spouse was covered by an employer retirement plan. 1040nr tax form Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. 1040nr tax form Appendix B includes an example with filled-in worksheets to assist you. 1040nr tax form Table 1-2. 1040nr tax form Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. 1040nr tax form IF your filing status is . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your modified adjusted gross income (modified AGI) is . 1040nr tax form . 1040nr tax form . 1040nr tax form THEN you can take . 1040nr tax form . 1040nr tax form . 1040nr tax form single or head of household $59,000 or less a full deduction. 1040nr tax form more than $59,000 but less than $69,000 a partial deduction. 1040nr tax form $69,000 or more no deduction. 1040nr tax form married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. 1040nr tax form more than $95,000 but less than $115,000 a partial deduction. 1040nr tax form $115,000 or more no deduction. 1040nr tax form married filing separately2 less than $10,000 a partial deduction. 1040nr tax form $10,000 or more no deduction. 1040nr tax form 1 Modified AGI (adjusted gross income). 1040nr tax form See Modified adjusted gross income (AGI) , later. 1040nr tax form  2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status). 1040nr tax form Table 1-3. 1040nr tax form Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. 1040nr tax form IF your filing status is . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your modified adjusted gross income (modified AGI) is . 1040nr tax form . 1040nr tax form . 1040nr tax form THEN you can take . 1040nr tax form . 1040nr tax form . 1040nr tax form single, head of household, or qualifying widow(er) any amount a full deduction. 1040nr tax form married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. 1040nr tax form married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. 1040nr tax form more than $178,000 but less than $188,000 a partial deduction. 1040nr tax form $188,000 or more no deduction. 1040nr tax form married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. 1040nr tax form $10,000 or more no deduction. 1040nr tax form 1 Modified AGI (adjusted gross income). 1040nr tax form See Modified adjusted gross income (AGI) , later. 1040nr tax form  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. 1040nr tax form For 2014, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. 1040nr tax form If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. 1040nr tax form Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. 1040nr tax form Covered by a retirement plan. 1040nr tax form   If you are covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2. 1040nr tax form For 2014, if you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: More than $60,000 but less than $70,000 for a single individual (or head of household), More than $96,000 but less than $116,000 for a married couple filing a joint return (or a qualifying widow(er)), or Less than $10,000 for a married individual filing a separate return. 1040nr tax form If your spouse is covered. 1040nr tax form   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3. 1040nr tax form Filing status. 1040nr tax form   Your filing status depends primarily on your marital status. 1040nr tax form For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. 1040nr tax form If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. 1040nr tax form Lived apart from spouse. 1040nr tax form   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. 1040nr tax form Modified adjusted gross income (AGI). 1040nr tax form   You can use Worksheet 1-1 to figure your modified AGI. 1040nr tax form If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Both contributions for 2013 and distributions in 2013 , later. 1040nr tax form    Do not assume that your modified AGI is the same as your compensation. 1040nr tax form Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. 1040nr tax form Form 1040. 1040nr tax form   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 1040nr tax form IRA deduction. 1040nr tax form Student loan interest deduction. 1040nr tax form Tuition and fees deduction. 1040nr tax form Domestic production activities deduction. 1040nr tax form Foreign earned income exclusion. 1040nr tax form Foreign housing exclusion or deduction. 1040nr tax form Exclusion of qualified savings bond interest shown on Form 8815. 1040nr tax form Exclusion of employer-provided adoption benefits shown on Form 8839. 1040nr tax form This is your modified AGI. 1040nr tax form Form 1040A. 1040nr tax form   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 1040nr tax form IRA deduction. 1040nr tax form Student loan interest deduction. 1040nr tax form Tuition and fees deduction. 1040nr tax form Exclusion of qualified savings bond interest shown on Form 8815. 1040nr tax form This is your modified AGI. 1040nr tax form Form 1040NR. 1040nr tax form   If you file Form 1040NR, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. 1040nr tax form IRA deduction. 1040nr tax form Student loan interest deduction. 1040nr tax form Domestic production activities deduction. 1040nr tax form Exclusion of qualified savings bond interest shown on Form 8815. 1040nr tax form Exclusion of employer-provided adoption benefits shown on Form 8839. 1040nr tax form This is your modified AGI. 1040nr tax form Income from IRA distributions. 1040nr tax form   If you received distributions in 2013 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. 1040nr tax form Both contributions for 2013 and distributions in 2013. 1040nr tax form   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. 1040nr tax form You received distributions in 2013 from one or more traditional IRAs, You made contributions to a traditional IRA for 2013, and Some of those contributions may be nondeductible contributions. 1040nr tax form (See Nondeductible Contributions and Worksheet 1-2, later. 1040nr tax form ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. 1040nr tax form To do this, you can use Worksheet 1-5, later. 1040nr tax form   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. 1040nr tax form How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. 1040nr tax form Figuring Your Reduced IRA Deduction for 2013. 1040nr tax form The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. 1040nr tax form If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. 1040nr tax form Note. 1040nr tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 1040nr tax form Worksheet 1-1. 1040nr tax form Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. 1040nr tax form 1. 1040nr tax form Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1. 1040nr tax form   2. 1040nr tax form Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. 1040nr tax form   3. 1040nr tax form Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. 1040nr tax form   4. 1040nr tax form Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. 1040nr tax form   5. 1040nr tax form Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. 1040nr tax form   6. 1040nr tax form Enter any foreign housing deduction from Form 2555, line 50 6. 1040nr tax form   7. 1040nr tax form Enter any excludable savings bond interest from Form 8815, line 14 7. 1040nr tax form   8. 1040nr tax form Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. 1040nr tax form   9. 1040nr tax form Add lines 1 through 8. 1040nr tax form This is your Modified AGI for traditional IRA purposes 9. 1040nr tax form   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. 1040nr tax form If you file Form 1040A, enter your IRA deduction on line 17 of that form. 1040nr tax form If you file Form 1040NR, enter your IRA deduction on line 32 of that form. 1040nr tax form You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. 1040nr tax form Self-employed. 1040nr tax form   If you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. 1040nr tax form If you file Form 1040NR, enter your deduction on line 28 of that form. 1040nr tax form Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. 1040nr tax form The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. 1040nr tax form Example. 1040nr tax form Tony is 29 years old and single. 1040nr tax form In 2013, he was covered by a retirement plan at work. 1040nr tax form His salary is $62,000. 1040nr tax form His modified AGI is $70,000. 1040nr tax form Tony makes a $5,500 IRA contribution for 2013. 1040nr tax form Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. 1040nr tax form He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. 1040nr tax form Repayment of reservist distributions. 