2003 HTML Instructions for Form 1040NR,

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Name, Address, and Identifying Number

Name. If you are filing Form 1040NR for an estate or trust, enter the name of the estate or trust, and your name, title, and address. Also, give the name and address of any U.S. grantors and beneficiaries.

P.O. box. Enter your box number only if your post office does not deliver mail to your home.

Foreign address. Enter the information in the following order: City, province or state, and country. Follow the country's practice for entering the postal code. Do not abbreviate the country name.

Identifying number. If you are an individual, you are generally required to enter your social security number (SSN). To apply for an SSN, get
Form SS-5 from a Social Security Administration (SSA) office or, if in the United States, you may call the SSA at 1-800-772-1213. Fill in Form SS-5 and return it to the SSA.

If you do not have and are not eligible to get an SSN, you must apply for an individual taxpayer identification number (ITIN). For details on how to do so, see Form W-7 and its instructions. It usually takes about 4-6 weeks to get an ITIN.

If you already have an ITIN, enter it wherever your SSN is requested on your tax return. If you are required to include another person's SSN on your return and that person does not have and cannot get an SSN, enter that person's ITIN.

Note:

An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law.

If you are filing Form 1040NR for an estate or trust, enter the employer identification number of the estate or trust.

An incorrect or missing identifying number may increase your tax or reduce your refund.

Filing Status

The amount of your tax depends on your filing status. Before you decide which box to check, read the following explanations.

Were you single or married? If you were married on December 31, consider yourself married for the whole year. If you were single, divorced, or legally separated under a decree of divorce or separate maintenance on December 31, consider yourself single for the whole year. If you meet the tests described under Married persons who live apart below, you may consider yourself single for the whole year.

If your spouse died in 2003, consider yourself married to that spouse for the whole year, unless you remarried before the end of 2003.

Married persons who live apart. Some married persons who have a child and who do not live with their spouse may file as single. If you meet all five of the following tests and you are a married resident of Canada or Mexico, or you are a married U.S. national, check the box on line 1. If you meet the tests and you are a married resident of Japan or the Republic of Korea (South Korea), check the box on line 2.

You file a return separate from your spouse.
You paid more than half of the cost to keep up your home in 2003.
You lived apart from your spouse during the last 6 months of 2003.
Your home was the main home of your child, stepchild, foster child, or adopted child for more than half of 2003.
You are able to claim a dependency exemption for the child or the child's other parent claims him or her as a dependent under the rules in Pub. 501 for children of divorced or separated parents.

Line 6—Qualifying widow(er) with dependent child. You may check the box on line 6 if all seven of the following apply.

You were a resident of Canada, Mexico, Japan, or the Republic of Korea (South Korea), or were a U.S. national.
Your spouse died in 2001 or 2002 and you did not remarry in 2003.
You have a child, stepchild, adopted child, or foster child for whom you can claim a dependency exemption.
This child lived in your home for all of 2003. Temporary absences, such as for school, vacation, or medical care, count as time lived in the home.
You paid over half of the cost of keeping up your home.
You were a resident alien or U.S. citizen the year your spouse died. This refers to your actual status, not the election that some nonresident aliens can make to be taxed as U.S. residents.
You were entitled to file a joint return with your spouse the year he or she died, even if you did not actually do so.

Exemptions

Exemptions for estates and trusts are described in the instructions for line 37 beginning on page 15.

Note:

Residents of India who were students or business apprentices may be able to claim exemptions for their spouse and dependents. See Pub. 519 for details.

Line 7b—Spouse. If you checked filing status box 3 or 4, you can take an exemption for your spouse only if your spouse had no gross income for U.S. tax purposes and cannot be claimed as a dependent on another U.S. taxpayer's return. (You can do this even if your spouse died in 2003.) In addition, if you checked filing status box 4, your spouse must have lived with you in the United States at some time during 2003. Finally, your spouse must have an SSN or an ITIN. If your spouse is not eligible to obtain an SSN, he or she must apply for an ITIN. See Identifying number on page 7 for additional information.

Line 7c—Dependents. Only U.S. nationals and residents of Canada, Mexico, Japan, and the Republic of Korea (South Korea), may claim exemptions for their dependents. If you were a U.S. national (American Samoan or a Northern Mariana Islander who chose to be a U.S. national) or a resident of Canada or Mexico, you can claim exemptions for your children and other dependents on the same terms as U.S. citizens. See Pub. 501 for more details. Be sure to complete item I on page 5 of the form. If you were a resident of Japan or the Republic of Korea (South Korea), you may claim an exemption for any of your children who lived with you in the United States at some time during 2003.

You can take an exemption for each of your dependents. If you have more than four dependents, attach a statement to your return with the required information.

Children Who Did Not Live With You Due to Divorce or Separation. If you checked filing status box 1 or 3 and are claiming as a dependent a child who did not live with you under the rules explained in Pub. 501 for children of divorced or separated parents, attach Form 8332 or similar statement to your return. But see the Exception below.

If your divorce decree or separation agreement went into effect after 1984, you may attach certain pages from the decree or agreement instead of
Form 8332. To be able to do this, the decree or agreement must state:

You can claim the child as your dependent without regard to any condition, such as payment of support, and
The other parent will not claim the child as a dependent, and
The years for which the claim is released.

Attach the following pages from the decree or agreement:
- Cover page (including the other parent's SSN on that page), and
- The pages that include all of the information identified in 1 through 3 above, and
- Signature page with the other parent's signature and date of agreement.

Note:

You must attach the required information even if you filed it in an earlier year.

Exception. You do not have to attach Form 8332 or similar statement if your divorce decree or written separation agreement went into effect before 1985 and it states that you can claim this child as your dependent.

Other Dependent Children. Include the total number of children who did not live with you for reasons other than divorce or separation on the line labeled “Dependents on 7c not entered above.”

Line 7c, Column (2). You must enter each dependent's identifying number (SSN, ITIN, or adoption taxpayer identification number (ATIN)). If you do not enter the correct identifying number, at the time we process your return we may disallow the exemption claimed for the dependent and reduce or disallow any other tax benefits (such as the child tax credit) based on the dependent.

For details on how your dependent can get an identifying number, see Identifying number on page 7.

If your dependent child was born and died in 2003 and you do not have an identifying number for the child, you may attach a copy of the child's birth certificate instead and enter “Died” in column (2).

Adoption Taxpayer Identification Numbers (ATINs). If you have a dependent who was placed with you by an authorized placement agency and you do not know his or her SSN, you must get an ATIN for the dependent from the IRS. An authorized placement agency includes any person authorized by state law to place children for legal adoption. See Form W-7A for details.

Line 7c, Column (4). Check the box in this column if your dependent is a qualifying child for the child tax credit (defined below). If you have at least one qualifying child, you may be able to take the child tax credit on line 45 and the additional child tax credit on line 60.

