Tax Preparation Help  
Instructions for Form 1040NR-EZ 2006 Tax Year

Line Instructions for Form 1040NR-EZ

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Identifying Number and Address

Identifying number.   You are generally required to enter your social security number (SSN). To apply for this number, get Form SS-5, Application for a Social Security Card, from your local Social Security Administration (SSA) office or call the SSA at 1-800-772-1213. You can also download Form SS-5 from the SSA's website at www.socialsecurity.gov/online/ss-5.html. You must visit an SSA office in person and submit your Form SS-5 along with original documentation showing your age, identity, immigration status, and authority to work in the United States. If you are an F-1 or M-1 student, you must also show your Form I-20. If you are a J-1 exchange visitor, you will also need to show your Form DS-2019. Generally, you will receive your card about 2 weeks after the SSA has all the evidence and information it needs.

  If you do not have an SSN and are not eligible to get one, 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.

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.

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

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.

Filing Status

Lines 1 and 2.   The amount of your tax depends on your filing status. Before you decide which box to check, read the following explanation.

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, you may consider yourself single for the whole year.

  If your spouse died in 2006, consider yourself married to that spouse for the whole year, unless you remarried before the end of 2006.

U.S. national.   A U.S. national is an individual who, although not a U.S. citizen, owes his or her allegiance to the United States. U.S. nationals include American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.

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

  2. You paid more than half of the cost to keep up your home in 2006.

  3. You lived apart from your spouse during the last 6 months of 2006.

  4. Your home was the main home of your child, stepchild, or foster child for more than half of 2006. Temporary absences, such as for school, vacation, or medical care, count as time lived in the home.

  5. You are able to claim a dependency exemption for the child (on Form 1040NR) or the child's other parent claims him or her as a dependent under the rules for children of divorced or separated parents. See Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents.

Adopted child.   An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

Foster child.   A foster child is any child placed with you by an authorized placement agency, or by judgment, decree, or other order of any court of competent jurisdiction.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on your return. 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.

Taxable Income

Line 3—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 their Form(s) W-2, box 1. However, do not include on line 3 amounts exempted under a tax treaty. Instead, include these amounts on line 6 and complete item J on page 2 of Form 1040NR-EZ.

  Also include on line 3:
  • Wages received as a household employee for which you did not receive a Form W-2 because your employer paid you less than $1,500 in 2006. Also, enter “HSH” and the amount not reported on a Form W-2 on the dotted line next to line 3.

  • 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 your Form(s) W-2, box 8. They are not included as income in box 1. See
    Pub. 531 for more details.

    Caution
    You may owe social security and Medicare tax on unreported or allocated tips. See the instructions for line 16.

  • Disability pensions shown on
    Form 1042-S or Form 1099-R if you have not reached the minimum retirement age set by your employer.

You must use Form 1040NR to report disability pensions received after you reach your employer's minimum retirement age and other payments shown on Form 1042-S or Form 1099-R .

Missing or incorrect Form W-2.   Your employer is required to provide or send Form W-2 to you no later than January 31, 2007. 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 3. If you lose your Form W-2 or it is incorrect, ask your employer for a new one.

Dependent care benefits.   If you received benefits for 2006 under your employer's dependent care plan, you must use Form 1040NR. The benefits should be shown in your Form(s) W-2, box 10.

Adoption benefits.   If you received employer-provided adoption benefits for 2006, you must use Form 1040NR. The benefits should be shown in your Form(s) W-2, box 12, with code T.

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, enter “TEI” and the amount of your tax-exempt interest on the dotted line next to line 3. Include any exempt-interest dividends from a mutual fund or other regulated investment company. But do not include interest earned on your IRA or Coverdell education savings account, or 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. Do not add any tax-exempt interest to your line 3 total.

Line 4—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 2006, you may receive a
Form 1099-G. If you chose to apply part or all of the refund to your 2006 estimated state or local income tax, the amount applied is treated as received in 2006.

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

Line 5—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 Form(s) 1042-S, box 2, on line 5. However, if any or all of that amount is exempt by treaty, do not include the treaty-exempt amount on line 5. Instead, include the treaty-exempt amount on line 6 and complete item J on page 2 of
Form 1040NR-EZ.