1040nr tax form   Nondeductible contributions may include repayments of qualified reservist distributions. 1040nr tax form For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. 1040nr tax form Form 8606. 1040nr tax form   To designate contributions as nondeductible, you must file Form 8606. 1040nr tax form (See the filled-in Forms 8606 in this chapter. 1040nr tax form )   You do not have to designate a contribution as nondeductible until you file your tax return. 1040nr tax form When you file, you can even designate otherwise deductible contributions as nondeductible contributions. 1040nr tax form   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. 1040nr tax form    A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. 1040nr tax form In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. 1040nr tax form See Form 8606 under Distributions Fully or Partly Taxable, later. 1040nr tax form Failure to report nondeductible contributions. 1040nr tax form   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. 1040nr tax form All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. 1040nr tax form Penalty for overstatement. 1040nr tax form   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. 1040nr tax form Penalty for failure to file Form 8606. 1040nr tax form   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. 1040nr tax form Tax on earnings on nondeductible contributions. 1040nr tax form   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. 1040nr tax form Cost basis. 1040nr tax form   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. 1040nr tax form Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. 1040nr tax form    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. 1040nr tax form See Are Distributions Taxable, later, for more information. 1040nr tax form Recordkeeping. 1040nr tax form There is a recordkeeping worksheet, Appendix A. 1040nr tax form Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. 1040nr tax form Examples — Worksheet for Reduced IRA Deduction for 2013 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013. 1040nr tax form Example 1. 1040nr tax form For 2013, Tom and Betty file a joint return on Form 1040. 1040nr tax form They are both 39 years old. 1040nr tax form They are both employed and Tom is covered by his employer's retirement plan. 1040nr tax form Tom's salary is $59,000 and Betty's is $32,555. 1040nr tax form They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. 1040nr tax form Because their modified AGI is between $95,000 and $115,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . 1040nr tax form For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. 1040nr tax form Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. 1040nr tax form Tom can take a deduction of only $5,080. 1040nr tax form He can choose to treat the $5,080 as either deductible or nondeductible contributions. 1040nr tax form He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 1040nr tax form He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. 1040nr tax form Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. 1040nr tax form Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. 1040nr tax form Betty figures her IRA deduction as follows. 1040nr tax form Betty can treat all or part of her contributions as either deductible or nondeductible. 1040nr tax form This is because her $5,500 contribution for 2013 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . 1040nr tax form She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, because their modified AGI is not within the phaseout range that applies. 1040nr tax form Betty decides to treat her $5,500 IRA contributions as deductible. 1040nr tax form The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. 1040nr tax form Example 2. 1040nr tax form For 2013, Ed and Sue file a joint return on Form 1040. 1040nr tax form They are both 39 years old. 1040nr tax form Ed is covered by his employer's retirement plan. 1040nr tax form Ed's salary is $45,000. 1040nr tax form Sue had no compensation for the year and did not contribute to an IRA. 1040nr tax form Sue is not covered by an employer plan. 1040nr tax form Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). 1040nr tax form Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $180,555. 1040nr tax form Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. 1040nr tax form He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. 1040nr tax form Sue figures her IRA deduction as shown on Worksheet 1-2. 1040nr tax form Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. 1040nr tax form Worksheet 1-2. 1040nr tax form Figuring Your Reduced IRA Deduction for 2013 (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 1040nr tax form ) Note. 1040nr tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 1040nr tax form IF you . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your  filing status is . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your modified AGI is over . 1040nr tax form . 1040nr tax form . 1040nr tax form THEN enter on  line 1 below . 1040nr tax form . 1040nr tax form . 1040nr tax form       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 1040nr tax form Enter applicable amount from table above 1. 1040nr tax form   2. 1040nr tax form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 1040nr tax form     Note. 1040nr tax form If line 2 is equal to or more than the amount on line 1, stop here. 1040nr tax form  Your IRA contributions are not deductible. 1040nr tax form See Nondeductible Contributions , earlier. 1040nr tax form     3. 1040nr tax form Subtract line 2 from line 1. 1040nr tax form If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 1040nr tax form You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 1040nr tax form   4. 1040nr tax form Multiply line 3 by the percentage below that applies to you. 1040nr tax form If the result is not a multiple of $10, round it to the next highest multiple of $10. 1040nr tax form (For example, $611. 1040nr tax form 40 is rounded to $620. 1040nr tax form ) However, if the result is less than $200, enter $200. 1040nr tax form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 1040nr tax form 5% (. 1040nr tax form 275) (by 32. 1040nr tax form 5% (. 1040nr tax form 325) if you are age 50 or older). 1040nr tax form All others, multiply line 3 by 55% (. 1040nr tax form 55) (by 65% (. 1040nr tax form 65) if you are age 50 or older). 1040nr tax form 4. 1040nr tax form   5. 1040nr tax form Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 1040nr tax form If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 1040nr tax form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 1040nr tax form   6. 1040nr tax form Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 1040nr tax form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 1040nr tax form 6. 1040nr tax form   7. 1040nr tax form IRA deduction. 1040nr tax form Compare lines 4, 5, and 6. 1040nr tax form Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 1040nr tax form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 1040nr tax form   8. 1040nr tax form Nondeductible contribution. 1040nr tax form Subtract line 7 from line 5 or 6, whichever is smaller. 1040nr tax form  Enter the result here and on line 1 of your Form 8606 8. 1040nr tax form   Worksheet 1-2. 1040nr tax form Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 1040nr tax form ) Note. 1040nr tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 1040nr tax form IF you . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your  filing status is . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your modified AGI is over . 1040nr tax form . 1040nr tax form . 1040nr tax form THEN enter on  line 1 below . 1040nr tax form . 1040nr tax form . 1040nr tax form       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 1040nr tax form Enter applicable amount from table above 1. 1040nr tax form 115,000 2. 1040nr tax form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 1040nr tax form 96,555   Note. 1040nr tax form If line 2 is equal to or more than the amount on line 1, stop here. 1040nr tax form  Your IRA contributions are not deductible. 1040nr tax form See Nondeductible Contributions , earlier. 1040nr tax form     3. 1040nr tax form Subtract line 2 from line 1. 1040nr tax form If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 1040nr tax form You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 1040nr tax form 18,445 4. 1040nr tax form Multiply line 3 by the percentage below that applies to you. 1040nr tax form If the result is not a multiple of $10, round it to the next highest multiple of $10. 