Qualifying Child for Child Tax Credit. A qualifying child for purposes of the child tax credit is a child who:

Is claimed as your dependent on
line 7c, and
Was under age 17 at the end of 2003, and
Is your (a) son, daughter, adopted child, stepchild, or a descendant of any of them (for example, your grandchild); (b) brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew), whom you cared for as you would your own child; or (c) foster child (any child placed with you by an authorized placement agency whom you cared for as you would your own child), and
Is a U.S. citizen or resident alien.

An adopted child is always treated as your own child. An adopted child includes a child placed with you by an authorized placement agency for legal adoption even if the adoption is not final. An authorized placement agency includes any person or court authorized by state law to place children for legal adoption.

Child Tax Credit Worksheet—Line 45
(keep for your records)

		To be a qualifying child for the child tax credit, the child must be under age 17 at the end of 2003 and meet the other requirements listed in the instructions for line 45 on this page. Do not use this worksheet if you answered “Yes” to question 1 or 2 in Who Must Use Pub. 972 above. Instead, use Pub. 972.
1.	Number of qualifying children: X $1,000. Enter the result		1.
2.	Enter the amount, if any, of your advance child tax credit payment (before offset)		2.
3.	Is line 1 less than or equal to line 2? Yes.STOP. You cannot take this credit. If line 2 is more than line 1, you do not have to pay back the difference. No. Subtract line 2 from line 1			3.
4.	Enter the amount from Form 1040NR, line 41		4.
5.	Enter the total of the amounts from Form 1040NR, lines 42 through 44		5.
6.	Are the amounts on lines 4 and 5 the same? Yes.STOP. You cannot take this credit because there is no tax to reduce. However, you may be able to take the additional child tax credit. See the TIP below. No. Subtract line 5 from line 4			6.
7.	Is the amount on line 3 more than the amount on line 6? Yes. Enter the amount from line 6. Also, you may be able to take the additional child tax credit. See the TIP below. No. Enter the amount from line 3			7.
	This is your child tax credit. Enter this amount on Form 1040NR, line 45.
TIP: You may be able to take the additional child tax credit on Form 1040NR, line 60, if you answered “Yes” on line 6 or 7 above. First, complete your Form 1040NR through line 59. Then, use Form 8812 to figure any additional child tax credit.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.

Income Effectively Connected With U.S. Trade or Business

Pub. 519 explains how income is classified and what income you should report here. The instructions for this section assume you have decided that the income involved is effectively connected with a U.S. trade or business in which you were engaged. But your decision may not be easy. “Interest,” for example, may be effectively connected with a U.S. trade or business, it may not be, or it may be tax-exempt. The tax status of income also depends on its source. Under some circumstances, items of income from foreign sources are treated as effectively connected with a U.S. trade or business. Other items are reportable as effectively connected or not effectively connected with a U.S. trade or business, depending on how you elect to treat them.

Line 8—Wages, salaries, tips, etc. Enter the total of your effectively connected wages, salaries, tips, etc. For most people, the amount to enter on this line should be shown in box 1 of their Form(s) W-2. However, do not include on line 8 amounts exempted under a tax treaty. Instead, include these amounts on line 22 and complete item M on page 5 of Form 1040NR.

Also include on line 8:

Wages received as a household employee for which you did not receive a Form W-2 because your employer paid you less than $1,400 in 2003. Also, enter “HSH” and the amount not reported on a Form W-2 on the dotted line next to line 8.
Tip income you did not report to your employer. Also include allocated tips shown on your Form(s) W-2 unless you can prove that you received less. Allocated tips should be shown in box 8 of your Form(s) W-2. They are not included as income in box 1. See
Pub. 531 for more details.

You may owe social security and Medicare tax on unreported or allocated tips. See the instructions for line 52 on page 19.
Dependent care benefits, which should be shown in box 10 of your Form(s) W-2. But first complete Form 2441 to see if you may exclude part or all of the benefits.
Employer-provided adoption benefits, which should be shown in
box 12 of your Form(s) W-2 with code T. You may also be able to exclude amounts if you adopted a child with special needs and the adoption became final in 2003. See the Instructions for Form 8839 to find out if you may exclude part or all of the benefits.
Excess salary deferrals. The amount deferred should be shown in box 12 of your Form W-2 and the “Retirement plan” box in box 13 should be checked. If the total amount you deferred for 2003 under all plans was more than $12,000 (excluding catch-up contributions as explained below), include the excess on line 8. This limit is increased to $15,000 for section 403(b) plans, if you qualify for the 15-year rule in Pub. 571.

A higher limit may apply to participants in section 457(b) deferred compensation plans for the 3 years before retirement age. Contact your plan administrator for more information.

Catch-up contributions. If you were age 50 or older at the end of 2003, your employer may have allowed an additional deferral of up to $2,000 ($1,000 for SIMPLE plans). This additional deferral amount is not subject to the overall limit on elective deferrals.

You may not deduct the amount deferred. It is not included as income in box 1 of your Form W-2.
Disability pensions shown on
Form 1099-R if you have not reached the minimum retirement age set by your employer. Disability pensions received after you reach that age and other payments shown on Form 1099-R (other than payments from an IRA*) are reported on lines 17a and 17b. Payments from an IRA are reported on lines 16a and 16b.
Corrective distributions shown on Form 1099-R of (a) excess salary deferrals plus earnings and (b) excess contributions plus earnings to a retirement plan. But do not include distributions from an IRA* on line 8. Instead, report distributions from an IRA on lines 16a and 16b.

*This includes a Roth, SEP, or SIMPLE IRA.

Missing or Incorrect Form W-2. Your employer is required to provide or send Form W-2 to you no later than February 2, 2004. If you do not receive it by early February, ask your employer for it. Even if you do not get a Form W-2, you must still report your earnings on line 8. If you lose your Form W-2 or it is incorrect, ask your employer for a new one.

Line 9a—Taxable interest. Report on line 9a all of your taxable interest income from assets effectively connected with a U.S. trade or business.

If you received interest not effectively connected with a U.S. trade or business, report it on page 4 of
Form 1040NR, unless it is tax exempt under a treaty and the withholding agent did not withhold tax on the payment. See Pub. 901 for a quick reference guide to the provisions of U.S. tax treaties. In addition, interest from a U.S. bank, savings and loan association, credit union, or similar institution, and from certain deposits with U.S. insurance companies, is tax exempt to a nonresident alien if it is not effectively connected with a U.S. trade or business.

Interest credited in 2003 on deposits that you could not withdraw because of the bankruptcy or insolvency of the financial institution may not have to be included in your 2003 income. For details, see Pub. 550.