  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 2006 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 2006 shows $9,000 in box 2 and $1,260 (14% of $9,000) in box 7.

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-EZ:
  • Enter on line 5 the $9,000 shown in box 2 of Form 1042-S.

  • Enter $0 on line 8. 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 5 of Form 1040NR-EZ), you cannot exclude any of the section 117 amounts on line 8.

  • Include on line 18 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.

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-EZ. See the instructions for item J, on page 9, for details.

  When completing Form 1040NR-EZ:
  • Enter $0 on line 5. The $9,000 reported to you in box 2 of Form 1042-S is reported on line 6 (not line 5).

  • Enter $9,000 on line 6.

  • Enter $0 on line 8. 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 8.

  • Include on line 18 any withholding shown in box 7 of Form 1042-S.

  • Provide all the required information in item J on page 2.

Line 6.   Use line 6 to report your total effectively connected income that is exempt from tax by a tax treaty. Do not include this exempt income on line 7. Also, you must complete item J on page 2 of Form 1040NR-EZ.

Line 8—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 5. See the examples in the instructions for line 5 on this page.

Student Loan Interest Deduction Worksheet—Line 9

See the instructions for line 9 before you begin.
1. Enter the total interest you paid in 2006 on qualified student loans (defined on this page). Do not enter more than $2,500 1.  
2. Enter the amount from Form 1040NR-EZ, line 7 2.      
3. Enter the amount from Form 1040NR-EZ, line 8 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-EZ, line 9 8.  
Line 9—Student loan interest deduction.   You can take this deduction only if all of the following apply.
  1. You paid interest in 2006 on a qualified student loan (see below).

  2. Your filing status is single.

  3. 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.

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

Qualified student loan.   This is any loan you took out to pay the qualified higher education expenses for:
  1. Yourself and your spouse.

  2. Any person who was your dependent when the loan was taken out.

  3. Any person you could have claimed as a dependent for the year the loan was taken out except that:

    1. The person filed a joint return.

    2. The person had gross income that was equal to or more than the exemption amount for that year ($3,300 for 2006), or

    3. You could be claimed as a dependent on someone else's return.

  The person for whom the expenses were paid must have been an eligible student (defined later on this page). 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 Form(s) W-2, box 1.

  • Excludable U.S. series EE and I savings bond interest from Form 8815.

  • Nontaxable qualified 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 11—Itemized deductions.   Enter the total state and local income taxes you paid or that were withheld from your salary in 2006. But use the worksheet on this page to figure the amount to enter on line 11 if your adjusted gross income from line 10 is more than $150,500 if you checked filing status box 1, or more than $75,250 if you checked filing status box 2. If, during 2006, you received any refunds of, or credits for, income tax paid in earlier years, do not subtract them from the amount you deduct here. Instead, see the instructions for Form 1040NR-EZ, line 4, on page 5.

  

Itemized Deductions Worksheet—Line 11

1. Enter the amount of state and local income taxes you paid or that were withheld from your salary in 2006 1.  
2. Multiply line 1 by 80% (.80) 2.      
3. Enter the amount from Form 1040NR-EZ, line 10 3.      
4. Enter: $150,500 ($75,250 if you checked filing status box 2) 4.      
5. Is the amount on line 4 less than the amount on line 3?        
 
No.
Stop. Your deduction is not limited. Enter the amount from line 1 above on Form 1040NR-EZ, line 11.        
 
Yes.
Subtract line 4 from line 3 5.      
6. Multiply line 5 by 3% (.03) 6.      
7. Enter the smaller of line 2 or line 6 7.  
8. Divide line 7 by 3.0 8.  
9. Subtract line 8 from line 7 9.  
10. Total itemized deductions. Subtract line 9 from line 1. Enter the result here and on Form 1040NR-EZ, line 11. Then, on the dotted line to the left of the line 12 entry space, enter “IDW 10.  

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 13—Exemption deduction.   Generally, you can take an exemption of $3,300 for yourself. But use the worksheet on page 7 to figure the amount, if any, to enter on line 13 if your adjusted gross income from line 10 is more than $150,500 if you checked filing status box 1, or more than $112,875 if you checked filing status box 2.

Residents of Canada, Mexico, the Republic of Korea (South Korea), and U.S. nationals may be able to claim exemptions for their dependents and, if married, their spouse. Residents of India who were students or business apprentices may also be able to take exemptions for their spouse and dependents. However, Form 1040NR must be used to claim the additional exemptions.