1040nr tax form (For example, $611. 1040nr tax form 40 is rounded to $620. 1040nr tax form ) However, if the result is less than $200, enter $200. 1040nr tax form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 1040nr tax form 5% (. 1040nr tax form 275) (by 32. 1040nr tax form 5% (. 1040nr tax form 325) if you are age 50 or older). 1040nr tax form All others, multiply line 3 by 55% (. 1040nr tax form 55) (by 65% (. 1040nr tax form 65) if you are age 50 or older). 1040nr tax form 4. 1040nr tax form 5,080 5. 1040nr tax form Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 1040nr tax form If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 1040nr tax form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 1040nr tax form 59,000 6. 1040nr tax form Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 1040nr tax form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 1040nr tax form 6. 1040nr tax form 5,500 7. 1040nr tax form IRA deduction. 1040nr tax form Compare lines 4, 5, and 6. 1040nr tax form Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 1040nr tax form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 1040nr tax form 5,080 8. 1040nr tax form Nondeductible contribution. 1040nr tax form Subtract line 7 from line 5 or 6, whichever is smaller. 1040nr tax form  Enter the result here and on line 1 of your Form 8606 8. 1040nr tax form 420 Worksheet 1-2. 1040nr tax form Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. 1040nr tax form ) Note. 1040nr tax form If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. 1040nr tax form IF you . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your  filing status is . 1040nr tax form . 1040nr tax form . 1040nr tax form AND your modified AGI is over . 1040nr tax form . 1040nr tax form . 1040nr tax form THEN enter on  line 1 below . 1040nr tax form . 1040nr tax form . 1040nr tax form       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. 1040nr tax form Enter applicable amount from table above 1. 1040nr tax form 188,000 2. 1040nr tax form Enter your modified AGI (that of both spouses, if married filing jointly) 2. 1040nr tax form 180,555   Note. 1040nr tax form If line 2 is equal to or more than the amount on line 1, stop here. 1040nr tax form  Your IRA contributions are not deductible. 1040nr tax form See Nondeductible Contributions , earlier. 1040nr tax form     3. 1040nr tax form Subtract line 2 from line 1. 1040nr tax form If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. 1040nr tax form You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 1040nr tax form 7,445 4. 1040nr tax form Multiply line 3 by the percentage below that applies to you. 1040nr tax form If the result is not a multiple of $10, round it to the next highest multiple of $10. 1040nr tax form (For example, $611. 1040nr tax form 40 is rounded to $620. 1040nr tax form ) However, if the result is less than $200, enter $200. 1040nr tax form         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. 1040nr tax form 5% (. 1040nr tax form 275) (by 32. 1040nr tax form 5% (. 1040nr tax form 325) if you are age 50 or older). 1040nr tax form All others, multiply line 3 by 55% (. 1040nr tax form 55) (by 65% (. 1040nr tax form 65) if you are age 50 or older). 1040nr tax form 4. 1040nr tax form 4,100 5. 1040nr tax form Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). 1040nr tax form If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 1040nr tax form If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 1040nr tax form 39,500 6. 1040nr tax form Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). 1040nr tax form If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. 1040nr tax form 6. 1040nr tax form 5,500 7. 1040nr tax form IRA deduction. 1040nr tax form Compare lines 4, 5, and 6. 1040nr tax form Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. 1040nr tax form If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 1040nr tax form 4,100 8. 1040nr tax form Nondeductible contribution. 1040nr tax form Subtract line 7 from line 5 or 6, whichever is smaller. 1040nr tax form  Enter the result here and on line 1 of your Form 8606 8. 1040nr tax form 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. 1040nr tax form A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. 1040nr tax form Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. 1040nr tax form Inherited from spouse. 1040nr tax form   If you inherit a traditional IRA from your spouse, you generally have the following three choices. 1040nr tax form You can: Treat it as your own IRA by designating yourself as the account owner. 1040nr tax form Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (s
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The 1040nr Tax Form

1040nr tax form Publication 929 - Main Content Table of Contents Part 1. 1040nr tax form Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. 1040nr tax form Designated as representative. 1040nr tax form IRS notice. 1040nr tax form Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. 1040nr tax form Part 2. 1040nr tax form Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, Lines A–C) Step 1. 1040nr tax form Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. 1040nr tax form Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. 1040nr tax form Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. 1040nr tax form Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. 1040nr tax form Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. 1040nr tax form A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. 1040nr tax form See Other Filing Requirements, later. 1040nr tax form The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. 1040nr tax form  To find out whether a dependent must file, read the section that applies, or use Table 1. 1040nr tax form Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. 1040nr tax form Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). 1040nr tax form Example. 1040nr tax form William is 16. 1040nr tax form His mother claims an exemption for him on her income tax return. 1040nr tax form He worked part time on weekends during the school year and full time during the summer. 1040nr tax form He earned $7,000 in wages. 1040nr tax form He did not have any unearned income. 1040nr tax form He must file a tax return because he has earned income only and his gross income is more than $6,100. 1040nr tax form If he is blind, he does not have to file a return because his gross income is not more than $7,600. 1040nr tax form Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. 1040nr tax form Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). 1040nr tax form Example. 1040nr tax form Sarah is 18 and single. 1040nr tax form Her parents can claim an exemption for her on their income tax return. 1040nr tax form She received $1,970 of taxable interest and dividend income. 1040nr tax form She did not work during the year. 1040nr tax form She must file a tax return because she has unearned income only and her gross income is more than $1,000. 1040nr tax form If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. 1040nr tax form Election to report child's unearned income on parent's return. 1040nr tax form   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. 1040nr tax form See Parent's Election To Report Child's Interest and Dividends in Part 2. 1040nr tax form If the parent makes this election, the child does not have to file a return. 1040nr tax form Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. 1040nr tax form Filing Requirement Worksheet for Most Dependents 1. 1040nr tax form Enter dependent's earned income plus $350     2. 1040nr tax form Minimum amount   $1,000 3. 1040nr tax form Compare lines 1 and 2. 1040nr tax form Enter the larger amount     4. 1040nr tax form Maximum amount   6,100 5. 1040nr tax form Compare lines 3 and 4. 1040nr tax form Enter the smaller amount     6. 1040nr tax form Enter the dependent's gross income. 1040nr tax form If line 6 is more than line 5, the dependent must file an income tax return. 1040nr tax form If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. 1040nr tax form       Table 1. 1040nr tax form 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. 1040nr tax form   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. 1040nr tax form   Single dependents—Were you either age 65 or older or blind?     No. 1040nr tax form You must file a return if any of the following apply. 1040nr tax form       Your unearned income was over $1,000. 1040nr tax form Your earned income was over $6,100. 1040nr tax form Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. 