Line 9b—Tax-exempt interest. Certain types of interest income from investments in state and municipal bonds and similar instruments are not taxed by the United States. If you received such tax-exempt interest income, report the amount on line 9b. Include any exempt-interest dividends from a mutual fund or other regulated investment company. Do not include interest earned on your IRA or Coverdell education savings account. Also do not include interest from a U.S. bank, savings and loan association, credit union, or similar institution (or from certain deposits with U.S. insurance companies) that is exempt from tax under a tax treaty or under section 871(i) because the interest is not effectively connected with a U.S. trade or business.

Line 10a—Ordinary dividends. Enter your total ordinary dividends from assets effectively connected with a U.S. trade or business. Each payer should send you a Form 1099-DIV.

Capital Gain Distributions. If you received any capital gain distributions, see the instructions for line 14a on page 11.

Nontaxable Distributions. Some distributions are nontaxable because they are a return of your cost (or other basis). They will not be taxed until you recover your cost (or other basis). You must reduce your cost (or other basis) by these distributions. After you get back all of your cost (or other basis), you must report these distributions as capital gains on Schedule D
(Form 1040). For details, see Pub. 550.

Dividends on insurance policies are a partial return of the premiums you paid. Do not report them as dividends. Include them in income only if they exceed the total of all net premiums you paid for the contract.

Line 10b—Qualified dividends. Enter your total qualified dividends on line 10b. Qualified dividends are eligible for a lower tax rate than other ordinary income. Generally, these dividends are shown in box 1b of your Form(s) 1099-DIV. See Pub. 550 for the definition of qualified dividends if you received dividends not reported on Form 1099-DIV.

Exception. Some dividends may be reported as qualified dividends in box 1b of Form 1099-DIV but are not qualified dividends. These include:

Dividends you received as a nominee. See Chapter 1 in Pub. 550.
Dividends you received on any share of stock that you held for less than 61 days during the 120-day period that began 60 days before the ex-dividend date. The ex-dividend date is the first date following the declaration of a dividend on which the purchaser of a stock is not entitled to receive the next dividend payment. When counting the number of days you held the stock, include the day you disposed of the stock but not the day you acquired it. See the examples below.
Dividends attributable to periods totaling more than 366 days that you received on any share of preferred stock held for less than 91 days during the 180-day period that began 90 days before the ex-dividend date. Preferred dividends attributable to periods totaling less than 367 days are subject to the 61-day holding period rule above.
Dividends on any share of stock to the extent that you are under an obligation (including a short sale) to make related payments with respect to positions in substantially similar or related property.
Payments in lieu of dividends, but only if you know or have reason to know that the payments are not qualified dividends.

Example 1. You bought 5,000 shares of XYZ Corp. common stock on July 1, 2003. XYZ Corp. paid a cash dividend of 10 cents per share. The ex-dividend date was July 9, 2003. Your Form 1099-DIV from XYZ Corp. shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). However, you sold the 5,000 shares on August 4, 2003. You held your shares of XYZ Corp. for only 34 days of the 120-day period (from July 2, 2003, through August 4, 2003). The 120-day period began on May 10, 2003 (60 days before the ex-dividend date), and ended on September 6, 2003. You have no qualified dividends from XYZ Corp. because you held the XYZ stock for less than 61 days.

Example 2. Assume the same facts as in Example 1 except that you bought the stock on July 8, 2003 (the day before the ex-dividend date), and you sold the stock on September 9, 2003. You held the stock for 63 days (from July 9, 2003, through September 9, 2003). However, you have no qualified dividends from XYZ Corp. because you held the stock for only 60 days of the 120-day period (from July 9, 2003, through September 6, 2003).

Example 3. You bought 10,000 shares of ABC Mutual Fund common stock on July 1, 2003. ABC Mutual Fund paid a cash dividend of 10 cents a share. The ex-dividend date was July 9, 2003. The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. However, you sold the 10,000 shares on August 4, 2003. You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days.

Be sure you use Schedule D or the Qualified Dividends and Capital Gain Tax Worksheet, whichever applies, to figure your tax. Your tax may be less. See the instructions for line 39 on page 16 for details.

Line 11—Taxable refunds, credits, or offsets of state and local income taxes. If you received a refund, credit, or offset of state or local income taxes in 2003, you may receive a Form 1099-G. If you chose to apply part or all of the refund to your 2003 estimated state or local income tax, the amount applied is treated as received in 2003.

For details on how to figure the amount you must report as income, see Recoveries in Pub. 525.

Line 12—Scholarship and fellowship grants. If you received a scholarship or fellowship, part or all of it may be taxable.

If you were a degree candidate, the amounts you used for expenses other than tuition and course-related expenses (fees, books, supplies, and equipment) are generally taxable. For example, amounts used for room, board, and travel are generally taxable.

If you were not a degree candidate, the full amount of the scholarship or fellowship is generally taxable. Also, amounts received in the form of a scholarship or fellowship that are payment for teaching, research, or other services are generally taxable as wages even if the services were required to get the grant.

If the grant was reported on
Form(s) 1042-S, you must generally include the amount shown in box 2 of Form(s) 1042-S on line 12. However, if any or all of that amount is exempt by treaty, do not include the treaty-exempt amount on line 12. Instead, include the treaty-exempt amount on line 22 and complete item M on page 5 of Form 1040NR.

Attach any Form(s) 1042-S you received from the college or institution. If you did not receive a Form 1042-S, attach a statement from the college or institution (on their letterhead) showing the details of the grant.

For more information about scholarships and fellowships in general, see Pub. 970.

Example 1. You are a citizen of a country that has not negotiated a tax treaty with the United States. You are a candidate for a degree at ABC University (located in the United States). You are receiving a full scholarship from ABC University. The total amounts you received from ABC University during 2003 are as follows:

	Tuition and fees	$25,000
	Books, supplies, and equipment	1,000
	Room and board	9,000
		$35,000

The Form 1042-S you received from ABC University for 2003 shows $9,000 in box 2 and $1,260 (14% of $9,000) in box 7.

Note:

Box 2 shows only $9,000 because withholding agents (such as ABC University) are not required to report section 117 amounts (tuition, fees, books, supplies, and equipment) on Form 1042-S.

When completing Form 1040NR:

Enter on line 12 the $9,000 shown in box 2 of Form 1042-S.
Enter $0 on line 31. Because
section 117 amounts (tuition, fees, books, supplies, and equipment) were not included in box 2 of your Form 1042-S (and are not included on line 12 of Form 1040NR), you cannot exclude any of the section 117 amounts on line 31.
Include on line 57 the $1,260 shown in box 7 of Form 1042-S.

Example 2. The facts are the same as in Example 1 except that you are a citizen of a country that has negotiated a tax treaty with the United States and you were a resident of that country immediately before leaving for the United States to attend ABC University. Also, assume that, under the terms of the tax treaty, all of your scholarship income is exempt from tax because ABC University is a nonprofit educational organization.