Exemption Deduction Worksheet—Line 13

1.   Is the amount on Form 1040NR-EZ, line 10, more than the amount shown on line 4 below for your filing status?  
   
Box
No.
Stop reading here. This doen't apply to you
Enter $3,300 on Form 1040NR-EZ, line 13.    
   
Box
Yes.
Go to line 3.            
2.   Exemption amount 2. $3,300  
3.   Enter the amount from Form 1040NR-EZ, line 10   3.        
4.   Enter the amount shown below for the filing status box you checked on page 1 of Form 1040NR-EZ.            
 
  • Box 1—$150,500

  • Box 2—$112,875

Right brace
.   4.        
5.   Subtract line 4 from line 3.   5.        
6.   Is line 5 more than $122,500 ($61,250 if you checked filing status box 2)?            
   
Box
Yes.
Stop reading here. This doen't apply to you
Enter $1,100 on Form 1040NR-EZ, line 13. Do not complete the rest of this worksheet.            
   
Box
No.
Divide line 5 by $2,500 ($1,250 if you checked filing status box 2). 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 the decimal on line 7 8.    
9.   Divide line 8 by 1.5 9.    
10.   Exemption deduction. Subtract line 9 from line 2. Enter the result here and on
Form 1040NR-EZ, line 13
10.    
 
Line 16—Social security and Medicare tax on tip income not reported to employer.   If you are subject to social security and Medicare tax, you received tips of $20 or more in any month, and you did not report the full amount to your employer, you must pay the social security and Medicare or railroad retirement (RRTA) tax on the unreported tips. You must also pay this tax if your Form(s) W-2 show allocated tips that you are including in your income on Form 1040NR-EZ, line 3.

  To figure the social security and Medicare tax, use Form 4137. To pay the RRTA tax, contact your employer. Your employer will figure and collect the tax.

  
Caution
You may be charged a penalty equal to 50% of the social security and Medicare tax due on tips you received but did not report to your employer.

Payments

Line 18—Federal income tax withheld.   Add the amounts shown as federal income tax withheld on your Form(s) W-2, 1042-S, and 1099-R. Enter the total on line 18. The amount(s) withheld should be shown in your Form(s) W-2, box 2, Form(s) 1042-S, box 7, and Form(s) 1099-R, box 4.

Line 19—2006 Estimated tax payments.   Enter any estimated federal income tax payments you made using Form 1040-ES (NR) for 2006. Include any overpayment from your 2005 return that you applied to your 2006 estimated tax.

Name change.   If you changed your name because of marriage, divorce, etc., and you made estimated tax payments using your former name, attach a statement to the front of
Form 1040NR-EZ. On the statement, list all of the payments you made in 2006 and show the name(s) and identifying number(s) under which you made them.

Line 20—Credit for amount paid with Form 1040-C.   Enter any amount you paid with Form 1040-C for 2006.

Line 21—Credit for federal telephone excise tax paid.   If you were billed after February 28, 2003, and before August 1, 2006, for the federal telephone excise tax on long distance or bundled service, you may be able to request a credit for the tax paid. You had bundled service if your local and long distance service was provided under a plan that does not separately state the charge for local service.

   You cannot request the credit if you already have received a credit or refund from your service provider. If you request the credit, you cannot ask your service provider for a credit or refund and must withdraw any request previously submitted to your provider.

  You can request the standard amount or the actual amount you paid. If you believe you paid more than the standard amount, it can be to your benefit to request the actual amount. If you request the actual amount paid, you must attach Form 8913 showing the amount paid and keep records to substantiate the amount. See Form 8913 for details.

Standard amount.   The standard amount you can request is $30. Enter $30 on line 21 if you are requesting the standard amount. The standard amount includes both the tax paid and interest owed on that tax.

  If you request the standard amount and you later want to change it to the actual amount, you must file an amended return.

  If you request the standard amount, you do not have to include the credit in income for any tax year.

Line 22—Total payments.   Add
lines 18 through 21. Enter the total on line 22.