1040nr tax form         Yes. 1040nr tax form You must file a return if any of the following apply. 1040nr tax form     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). 1040nr tax form       Married dependents—Were you either age 65 or older or blind?     No. 1040nr tax form You must file a return if any of the following apply. 1040nr tax form       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. 1040nr tax form Your unearned income was over $1,000. 1040nr tax form Your earned income was over $6,100. 1040nr tax form Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. 1040nr tax form       Yes. 1040nr tax form You must file a return if any of the following apply. 1040nr tax form       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. 1040nr tax form Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). 1040nr tax form       Example 1. 1040nr tax form Joe is 20, single, not blind, and a full-time college student. 1040nr tax form He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. 1040nr tax form He received $200 taxable interest income and earned $2,750 from a part-time job. 1040nr tax form He does not have to file a tax return because his gross income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,100, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next). 1040nr tax form Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. 1040nr tax form Enter dependent's earned income plus $350   $ 3,100 2. 1040nr tax form Minimum amount   1,000 3. 1040nr tax form Compare lines 1 and 2. 1040nr tax form Enter the larger amount   3,100 4. 1040nr tax form Maximum amount   6,100 5. 1040nr tax form Compare lines 3 and 4. 1040nr tax form Enter the smaller amount   3,100 6. 1040nr tax form Enter the dependent's gross income. 1040nr tax form If line 6 is more than line 5, the dependent must file an income tax return. 1040nr tax form If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. 1040nr tax form   $ 2,950   Example 2. 1040nr tax form The facts are the same as in Example 1 except that Joe had $600 taxable interest income. 1040nr tax form He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). 1040nr tax form Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. 1040nr tax form Enter dependent's earned income plus $350   $ 3,100 2. 1040nr tax form Minimum amount   1,000 3. 1040nr tax form Compare lines 1 and 2. 1040nr tax form Enter the larger amount   3,100 4. 1040nr tax form Maximum amount   6,100 5. 1040nr tax form Compare lines 3 and 4. 1040nr tax form Enter the smaller amount   3,100 6. 1040nr tax form Enter the dependent's gross income. 1040nr tax form If line 6 is more than line 5, the dependent must file an income tax return. 1040nr tax form If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. 1040nr tax form   $ 3,350   Age 65 or older or blind. 1040nr tax form A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. 1040nr tax form Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. 1040nr tax form Enter dependent's earned income plus $350     2. 1040nr tax form Minimum amount   $1,000 3. 1040nr tax form Compare lines 1 and 2. 1040nr tax form Enter the larger amount     4. 1040nr tax form Maximum amount   6,100 5. 1040nr tax form Compare lines 3 and 4. 1040nr tax form Enter the smaller amount     6. 1040nr tax form Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. 1040nr tax form Add lines 5 and 6. 1040nr tax form Enter the total     8. 1040nr tax form Enter the dependent's gross income. 1040nr tax form If line 8 is more than line 7, the dependent must file an income tax return. 1040nr tax form If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. 1040nr tax form The facts are the same as in Example 2 except that Joe is also blind. 1040nr tax form He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). 1040nr tax form   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. 1040nr tax form Enter dependent's earned income plus $350   $3,100 2. 1040nr tax form Minimum amount   1,000 3. 1040nr tax form Compare lines 1 and 2. 1040nr tax form Enter the larger amount   3,100 4. 1040nr tax form Maximum amount   6,100 5. 1040nr tax form Compare lines 3 and 4. 1040nr tax form Enter the smaller amount   3,100 6. 1040nr tax form Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. 1040nr tax form Add lines 5 and 6. 1040nr tax form Enter the total   4,600 8. 1040nr tax form Enter the dependent's gross income. 1040nr tax form If line 8 is more than line 7, the dependent must file an income tax return. 1040nr tax form If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. 1040nr tax form A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. 1040nr tax form But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. 1040nr tax form A dependent must also file a tax return if he or she: Had wages of $108. 1040nr tax form 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. 1040nr tax form Spouse itemizes. 1040nr tax form   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). 1040nr tax form Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. 1040nr tax form Income tax was withheld from his or her income. 1040nr tax form He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. 1040nr tax form See the tax return instructions to find out who qualifies for these credits. 1040nr tax form  By filing a return, the dependent can get a refund. 1040nr tax form Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. 1040nr tax form If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. 1040nr tax form Signing the child's return. 1040nr tax form   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. 1040nr tax form ” Authority of parent or guardian. 1040nr tax form   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. 1040nr tax form   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. 1040nr tax form That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. 1040nr tax form Third party designee. 1040nr tax form   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. 1040nr tax form The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. 1040nr tax form   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. 1040nr tax form This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. 1040nr tax form See the return instructions for more information. 1040nr tax form Designated as representative. 1040nr tax form   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. 1040nr tax form Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. 1040nr tax form See Publication 947, Practice Before the IRS and Power of Attorney, for more information. 1040nr tax form   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. 1040nr tax form IRS notice. 1040nr tax form   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. 1040nr tax form The notice will show who to contact. 1040nr tax form The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. 1040nr tax form Child's earnings. 1040nr tax form   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. 1040nr tax form This is true even if, under state law, the parent has the right to the earnings and may actually have received them. 1040nr tax form If the child does not pay the tax due on this income, the parent may be liable for the tax. 1040nr tax form Child's expenses. 1040nr tax form   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. 1040nr tax form Example. 1040nr tax form You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. 1040nr tax form You made the payments out of your child's earnings. 1040nr tax form These items can be deducted only on the child's return. 1040nr tax form Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). 1040nr tax form However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. 1040nr tax form Certain dependents cannot claim any standard deduction. 1040nr tax form See Standard Deduction of Zero , later. 1040nr tax form Worksheet 1. 1040nr tax form   Use Worksheet 1 to figure the dependent's standard deduction. 1040nr tax form Worksheet 1. 1040nr tax form Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. 1040nr tax form If you were 65 or older and/or blind, check the correct number of boxes below. 1040nr tax form Put the total number of boxes checked in box c and go to line 1. 1040nr tax form a. 1040nr tax form You 65 or older   Blind   b. 1040nr tax form Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. 1040nr tax form Total boxes checked         1. 1040nr tax form Enter your earned income (defined below) plus $350. 1040nr tax form If none, enter -0-. 1040nr tax form 1. 1040nr tax form     2. 1040nr tax form Minimum amount. 1040nr tax form   2. 1040nr tax form $1,000   3. 1040nr tax form Compare lines 1 and 2. 