Note:

Many tax treaties do not permit an exemption from tax on scholarship or fellowship grant income unless the income is from sources outside the United States. If you are a resident of a treaty country, you must know the terms of the tax treaty between the United States and the treaty country to claim treaty benefits on Form 1040NR. See the instructions for item M on page 26 for details.

When completing Form 1040NR:

Be sure you have entered your home country and permanent address in the space provided on page 1.
Enter $0 on line 12. The $9,000 reported to you in box 2 of
Form 1042-S is reported on line 22 (not line 12).
Enter $9,000 on line 22.
Enter $0 on line 31. Because none of the $9,000 reported to you in box 2 of Form 1042-S is included in your income, you cannot exclude it on
line 31.
Include on line 57 any withholding shown in box 7 of Form 1042-S.
Provide all the required information in item M on page 5.

Line 13—Business income or (loss). If you operated a business or practiced your profession as a sole proprietor, report your effectively connected income and expenses on Schedule C or Schedule C-EZ (Form 1040).

Include any income you received as a dealer in stocks, securities, and commodities through your U.S. office. If you dealt in these items through an independent agent, such as a U.S. broker, custodian, or commissioned agent, your income may not be considered effectively connected with a U.S. business.

Line 14a—Capital gain or (loss). If you had effectively connected capital gains or losses, including any effectively connected capital gain distributions, you must complete and attach Schedule D (Form 1040). But see the Exception below. Enter the effectively connected gain or (loss) from Schedule D (Form 1040) on line 14a.

Gains and losses from disposing of U.S. real property interests are reported on Schedule D (Form 1040) and included on line 14a of Form 1040NR. See Dispositions of U.S. Real Property Interests on page 6.

Exception. You do not have to file Schedule D (Form 1040) if both of the following apply.

The only amounts you have to report on Schedule D (Form 1040) are effectively connected capital gain distributions from box 2a of Form(s) 1099-DIV or substitute statements and post-May 5 capital gain distributions from box 2b.
None of the Forms 1099-DIV or substitute statements have an amount in box 2c (qualified 5-year gain), box 2d (unrecaptured section 1250 gain), box 2e (section 1202 gain), or box 2f (collectibles (28%) gain).

If both of the above apply, enter your effectively connected capital gain distributions (from box 2a of Form(s) 1099-DIV) on line 14a and check the box on that line. If you received capital gain distributions as a nominee (that is, they were paid to you but actually belong to someone else), report on line 14a only the amount that belongs to you. Attach a statement showing the full amount you received and the amount you received as a nominee. See Chapter 1 of Pub. 550 for filing requirements for Forms 1099-DIV and 1096.

If you do not have to file Schedule D, be sure you use the Qualified Dividends and Capital Gain Tax Worksheet on page 17 to figure your tax. Your tax may be less if you use this worksheet.

Line 14b—Post-May 5 capital gain distributions. If you checked the box on line 14a because you are not required to file Schedule D, enter your total post-May 5 capital gain distributions on line 14b. This amount should be shown in box 2b of your Form(s) 1099-DIV or substitute statements. Reduce your total post-May 5 capital gain distributions by any post-May 5 capital gain distributions you received as a nominee (see the instructions for line 14a).

Line 15—Other gains or (losses). If you sold or exchanged assets used in a U.S. trade or business, see the Instructions for Form 4797.

Lines 16a and 16b—IRA distributions. You should receive a Form 1099-R showing the amount of any distribution from your individual retirement arrangement (IRA). Unless otherwise noted in the line 16a and 16b instructions, an IRA includes a traditional IRA, Roth IRA, simplified employee pension (SEP) IRA, and a savings incentive match plan for employees (SIMPLE) IRA. Except as provided below, leave line 16a blank and enter the total distribution on
line 16b.

Exception 1. Enter the total distribution on line 16a if you rolled over part or all of the distribution from one:

IRA to another IRA of the same type (for example, from one traditional IRA to another traditional IRA), or
SEP or SIMPLE IRA to a traditional IRA.

Also, put “Rollover” next to line 16b. If the total distribution was rolled over, enter zero on line 16b. If the total distribution was not rolled over, enter the part not rolled over on line 16b unless Exception 2 applies to the part not rolled over.

If you rolled over the distribution (a) in 2004 or (b) from an IRA into a qualified plan (other than an IRA), attach a statement explaining what you did.

Exception 2. If any of the following apply, enter the total distribution on
line 16a and use Form 8606 and its instructions to figure the amount to enter on line 16b.

You received a distribution from an IRA (other than a Roth IRA) and you made nondeductible contributions to any of your traditional or SEP IRAs for 2003 or an earlier year. If you made nondeductible contributions to these IRAs for 2003, also see Pub. 590.
You received a distribution from a Roth IRA. But if either 1 or 2 below applies, enter -0- on line 16b; you do not have to see Form 8606 or its instructions.
1. Distribution code T is shown in box 7 of your Form 1099-R and you made a contribution (including a conversion) to a Roth IRA for 1998.
2. Distribution code Q is shown in box 7 of your Form 1099-R.
You converted part or all of a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2003.
You had a 2002 or 2003 IRA contribution returned to you, with the related earnings or less any loss, by the due date (including extensions) of your tax return for that year.
You made excess contributions to your IRA for an earlier year and had them returned to you in 2003.
You recharacterized part or all of a contribution to a Roth IRA as a traditional IRA contribution, or vice versa.

Note:

If you received more than one distribution, figure the taxable amount of each distribution and enter the total of the taxable amounts on line 16b. Enter the total amount of those distributions on line 16a.

You may have to pay an additional tax if (a) you received an early distribution from your IRA and the total was not rolled over or (b) you were born before July 1, 1932, and received less than the minimum required distribution from your traditional, SEP, and SIMPLE IRAs. See the instructions for line 53 on page 19 for details.

Lines 17a and 17b—Pensions and annuities. Use lines 17a and 17b to report effectively connected pension and annuity payments you received. You should receive a Form 1099-R showing the amount you received. For details on rollovers and lump-sum distributions, see page 13. But if this income is not effectively connected with your U.S. trade or business, report it on line 79.

Simplified Method Worksheet—Lines 17a and 17b
(keep for your records)

Before you begin: If you are the beneficiary of a deceased employee or former employee who died before August 21, 1996, see Pub. 939 to find out if you are entitled to a death benefit exclusion of up to $5,000. If you are, include the exclusion in the amount entered on line 2 below.
Note: If you had more than one partially taxable pension or annuity, figure the taxable part of each separately. Enter the total of the taxable parts on Form 1040NR, line 17b. Enter the total pension or annuity payments received in 2003 on Form 1040NR, line 17a.
1.	Enter the total pension or annuity payments received in 2003. Also, enter this amount on Form 1040NR, line 17a			1.
2.	Enter your cost in the plan at the annuity starting date		2.
3.	Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below		3.
4.	Divide line 2 by line 3		4.
5.	Multiply line 4 by the number of months for which this year's payments were made. If your annuity starting date was before 1987, skip lines 6 and 7 and enter this amount on line 8. Otherwise, go to line 6		5.
6.	Enter the amount, if any, recovered tax free in years after 1986		6.
7.	Subtract line 6 from line 2		7.
8.	Enter the smaller of line 5 or line 7			8.
9.	Taxable amount. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, enter this amount on Form 1040NR, line 17b. If your Form 1099-R shows a larger amount, use the amount on this line instead of the amount from Form 1099-R			9.