1040nr tax form Enter the larger of the two amounts here. 1040nr tax form 3. 1040nr tax form     4. 1040nr tax form Enter on line 4 the amount shown below for your filing status. 1040nr tax form       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. 1040nr tax form     5. 1040nr tax form Standard deduction. 1040nr tax form         a. 1040nr tax form Compare lines 3 and 4. 1040nr tax form Enter the smaller amount here. 1040nr tax form If under 65 and not blind, stop here. 1040nr tax form This is your standard deduction. 1040nr tax form Otherwise, go on to line 5b. 1040nr tax form 5a. 1040nr tax form     b. 1040nr tax form If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. 1040nr tax form Enter the result here. 1040nr tax form 5b. 1040nr tax form     c. 1040nr tax form Add lines 5a and 5b. 1040nr tax form This is your standard deduction for 2013. 1040nr tax form 5c. 1040nr tax form     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. 1040nr tax form It also includes any amount received as a scholarship that you must include in income. 1040nr tax form   Example 1. 1040nr tax form Michael is single, age 15, and not blind. 1040nr tax form His parents can claim him as a dependent on their tax return. 1040nr tax form He has taxable interest income of $800 and wages of $150. 1040nr tax form He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. 1040nr tax form On line 3, he enters $1,000, the larger of $500 or $1,000. 1040nr tax form Michael enters $6,100 on line 4. 1040nr tax form On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. 1040nr tax form His standard deduction is $1,000. 1040nr tax form Example 2. 1040nr tax form Judy, a full-time student, is single, age 22, and not blind. 1040nr tax form Her parents can claim her as a dependent on their tax return. 1040nr tax form She has dividend income of $275 and wages of $2,500. 1040nr tax form She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. 1040nr tax form On line 3, she enters $2,850, the larger of $2,850 or $1,000. 1040nr tax form She enters $6,100 on line 4. 1040nr tax form On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. 1040nr tax form Example 3. 1040nr tax form Amy, who is single, is claimed as a dependent on her parents' tax return. 1040nr tax form She is 18 years old and blind. 1040nr tax form She has taxable interest income of $1,000 and wages of $2,000. 1040nr tax form She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. 1040nr tax form She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. 1040nr tax form Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. 1040nr tax form She enters $1,500 (the number in box c times $1,500) on line 5b. 1040nr tax form Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). 1040nr tax form Standard Deduction of Zero The standard deduction for the following dependents is zero. 1040nr tax form A married dependent filing a separate return whose spouse itemizes deductions. 1040nr tax form A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. 1040nr tax form A nonresident or dual-status alien dependent, unless the dependent is married to a U. 1040nr tax form S. 1040nr tax form citizen or resident alien at the end of the year and chooses to be treated as a U. 1040nr tax form S. 1040nr tax form resident for the year. 1040nr tax form See Publication 519, U. 1040nr tax form S. 1040nr tax form Tax Guide for Aliens, for information on making this choice. 1040nr tax form Example. 1040nr tax form Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. 1040nr tax form However, her husband elects to file a separate return and itemize his deductions. 1040nr tax form Because he itemizes, Jennifer's standard deduction on her return is zero. 1040nr tax form She can, however, itemize any of her allowable deductions. 1040nr tax form Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. 1040nr tax form This is true even if the other taxpayer does not actually claim the exemption. 1040nr tax form Example. 1040nr tax form James and Barbara can claim their child, Ben, as a dependent on their return. 1040nr tax form Ben is a college student who works during the summer and must file a tax return. 1040nr tax form Ben cannot claim his own exemption on his return. 1040nr tax form This is true even if James and Barbara do not claim him as a dependent on their return. 1040nr tax form Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. 1040nr tax form If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. 1040nr tax form The exemption from withholding does not apply to social security and Medicare taxes. 1040nr tax form Conditions for exemption from withholding. 1040nr tax form   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. 1040nr tax form For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. 1040nr tax form For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. 1040nr tax form Dependents. 1040nr tax form   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. 1040nr tax form The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. 1040nr tax form The employee's unearned income will be more than $350. 1040nr tax form Exceptions. 1040nr tax form   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. 1040nr tax form The above exceptions do not apply to supplemental wages greater than $1,000,000. 1040nr tax form For more information, see Exemption From Withholding in chapter 1 of Publication 505. 1040nr tax form Example. 1040nr tax form Guy is 17 and a student. 1040nr tax form During the summer he works part time at a grocery store. 1040nr tax form He expects to earn about $1,200 this year. 1040nr tax form He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. 1040nr tax form The only other income he expects during the year is $375 interest on a savings account. 1040nr tax form He expects that his parents will be able to claim him as a dependent on their tax return. 1040nr tax form He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. 1040nr tax form Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. 1040nr tax form Claiming exemption from withholding. 1040nr tax form    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. 1040nr tax form The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. 1040nr tax form Renewing an exemption from withholding. 1040nr tax form   An exemption from withholding is good for only one year. 1040nr tax form An employee must file a new Form W-4 by February 15 each year to continue the exemption. 1040nr tax form Part 2. 1040nr tax form Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. 1040nr tax form If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. 1040nr tax form (See Parent's Election To Report Child's Interest and Dividends , later. 1040nr tax form ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 1040nr tax form (See Tax for Certain Children Who Have Unearned Income , later. 1040nr tax form ) For these rules, the term “child” includes a legally adopted child and a stepchild. 1040nr tax form These rules apply whether or not the child is a dependent. 1040nr tax form These rules do not apply if neither of the child's parents were living at the end of the year. 1040nr tax form Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. 1040nr tax form The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . 1040nr tax form Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. 1040nr tax form Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . 1040nr tax form Parents are married. 1040nr tax form   If the child's parents file separate returns, use the return of the parent with the greater taxable income. 1040nr tax form Parents not living together. 1040nr tax form   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. 1040nr tax form If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. 1040nr tax form   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. 1040nr tax form Parents are divorced. 1040nr tax form   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. 1040nr tax form Custodial parent remarried. 1040nr tax form   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. 1040nr tax form Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. 1040nr tax form Do not use the return of the noncustodial parent. 1040nr tax form   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. 1040nr tax form If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. 1040nr tax form Parents never married. 1040nr tax form   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. 1040nr tax form If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. 1040nr tax form Widowed parent remarried. 1040nr tax form   If a widow or widower remarries, the new spouse is treated as the child's other parent. 