Table 1 for Line 3 Above
IF the age at annuity starting date (see page 13) was . . .		AND your annuity starting date was—
		before November 19, 1996, enter on line 3 . . .	after November 18, 1996, enter on line 3 . . .
55 or under		300	360
56–60		260	310
61–65		240	260
66–70		170	210
71 or older		120	160
Table 2 for Line 3 Above
IF the combined ages at annuity starting date (see page 13) were . . .			THEN enter on line 3 . . .
110 or under			410
111–120			360
121–130			310
131–140			260
141 or older			210

Do not include the following payments on lines 17a and 17b. Instead, report them on line 8.

Disability pensions received before you reach the minimum retirement age set by your employer.
Corrective distributions of excess salary deferrals or excess contributions to retirement plans.

If you received a Form 1099-R that shows Federal income tax withheld, attach it to Form 1040NR.

Some annuities are tax-exempt. See Chapter 3 of Pub. 519.

Note:

If you perform services in the United States, your income is generally effectively connected with the conduct of a U.S. trade or business. (See section 864 and Regulations
section 1.864-2 for details and exceptions.) When you receive a pension in a later year as a result of effectively connected services, the pension is also considered effectively connected with the conduct of a U.S. trade or business.

Fully Taxable Pensions and Annuities. If your pension or annuity is fully taxable, enter it on line 17b; do not make an entry on line 17a. Your payments are fully taxable if (a) you did not contribute to the cost (defined on page 13) of your pension or annuity or (b) you got your entire cost back tax free before 2003.

If you received a Form RRB-1099-R, see Pub. 575 for information on how to report your benefits.

Partially Taxable Pensions and Annuities. Enter the total pension or annuity payments you received in 2003 on line 17a. If your Form 1099-R does not show the taxable amount, you must use the General Rule explained in
Pub. 939 to figure the taxable part to enter on line 17b. But if your annuity starting date (defined below) was after July 1, 1986, see Simplified Method below to find out if you must use that method to figure the taxable part.

You can ask the IRS to figure the taxable part for you for a $90 fee. For details, see Pub. 939.

If your Form 1099-R shows a taxable amount, you may report that amount on line 17b. But you may be able to report a lower taxable amount by using the General Rule or the Simplified Method.

Annuity Starting Date. Your annuity starting date is the later of the first day of the first period for which you received a payment, or the date the plan's obligations became fixed.

Simplified Method. You must use the Simplified Method if (a) your annuity starting date (defined above) was after July 1, 1986, and you used this method last year to figure the taxable part or (b) your annuity starting date was after November 18, 1996, and both of the following apply.

The payments are from a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity.
On your annuity starting date, either you were under age 75 or the number of years of guaranteed payments was fewer than 5. See Pub. 575 for the definition of guaranteed payments.

If you must use the Simplified Method, complete the worksheet on page 12 to figure the taxable part of your pension or annuity. For more details on the Simplified Method, see Pub. 575.

Age (or Combined Ages) at Annuity Starting Date. If you are the retiree, use your age on the annuity starting date. If you are the survivor of a retiree, use the retiree's age on his or her annuity starting date. But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, use your combined ages on the annuity starting date.

If you are the beneficiary of an employee who died, see Pub. 575. If there is more than one beneficiary, see Pub. 575 to figure each beneficiary's taxable amount.

Cost. Your cost is generally your net investment in the plan as of the annuity starting date. It does not include pre-tax contributions. Your net investment should be shown in box 9b of Form 1099-R for the first year you received payments from the plan.

Rollovers. A rollover is a tax-free distribution of cash or other assets from one retirement plan that is contributed to another plan. Use lines 17a and 17b to report a rollover, including a direct rollover, from one qualified employer's plan to another or to an IRA or SEP.

Enter on line 17a the total distribution before income tax or other deductions were withheld. This amount should be shown in box 1 of
Form 1099-R. From the total on
line 17a, subtract any contributions (usually shown in box 5) that were taxable to you when made. From that result, subtract the amount that was rolled over. Enter the remaining amount, even if zero, on line 17b. Write “Rollover” next to line 17b.

Special rules apply to partial rollovers of property. For more details on rollovers, including distributions under qualified domestic relations orders, see Pub. 575.

Lump-Sum Distributions. If you received a lump-sum distribution from a profit-sharing or retirement plan, your Form 1099-R should have the “Total distribution” box in box 2b checked. You may owe an additional tax if you received an early distribution from a qualified retirement plan and the total amount was not rolled over. For details, see the instructions for line 53 on
page 19.

Enter the total distribution on
line 17a and the taxable part on
line 17b.

You may be able to pay less tax on the distribution if you were born before January 2, 1936, you meet certain other conditions, and you choose to use Form 4972 to figure the tax on any part of the distribution. You may also be able to use Form 4972 if you are the beneficiary of a deceased employee who was born before January 2, 1936. For details, see Form 4972.

Line 20—Unemployment compensation. You should receive a Form 1099-G showing the total unemployment compensation paid to you in 2003.

If you received an overpayment of unemployment compensation in 2003 and you repaid any of it in 2003, subtract the amount you repaid from the total amount you received. Enter the result on line 20. Also, enter “Repaid” and the amount you repaid on the dotted line next to line 20. If, in 2003, you repaid unemployment compensation that you included in gross income in an earlier year, you may deduct the amount repaid on Schedule A (Form 1040NR), line 11. But if you repaid more than $3,000, see Repayments in Pub. 525 for details on how to report the repayment.

Line 21—Other income. Use this line to report any other income effectively connected with your U.S. business that is not reported elsewhere on your return or other schedules. List the type and amount of income. If necessary, show the required information on an attached statement. For more details, see Miscellaneous Income in
Pub. 525.

Taxable distributions from a Coverdell education savings account (ESA). Distributions from a Coverdell ESA may be taxable if (a) they are more than the qualified education expenses of the designated beneficiary in 2003 and (b) they were not included in a qualified rollover. See Pub. 970. Include these taxable distributions on line 21.

You may have to pay an additional tax if you received a taxable distribution from a Coverdell ESA. See the Instructions for Form 5329.

Qualified tuition program earnings. You must generally include this type of income on line 21. However, you may be able to exclude part or all of the earnings from income if (a) the qualified tuition program was established and maintained by a state (or agency or instrumentality of the state) and (b) any part of the distribution was used to pay qualified higher education expenses. Also, you may be able to exclude part or all of the earnings from income if they were included in a qualified rollover. See Pub. 970.

You may have to pay an additional tax if you received qualified tuition program earnings that are included on line 21. See the Instructions for Form 5329.

Report other income on page 4 of Form 1040NR if not effectively connected with a U.S. trade or business.

Line 22. Use line 22 to report your total effectively connected income that is exempt from tax by a tax treaty. Do not include this exempt income on line 23. Also, you must complete item M on page 5 of Form 1040NR.

Adjusted Gross Income

Line 24—Educator expenses. If you were an eligible educator in 2003, you can deduct up to $250 of qualified expenses you paid in 2003. An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.

Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. An ordinary expense is one that is common and accepted in your educational field. A necessary expense is one that is helpful and appropriate for your profession as an educator. An expense does not have to be required to be considered necessary.

Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. You must reduce your qualified expenses by the following amounts.

Excludable U.S. series EE and I savings bond interest from Form 8815.
Nontaxable qualified state tuition program earnings.
Nontaxable earnings from Coverdell education savings accounts.
Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2.

Line 25—IRA deduction.

If you made any nondeductible contributions to a traditional individual retirement arrangement (IRA) for 2003, you must report them on Form 8606.

If you made contributions to a traditional IRA for 2003, you may be able to take an IRA deduction. But you must have had earned income to do so. A statement should be sent to you by June 1, 2004, that shows all contributions to your traditional IRA for 2003.

Were You Covered by a Retirement Plan? If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc.) at work or through self-employment, your IRA deduction may be reduced or eliminated. But you can still make contributions to an IRA even if you cannot deduct them. In any case, the income earned on your IRA contributions is not taxed until it is paid to you.

The “Retirement plan” box in box 13 of your Form W-2 should be checked if you were covered by a plan at work even if you were not vested in the plan. You are also covered by a plan if you were self-employed and had a SEP, SIMPLE, or qualified retirement plan.

If you were covered by a retirement plan and you file Form 8815 or you exclude employer-provided adoption benefits, see Pub. 590 to figure the amount, if any, of your IRA deduction.

Special rule for married individuals. If you checked filing status box 3, 4, or 5 and you were not covered by a retirement plan but your spouse was, you are considered covered by a plan unless you lived apart from your spouse for all of 2003.

See Pub. 590 for more details.

Line 26—Student loan interest deduction. You may take this deduction only if all four of the following apply.

You paid interest in 2003 on a qualified student loan (see below).
You checked filing status box 1, 2, or 6.
Your modified adjusted gross income (AGI) is less than $65,000. Use lines 2 through 4 of the worksheet on this page to figure your modified AGI.
You are not claimed as a dependent on someone else's (such as your parent's) 2003 tax return.

Use the worksheet on this page to figure your student loan interest deduction.

Student Loan Interest Deduction Worksheet—Line 26
(keep for your records)

Before you begin: Complete Form 1040NR, lines 27 through 31, if they apply to you. Figure any amount to be entered on the dotted line next to line 32 (see the instructions for line 32 on page 15). See the instructions for line 26 on this page.
1.	Enter the total interest you paid in 2003 on qualified student loans (defined below). Do not enter more than $2,500		1.
2.	Enter the amount from Form 1040NR, line 23	2.
3.	Enter the total of the amounts from Form 1040NR, line 24, line 25, and lines 27 through 31, plus any amount you entered on the dotted line next to line 32	3.
4.	Subtract line 3 from line 2	4.
5.	Is line 4 more than $50,000?
	□ No. Skip lines 5 and 6, enter -0- on line 7, and go to line 8.
	□ Yes. Subtract $50,000 from line 4	5.
6.	Divide line 5 by $15,000. Enter the result as a decimal (rounded to at least three places). If the result is 1.000 or more, enter 1.000		6.	.
7.	Multiply line 1 by line 6		7.
8.	Student loan interest deduction. Subtract line 7 from line 1. Enter the result here and on Form 1040NR, line 26. Do not include this amount in figuring any other deduction on your return (such as on Schedule A (Form 1040NR), Schedule C (Form 1040), Schedule E (Form 1040), etc.)		8.

Qualified student loan. This is any loan you took out to pay the qualified higher education expenses for yourself, your spouse, or anyone who was your dependent when the loan was taken out. The person for whom the expenses were paid must have been an eligible student (see below). However, a loan is not a qualified student loan if (a) any of the proceeds were used for other purposes or (b) the loan was from either a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan. To find out who is a related person, see Pub. 970.

Qualified higher education expenses generally include tuition, fees, room and board, and related expenses such as books and supplies. The expenses must be for education in a degree, certificate, or similar program at an eligible educational institution. An eligible educational institution includes most colleges, universities, and certain vocational schools. You must reduce the expenses by the following benefits.

Employer-provided educational assistance benefits that are not included in box 1 of your Form(s) W-2.
Excludable U.S. series EE and I savings bond interest from Form 8815.
Nontaxable qualified state tuition program earnings.
Nontaxable earnings from Coverdell education savings accounts.
Any scholarship, educational assistance allowance, or other payment (but not gifts, inheritances, etc.) excluded from income.

For more details on these expenses, see Pub. 970.

An eligible student is a person who:

Was enrolled in a degree, certificate, or other program (including a program of study abroad that was approved for credit by the institution at which the student was enrolled) leading to a recognized educational credential at an eligible educational institution and
Carried at least half the normal full-time workload for the course of study he or she was pursuing.

Line 27—Moving expenses. Employees and self-employed persons (including partners) can deduct certain moving expenses. The move must be in connection with employment that generates effectively connected income.

If you moved in connection with your job or business or started a new job, you may be able to take this deduction. But your new workplace must be at least 50 miles farther from your old home than your old home was from your old workplace. If you had no former workplace, your new workplace must be at least 50 miles from your old home. The deduction is generally limited to moves to or within the United States or its possessions. If you meet these requirements, see Pub. 521. Use Form 3903 to figure the amount to enter on this line.

Line 28—Self-employed health insurance deduction. If you were self-employed and had a net profit for the year, you may be able to deduct the amount you paid for health insurance for yourself, your spouse, and your dependents. The insurance plan must be established under your business. But if you were also eligible to participate in any subsidized health plan maintained by your or your spouse's employer for any month or part of a month in 2003, amounts paid for health insurance coverage for that month cannot be used to figure the deduction. For example, if you were eligible to participate in a subsidized health plan maintained by your spouse's employer from September 30 through December 31, you cannot use amounts paid for health insurance coverage for September through December to figure your deduction. For more details, see Pub. 535.