1040nr tax form The rules explained earlier under Custodial parent remarried apply. 1040nr tax form Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. 1040nr tax form If you do, your child will not have to file a return. 1040nr tax form You can make this election only if all the following conditions are met. 1040nr tax form Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. 1040nr tax form Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). 1040nr tax form The child's gross income was less than $10,000. 1040nr tax form The child is required to file a return unless you make this election. 1040nr tax form The child does not file a joint return for the year. 1040nr tax form No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. 1040nr tax form No federal income tax was withheld from your child's income under the backup withholding rules. 1040nr tax form You are the parent whose return must be used when applying the special tax rules for children. 1040nr tax form (See Which Parent's Return To Use , earlier. 1040nr tax form ) These conditions are also shown in Figure 1. 1040nr tax form Certain January 1 birthdays. 1040nr tax form   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. 1040nr tax form You cannot make this election for such a child unless the child was a full-time student. 1040nr tax form   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. 1040nr tax form You cannot make this election for such a child. 1040nr tax form How to make the election. 1040nr tax form    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. 1040nr tax form (If you make this election, you cannot file Form 1040A or Form 1040EZ. 1040nr tax form ) Attach a separate Form 8814 for each child for whom you make the election. 1040nr tax form You can make the election for one or more children and not for others. 1040nr tax form Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. 1040nr tax form Rate may be higher. 1040nr tax form   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. 1040nr tax form This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. 1040nr tax form However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. 1040nr tax form Deductions you cannot take. 1040nr tax form   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. 1040nr tax form The additional standard deduction if the child is blind. 1040nr tax form The deduction for a penalty on an early withdrawal of your child's savings. 1040nr tax form Itemized deductions (such as your child's investment expenses or charitable contributions). 1040nr tax form Figure 1. 1040nr tax form Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. 1040nr tax form Figure 1. 1040nr tax form Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. 1040nr tax form   If you use Form 8814, your child's unearned income is considered your unearned income. 1040nr tax form To figure the limit on your deductible investment interest, add the child's unearned income to yours. 1040nr tax form However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. 1040nr tax form Alternative minimum tax. 1040nr tax form    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. 1040nr tax form If it is, you must include it with your own tax preference items when figuring your AMT. 1040nr tax form See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. 1040nr tax form Reduced deductions or credits. 1040nr tax form   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. 1040nr tax form Deduction for contributions to a traditional individual retirement arrangement (IRA). 1040nr tax form Deduction for student loan interest. 1040nr tax form Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. 1040nr tax form Credit for child and dependent care expenses. 1040nr tax form Child tax credit. 1040nr tax form Education tax credits. 1040nr tax form Earned income credit. 1040nr tax form Penalty for underpayment of estimated tax. 1040nr tax form   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. 1040nr tax form If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. 1040nr tax form Get Publication 505 for more information. 1040nr tax form Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. 1040nr tax form Only the amount over $2,000 is added to your income. 1040nr tax form The amount over $2,000 is shown on Form 8814, line 6. 1040nr tax form Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. 1040nr tax form Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. 1040nr tax form If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. 1040nr tax form On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. 1040nr tax form Note. 1040nr tax form The tax on the first $2,000 is figured on Form 8814, Part II. 1040nr tax form See Figuring Additional Tax , later. 1040nr tax form Qualified dividends. 1040nr tax form   Enter on Form 8814, line 2a, any ordinary dividends your child received. 1040nr tax form This amount may include qualified dividends. 1040nr tax form Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. 1040nr tax form For detailed information about qualified dividends, see Publication 550. 1040nr tax form   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. 1040nr tax form You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. 1040nr tax form   Enter the child's qualified dividends on Form 8814, line 2b. 1040nr tax form But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. 1040nr tax form Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. 1040nr tax form (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. 1040nr tax form ) Capital gain distributions. 1040nr tax form   Enter on Form 8814, line 3, any capital gain distributions your child received. 1040nr tax form The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. 1040nr tax form You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. 1040nr tax form   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. 1040nr tax form (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. 1040nr tax form ) Collectibles (28% rate) gain. 1040nr tax form    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. 1040nr tax form Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. 1040nr tax form The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. 1040nr tax form The denominator is the child's total capital gain distribution. 1040nr tax form Enter the result on line 4 of the 28% Rate Gain Worksheet. 1040nr tax form Unrecaptured section 1250 gain. 1040nr tax form   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. 1040nr tax form Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. 1040nr tax form The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. 1040nr tax form The denominator is the child's total capital gain distribution. 1040nr tax form Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. 1040nr tax form Section 1202 gain. 1040nr tax form   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. 1040nr tax form (For information about the exclusion, see chapter 4 of Publication 550. 1040nr tax form ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. 1040nr tax form The numerator is the part of the child's total capital gain distribution that is section 1202 gain. 1040nr tax form The denominator is the child's total capital gain distribution. 1040nr tax form Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. 1040nr tax form In some cases, the exclusion is more than 50%. 1040nr tax form See the instructions for Schedule D for details and information on how to report the exclusion amount. 1040nr tax form Example. 1040nr tax form Fred is 6 years old. 1040nr tax form In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. 1040nr tax form (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. 1040nr tax form ) All of the ordinary dividends are qualified dividends. 1040nr tax form He has no other income and is not subject to backup withholding. 1040nr tax form No estimated tax payments were made under his name and social security number. 1040nr tax form Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. 1040nr tax form They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. 1040nr tax form They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. 1040nr tax form They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. 1040nr tax form They enter the amount of Fred's capital gain distributions, $525, on line 3. 1040nr tax form Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. 1040nr tax form They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. 1040nr tax form This is the total amount from Form 8814 to be reported on their return. 1040nr tax form Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. 