Self-Employed Health Insurance Deduction Worksheet—Line 28
(keep for your records)

Before you begin: Complete Form 1040NR, line 29, if it applies to you. If, during 2003, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient, see the Note in the first column above. Be sure you have read the Exception above to see if you can use this worksheet instead of Pub. 535 to figure your deduction.
1.	Enter the total amount paid in 2003 for health insurance coverage established under your business for 2003 for you, your spouse, and dependents. But do not include amounts for any month you were eligible to participate in an employer-sponsored health plan	1.
2.	Enter your net profit and any other earned income* from the business under which the insurance plan is established, minus any deduction you claim on Form 1040NR, line 29	2.
3.	Self-employed health insurance deduction. Enter the smaller of line 1 or line 2 here and on Form 1040NR, line 28	3.
Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. It does not include capital gain income.*

Note:

If, during 2003, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient, you must complete Form 8885 before completing the worksheet below. When figuring the amount to enter on line 1 of the worksheet below, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H. Also, subtract the amount shown on line 4 of Form 8885 (reduced by any advance payments shown on line 6 of that form) from the total insurance premiums you paid.

If you qualify to take the deduction, use the worksheet on this page to figure the amount you can deduct.

Exception. Use Pub. 535 instead of the worksheet below to find out how to figure your deduction if either of the following applies.

You had more than one source of income subject to self-employment tax.
You are using amounts paid for qualified long-term care insurance to figure the deduction.

Line 29—Self-employed SEP, SIMPLE, and qualified plans. If you were self-employed or a partner, you may be able to take this deduction. See Pub. 560 or, if you were a minister, Pub. 517.

Line 30—Penalty on early withdrawal of savings. The
Form 1099-INT or Form 1099-OID you received will show the amount of any penalty you were charged.

Line 31—Scholarship and fellowship grants excluded. If you received a scholarship or fellowship grant and were a degree candidate, enter amounts used for tuition and course-related expenses (fees, books, supplies, and equipment), but only to the extent the amounts are included on line 12. See the examples in the instructions for line 12 on page 10.

Line 32. Include in the total on line 32 any of the following adjustments that are related to your effectively connected income. To find out if you can take the deduction, see the form or publication indicated. On the dotted line next to line 32, enter the amount of your deduction and identify it as indicated.

Archer MSA deduction (see Form 8853). Identify as “MSA.”
Deduction for clean-fuel vehicles (see Pub. 535). Identify as “Clean-Fuel.”
Performing-arts-related expenses (see Form 2106 or 2106-EZ). Identify as “QPA.”
Reforestation amortization (see
Pub. 535). Identify as “RFST.”
Repayment of supplemental unemployment benefits under the Trade Act of 1974 (see Pub. 525). Identify as “Sub-Pay TRA.”
Contributions to section 501(c)(18)(D) pension plans (see Pub. 525). Identify as “501(c)(18)(D).”
Contributions by certain chaplains to section 403(b) plans (see Pub. 517). Identify as “403(b).”

Line 33—Adjusted gross income. If line 33 is less than zero, you may have a net operating loss that you can carry to another tax year. See Form 1045 and its instructions for details.

Tax Computation on Income Effectively Connected With A U.S. Trade or Business

Line 35—Itemized deductions. Enter the total itemized deductions from
line 17 of Schedule A on page 3 of the form.

Note:

Residents of India who were students or business apprentices may be able to take the standard deduction instead of their itemized deductions. See Pub. 519 for details.

Line 37—Deduction for exemptions. You can claim exemptions only to the extent of your income that is effectively connected with a U.S. trade or business.

Individuals. If you are a nonresident alien individual, multiply $3,050 by the total number of exemptions entered on line 7d. (If you were a resident of Japan or the Republic of Korea (South Korea), you must figure the exemptions for your spouse and children according to the proportion your U.S. income bears to your total income. You must also complete item I on page 5 of the form. (For details, see Pub. 519.) But use the worksheet on page 16 to figure the amount, if any, to enter on line 37 if your adjusted gross income from line 34 is more than $139,500 if you checked filing status box 1 or 2; $104,625 if you checked filing status box 3, 4, or 5; $209,250 if you checked filing status box 6.

Estates. If you are filing for an estate, enter $600 on line 37.

Trusts. If you are filing for a trust whose governing instrument requires it to distribute all of its income currently, enter $300 on line 37. If you are filing for a qualified disability trust (defined in section 642(b)(2)(C)(ii)), enter $3,050 on line 37. But if the qualified disability trust's modified AGI (determined under section 67(e) without regard to section 642(b)) is more than $139,500, use the worksheet on page 16 to figure the amount to enter on line 37. If you are filing for any other trust, enter $100 on line 37.

Deduction for Exemptions Worksheet—Line 37
See the instructions for line 37 on page 15.
(keep for your records)

Caution: If you are filing for a qualified disability trust (on page 15), use this worksheet only if the trust's modified AGI* is more than $139,500. Also, skip line 1, enter $3,050 on line 2, enter the trust's modified AGI on line 3, and enter $139,500 on line 4.
1.	Is the amount on Form 1040NR, line 34, more than the amount shown on line 4 below for your filing status?
	□ No. Stop. Multiply $3,050 by the total number of exemptions claimed on Form 1040NR, line 7d, and enter the result on line 37.
	□ Yes. Go to line 2.
2.	Multiply $3,050 by the total number of exemptions claimed on Form 1040NR, line 7d		2.
3.	Enter the amount from Form 1040NR, line 34	3.
4.	Enter the amount shown below for the filing status box you checked on page 1 of Form 1040NR:
	Box 1 or 2, enter $139,500 Box 3, 4, or 5, enter $104,625 Box 6, enter $209,250	4.
5.	Subtract line 4 from line 3. If the result is more than $122,500 ($61,250 if you checked filing status box 3, 4, or 5), stop here. You cannot take a deduction for exemptions.	5.

6.	Divide line 5 by $2,500 ($1,250 if you checked filing status box 3, 4, or 5). If the result is not a whole number, increase it to the next higher whole number (for example, increase 0.0004 to 1)	6.
7.	Multiply line 6 by 2% (.02) and enter the result as a decimal		7.	.
8.	Multiply line 2 by line 7		8.
9.	Deduction for exemptions. Subtract line 8 from line 2. Enter the result here and on Form 1040NR, line 37		9.
*Figure the trust's modified AGI by applying section 67(e) without regard to section 642(b).

A qualified disability trust must enter “Section 642(b)(2)(C)” on the dotted line next to line 37.

Line 39—Tax. Use one of the following methods to figure your tax. Also, include in the total on line 39 any tax from Forms 8814 and 4972. Be sure to check the appropriate box(es).

Tax Table or Tax Rate Schedules. If you are filing for an estate or trust, use the Tax Rate Schedules on page 41.

Individuals. If your taxable income (line 38) is less than $100,000, you must use the Tax Table, which starts on page 29, to figure your tax. Be sure you use the correct column. If you checked filing status box 3, 4, or 5, you must use the Married filing separately column. If your taxable income is $100,000 or more, use the Tax Rate Schedules on page 41.