1040nr tax form They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. 1040nr tax form They enter the result, . 1040nr tax form 75, on line 7. 1040nr tax form They divide the amount on line 3, $525, by the amount on line 4, $2,100. 1040nr tax form They enter the result, . 1040nr tax form 25, on line 8. 1040nr tax form They multiply the amount on line 6, $100, by the decimal on line 7, . 1040nr tax form 75, and enter the result, $75, on line 9. 1040nr tax form They multiply the amount on line 6, $100, by the decimal on line 8, . 1040nr tax form 25, and enter the result, $25, on line 10. 1040nr tax form They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. 1040nr tax form They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. 1040nr tax form They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. 1040nr tax form Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. 1040nr tax form Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. 1040nr tax form This tax is added to the tax figured on your income. 1040nr tax form This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. 1040nr tax form Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. 1040nr tax form Check box a on Form 1040, line 44, or Form 1040NR, line 42. 1040nr tax form Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 1040nr tax form If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. 1040nr tax form Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. 1040nr tax form When Form 8615 must be filed. 1040nr tax form   Form 8615 must be filed for a child if all of the following statements are true. 1040nr tax form The child's unearned income was more than $2,000. 1040nr tax form The child is required to file a return for 2013. 1040nr tax form The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. 1040nr tax form At least one of the child's parents was alive at the end of 2013. 1040nr tax form The child does not file a joint return for 2013. 1040nr tax form These conditions are also shown in Figure 2. 1040nr tax form Certain January 1 birthdays. 1040nr tax form   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. 1040nr tax form IF a child was born on. 1040nr tax form . 1040nr tax form . 1040nr tax form THEN, at the end of 2013, the child is considered to be. 1040nr tax form . 1040nr tax form . 1040nr tax form January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. 1040nr tax form The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. 1040nr tax form  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. 1040nr tax form  ***Do not use Form 8615 for this child. 1040nr tax form Figure 2. 1040nr tax form Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. 1040nr tax form Figure 2. 1040nr tax form Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. 1040nr tax form (If the parents filed a joint return, enter the name and social security number listed first on the joint return. 1040nr tax form ) On line C, check the box for the parent's filing status. 1040nr tax form See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. 1040nr tax form Parent with different tax year. 1040nr tax form   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. 1040nr tax form Example. 1040nr tax form Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). 1040nr tax form Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). 1040nr tax form Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. 1040nr tax form Parent's return information not known timely. 1040nr tax form   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. 1040nr tax form   You can use any reasonable estimate. 1040nr tax form This includes using information from last year's return. 1040nr tax form If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. 1040nr tax form   When you get the correct information, file an amended return on Form 1040X, Amended U. 1040nr tax form S. 1040nr tax form Individual Income Tax Return. 1040nr tax form Extension of time to file. 1040nr tax form   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. 1040nr tax form S. 1040nr tax form Individual Income Tax Return. 1040nr tax form See the instructions for Form 4868 for details. 1040nr tax form    An extension of time to file is not an extension of time to pay. 1040nr tax form You must make an accurate estimate of the tax for 2013. 1040nr tax form If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. 1040nr tax form See Form 4868 and its instructions. 1040nr tax form Parent's return information not available. 1040nr tax form   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). 1040nr tax form How to request. 1040nr tax form   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. 1040nr tax form (The IRS cannot process a request received before the end of the tax year. 1040nr tax form )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. 1040nr tax form   The request must contain all of the following. 1040nr tax form A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. 1040nr tax form Proof of the child's age (for example, a copy of the child's birth certificate). 1040nr tax form Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). 1040nr tax form The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. 1040nr tax form    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. 1040nr tax form Step 1. 1040nr tax form Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. 1040nr tax form To do that, use Form 8615, Part I. 1040nr tax form Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. 1040nr tax form Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. 1040nr tax form Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. 1040nr tax form If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. 1040nr tax form However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. 1040nr tax form Alternate Worksheet for Form 8615, Line 1 A. 1040nr tax form Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. 1040nr tax form Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. 1040nr tax form Enter this total as a positive number (greater than zero)   C. 1040nr tax form Add line A and line B and  enter the total   D. 1040nr tax form Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. 1040nr tax form Subtract line D from line C. 1040nr tax form Enter the result here and on Form 8615, line 1   Unearned income defined. 1040nr tax form   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. 1040nr tax form It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. 1040nr tax form Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). 1040nr tax form Nontaxable income. 1040nr tax form   For this purpose, unearned income includes only amounts the child must include in gross income. 1040nr tax form Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. 1040nr tax form Capital loss. 1040nr tax form   A child's capital losses are taken into account in figuring the child's unearned income. 1040nr tax form Capital losses are first applied against capital gains. 1040nr tax form If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. 1040nr tax form Any difference over $3,000 is carried to the next year. 1040nr tax form Income from property received as a gift. 1040nr tax form   A child's unearned income includes all income produced by property belonging to the child. 1040nr tax form This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. 1040nr tax form   A child's unearned income includes income produced by property given as a gift to the child. 1040nr tax form This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. 1040nr tax form Example. 1040nr tax form Amanda Black, age 13, received the following income. 1040nr tax form Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. 1040nr tax form Amanda's unearned income is $2,100. 1040nr tax form This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). 1040nr tax form Her wages are earned (not unearned) income because they are received for work actually performed. 1040nr tax form Her tax-exempt interest is not included because it is nontaxable. 1040nr tax form Trust income. 1040nr tax form   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. 1040nr tax form   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. 1040nr tax form See the Form 8615 instructions for details. 1040nr tax form Adjustment to income. 1040nr tax form   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. 1040nr tax form Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. 1040nr tax form If the child itemizes deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. 1040nr tax form Directly connected. 1040nr tax form   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. 1040nr tax form These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. 1040nr tax form    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). 1040nr tax form Only the amount greater than 2% of the child's adjusted gross income can be deducted. 1040nr tax form See Publication 529, Miscellaneous Deductions, for more information. 1040nr tax form Example 1. 1040nr tax form Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his unearned income. 1040nr tax form His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. 1040nr tax form Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly-connected itemized deductions of $300. 1040nr tax form Example 2. 1040nr tax form Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. 1040nr tax form She has no other income. 1040nr tax form She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. 1040nr tax form Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). 1040nr tax form The amount on line 2 is $2,050. 1040nr tax form This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. 1040nr tax form Line 3 Subtract line 2 from line 1 and enter the result on this line. 1040nr tax form If zero or less, do not complete the rest of the form. 1040nr tax form However, you must still attach Form 8615 to the child's tax return. 1040nr tax form Figure the tax on the child's taxable income in the normal manner. 1040nr tax form Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. 1040nr tax form Child files Form 2555 or 2555-EZ. 1040nr tax form   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. 1040nr tax form Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. 1040nr tax form Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. 1040nr tax form Enter on Form 8615, line 5, the smaller of line 3 or line 4. 1040nr tax form This is the child's net unearned income. 1040nr tax form If zero or less, do not complete the rest of the form. 1040nr tax form However, you must still attach Form 8615 to the child's tax return. 1040nr tax form Figure the tax on the child's taxable income in the normal manner. 1040nr tax form Step 2. 1040nr tax form Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. 1040nr tax form The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. 1040nr tax form When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. 1040nr tax form For example, do not refigure the medical expense deduction. 1040nr tax form Figure the tentative tax on Form 8615, lines 6 through 13. 1040nr tax form Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. 1040nr tax form If the parent's taxable income is zero or less, enter zero on line 6. 1040nr tax form Parent files Form 2555 or 2555-EZ. 1040nr tax form   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. 1040nr tax form Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. 1040nr tax form Line 7 (Net Unearned Income of Other Children) If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. 1040nr tax form Do not include the amount from line 5 of the Form 8615 being completed. 1040nr tax form (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. 1040nr tax form ) Example. 1040nr tax form Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. 1040nr tax form The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon—$800 Jerry—$600 Mike—$1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. 1040nr tax form Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). 1040nr tax form Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). 1040nr tax form Other children's information not available. 1040nr tax form   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. 1040nr tax form Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . 1040nr tax form Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. 1040nr tax form You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. 1040nr tax form Net capital gain. 1040nr tax form   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. 1040nr tax form If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. 1040nr tax form Qualified dividends. 1040nr tax form   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. 1040nr tax form Net capital gain and qualified dividends on line 8. 1040nr tax form   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. 1040nr tax form   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. 1040nr tax form   If the child, parent, or any other child has net capital gain, figure the amount of net capital gain included on line 8 by adding together the net capital gain amounts included on lines 5, 6, and 7 of Form 8615. 1040nr tax form   If the child, parent, or any other child has qualified dividends, figure the amount of qualified dividends included on line 8 by adding together the qualified dividend amounts included on lines 5, 6, and 7. 1040nr tax form   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. 1040nr tax form See the instructions for Form 8615 for more details. 1040nr tax form Note. 1040nr tax form The amount of any net capital gain or qualified dividends is not separately reported on line 8. 1040nr tax form It is  needed, however, when figuring the tax on line 9. 1040nr tax form Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. 1040nr tax form If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. 1040nr tax form But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. 1040nr tax form If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. 1040nr tax form For details, see the instructions for Form 8615, line 9. 1040nr tax form However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. 1040nr tax form But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. 1040nr tax form Child files Form 2555 or 2555-EZ. 1040nr tax form   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. 1040nr tax form Using the Schedule D Tax Worksheet for line 9 tax. 1040nr tax form    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. 1040nr tax form If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. 1040nr tax form Then figure the line 9 tax using another Schedule D Tax Worksheet. 1040nr tax form (Do not attach this Schedule D Tax Worksheet to the child's return. 1040nr tax form )   Complete this Schedule D Tax Worksheet as follows. 1040nr tax form On line 1, enter the amount from Form 8615, line 8. 1040nr tax form On line 2, enter the qualified dividends included on Form 8615, line 8. 1040nr tax form (See the earlier discussion for line 8. 1040nr tax form ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. 1040nr tax form On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. 1040nr tax form If applicable, include instead the smaller amount entered on the dotted line next to line 4e. 1040nr tax form On lines 5 and 6, follow the worksheet instructions. 1040nr tax form On line 7, enter the net capital gain included on Form 8615, line 8. 1040nr tax form (See the earlier discussion for line 8. 1040nr tax form ) On lines 8 through 10, follow the worksheet instructions. 1040nr tax form On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). 1040nr tax form Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. 1040nr tax form Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). 1040nr tax form If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. 1040nr tax form Otherwise, skip steps 10, 11, and 12 below, and go to step 13. 1040nr tax form Determine whether there is a line 8 capital gain excess as follows. 1040nr tax form Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. 1040nr tax form (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. 1040nr tax form ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. 1040nr tax form Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. 1040nr tax form If the result is more than zero, that amount is the line 8 capital gain excess. 1040nr tax form If the result is zero or less, there is no line 8 capital gain excess. 1040nr tax form If there is no line 8 capital gain excess, skip step 12 below and go to step 13. 1040nr tax form If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. 1040nr tax form (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. 1040nr tax form ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. 1040nr tax form Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. 1040nr tax form If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. 1040nr tax form If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. 1040nr tax form Complete lines 12 through 45 following the worksheet instructions. 1040nr tax form Use the parent's filing status to complete lines 15, 42, and 44. 1040nr tax form Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line