Exception. Do not use the Tax Table or Tax Rate Schedules to figure your tax if either of the following applies.

You are required to figure your tax using Form 8615, Schedule D (Form 1040), or the Qualified Dividends and Capital Gain Tax Worksheet on page 17.
You use Schedule J (Form 1040) (for farm income) to figure your tax.

Form 8615. You must generally use Form 8615 to figure the tax for any child who was under age 14 at the end of 2003, and who had more than $1,500 of investment income, such as taxable interest, ordinary dividends, or capital gains (including capital gain distributions), that is effectively connected with a U.S. trade or business. But if neither of the child's parents was alive on December 31, 2003, do not use Form 8615 to figure the child's tax.

Also, a child born on January 1, 1990, is considered to be age 14 at the end of 2003. Do not use Form 8615 for such a child.

Schedule D (Form 1040). Use Part IV of Schedule D to figure your tax if you are required to file Schedule D and (a) you had a net capital gain (both lines 16 and 17a of Schedule D are gains) or (b) you have qualified dividends on Form 1040NR, line 10b.

Qualified Dividends and Capital Gain Tax Worksheet. If you received qualified dividends or capital gain distributions but you are not required to file Schedule D (Form 1040), use the worksheet on page 17 to figure your tax.

Schedule J (Form 1040). If you had income from farming, your tax may be less if you choose to figure it using income averaging on Schedule J.

Line 40—Alternative minimum tax. The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. If you benefit from these provisions, you may have to pay a minimum amount of tax through the alternative minimum tax. This tax is figured on Form 6251for individuals. If you are filing for an estate or trust, see Schedule I (Form 1041) and its instructions to find out if you owe this tax.

If you have any of the adjustments or preferences from the list below or you are claiming a net operating loss deduction or the foreign tax credit, you must complete Form 6251. Otherwise, to see if you should complete
Form 6251, add the amount on line 36 of Form 1040NR to the amounts on lines 3 and 15 of Schedule A (Form 1040NR). If the total is more than the dollar amount shown below that applies to you, fill in Form 6251.

$40,250 if you checked filing status box 1 or 2.
$29,000 if you checked filing status box 3, 4, or 5.
$58,000 if you checked filing status box 6.

Disposition of U.S. real property interests. If you disposed of a U.S. real property interest at a gain, you must make a special computation to see if you owe this tax. For details, see the Instructions for Form 6251.

Adjustments and Preferences:

Accelerated depreciation.
Stock by exercising an incentive stock option and you did not dispose of the stock in the same year.
Tax-exempt interest from private activity bonds.
Intangible drilling, circulation, research, experimental, or mining costs.
Amortization of pollution-control facilities or depletion.
Income or (loss) from tax-shelter farm activities or passive activities.
Income from long-term contracts not figured using the percentage-of-completion method.
Alternative minimum tax adjustments from an estate, trust, electing large partnership, or cooperative.
Section 1202 exclusion.

Qualified Dividends and Capital Gain Tax Worksheet—Line 39
(keep for your records)

Before you begin: Be sure you do not have to file Schedule D (Form 1040) (see the instructions for Form 1040NR, line 14a, on page 11). If you have capital gain distributions, be sure you checked the box on line 14a of Form 1040NR.
1.	Enter the amount from Form 1040NR, line 38		1.
2.	Enter the amount from Form 1040NR, line 10b	2.
3.	Enter the amount from Form 1040NR, line 14a	3.
4.	Add lines 2 and 3		4.
5.	Subtract line 4 from line 1. If zero or less, enter -0-		5.
6.	Enter the smaller of:
	The amount on line 1 or $28,400 if you checked filing status box 1, 2, 3, 4, or 5; or $56,800 if you checked filing status box 6		6.
7.	Is the amount on line 5 equal to or more than the amount on line 6?
	□ Yes. Skip lines 7 through 13; go to line 14 and check the “No” box. □ No. Enter the amount from line 5		7.
8.	Subtract line 7 from line 6		8.
9.	Add Form 1040NR, line 14b, and line 2 above	9.
10.	Enter the smaller of line 8 or line 9		10.
11.	Multiply line 10 by 5% (.05)			11.
12.	Subtract line 10 from line 8, if zero or less, go to line 14		12.
13.	Multiply line 12 by 10% (.10)			13.
14.	Are the amounts on lines 4 and 8 the same?
	□ Yes. Skip lines 14 through 23; go to line 24.
	□ No. Enter the smaller of line 1 or line 4		14.
15.	Enter the amount from line 8 (if line 8 is blank, enter -0-)		15.
16.	Subtract line 15 from line 14		16.
17.	Add Form 1040NR, line 14b and line 2 above	17.
18.	Enter the amount from line 10 (if line 10 is blank, enter -0-)	18.
19.	Subtract line 18 from line 17	19.
20.	Enter the smaller of line 16 or line 19		20.
21.	Multiply line 20 by 15% (.15)			21.
22.	Subtract line 20 from line 16. If zero, go to line 24.		22.
23.	Multiply line 22 by 20% (.20)			23.
24.	Figure the tax on the amount on line 5. Use the Tax Table or Tax Rate Schedules, whichever applies			24.
25.	Add lines 11, 13, 21, 23, and 24			25.
26.	Figure the tax on the amount on line 1. Use the Tax Table or Tax Rate Schedules, whichever applies			26.
27.	Tax on all taxable income. Enter the smaller of line 25 or line 26 here and on Form 1040NR, line 39			27.

Form 6251 should be filled in for a child who was under age 14 at the end of 2003 if the child's adjusted gross income from Form 1040NR, line 34, exceeds the child's earned income by more than $5,600.

Credits

Line 42—Foreign tax credit. If you paid income tax to a foreign country, you may be able to take this credit. But only if you:

Report income from foreign sources (see Foreign Income Taxed by the United States on page 6) and
Have paid or owe foreign tax on that income.

Generally, you must complete and attach Form 1116 to take this credit.

Exception. You do not have to complete Form 1116 to take this credit if all six of the following apply.

Form 1040NR is being filed for a nonresident alien individual and not an estate or trust.
All of your gross foreign source income is from the passive category (which includes most interest and dividend income).
All the income and any foreign taxes paid on it were reported to you on qualified payee statements, such as Form 1099-INT, Form 1099-DIV, or similar substitute statements.
If you have dividend income from shares of stock, you held those shares for at least 16 days.
The total of your foreign taxes is not more than $300.
All of your foreign taxes were:

Legally owed and not eligible for a refund and
Paid to countries that are recognized by the United States and do not support terrorism.

Note:

If you need more information about these requirements, see the Instructions for Form 1116.

If you meet all six requirements, enter on line 42 the smaller of your total foreign taxes or the amount on Form 1040NR, line 39. If you do not meet all six requirements, see
Form 1116 to find out if you can take the credit.

Line Instructions for Form 1040NR