Amount paid with request for extension of time to file.   If you filed Form 4868 to get an automatic extension of time to file
Form 1040NR-EZ, include in the total on line 22 the amount you paid with that form, or by electronic funds withdrawal, or credit card. If you paid by credit card, do not include on line 22 the convenience fee you were charged. On the dotted line next to line 22, enter “Form 4868” and show the amount paid.

Refund

Line 23—Amount overpaid.   If line 23 is under $1, we will send a refund only on written request.

  
Tip
If the amount you overpaid is large, you may be able to decrease the amount of income tax withheld from your pay by filing a new Form W-4. See Income Tax Withholding and Estimated Tax Payments for 2007 on page 10.

Refund offset.   If you owe past-due federal tax, state income tax, child support, spousal support, or certain federal nontax debts, such as student loans, all or part of the overpayment on line 23 may be used (offset) to pay the past-due amount. Offsets for federal taxes are made by the IRS. All other offsets are made by the Treasury Department's Financial Management Service (FMS). For federal tax offsets, you will receive a notice from the IRS. For all other offsets, you will receive a notice from FMS. To find out if you may have an offset or if you have any questions about it, contact the agency(ies) you owe the debt to.

Lines 24a through 24d—Direct deposit of refund.   
Choose Direct Deposit
 
   
Why Use Direct Deposit?
  • You get your refund fast.

  • Payment is more secure—there is no check to get lost.

  • More convenient. No trip to the bank to deposit your check.

  • Saves tax dollars. A refund by direct deposit costs less than a check.

  If you want us to directly deposit the amount shown on line 24a to your checking or savings account, including an IRA, at a U.S. bank or other financial institution (such as a mutual fund, brokerage firm, or credit union) in the United States:
  • Check the box on line 24a and attach Form 8888 if you want to split the direct deposit of your refund among two or three accounts, or

  • Complete lines 24b through 24d if you want your refund deposited to only one account.


Otherwise, we will send you a check.

If you do not want your refund directly deposited to your account, do not check the box on line 24a. Draw a line through the boxes on lines 24b and 24d.

  
Caution
The IRS is not responsible for a lost refund if you enter the wrong account information. Check with your financial institution to get the correct routing and account numbers and to make sure your direct deposit will be accepted.

  If the direct deposit to your account(s) is different from the amount you expected, you will receive an explanation in the mail about 2 weeks after your refund is deposited.

Line 24a.   If you want to split the direct deposit of your refund among two or three accounts, check the box on line 24a and attach Form 8888. If you want your refund deposited to only one account, do not check the box on line 24a, but instead complete lines 24b through 24d.

Line 24b.   The routing number must be nine digits. The first two digits must be 01 through 12 or 21 through 32. Otherwise, the direct deposit will be rejected and a check sent instead. On the sample check on page 8, the routing number is 250250025.

  Your check may state that it is payable through a financial institution different from the one at which you have your checking account. If so, do not use the routing number on that check. Instead, contact your financial institution for the correct routing number to enter on line 24b.

Line 24c.    Check the appropriate box for the type of account. Do not check more than one box. If the deposit is to an IRA, check the “Savings” box.

Line 24d.    The account number can be up to 17 characters (both numbers and letters). Include hyphens but omit spaces and special symbols. Enter the number from left to right and leave any unused boxes blank. On the sample check above, the account number is 20202086. Do not include the check number.

Line 25—Applied to 2007 estimated tax.   Enter on line 25 the amount, if any, of the overpayment on line 23 you want applied to your 2007 estimated tax. This election cannot be changed later.

Amount You Owe

Line 26—Amount you owe.   
Tip
Pay your taxes in full to save interest and penalties. You do not have to pay if line 26 is under $1.

  Include any estimated tax penalty from line 27 in the amount you enter on line 26.

  You can pay by check, money order, or credit card. Do not include any estimated tax payment for 2007 in your check, money order, or amount you charge. Instead, make the estimated tax payment separately.

To pay by check or money order.   Make your check or money order payable to the “United States Treasury” for the full amount due. Do not send cash. Do not attach the payment to your return. Write “2006 Form 1040NR-EZ” and your name, address, daytime phone number, and SSN or ITIN on your payment.

  To help us process your payment, enter the amount on the right side of the check like this: $ 1040NR-EZ.XX. Do not use dashes or lines (for example, do not enter “$ 1040NR-EZ-” or
$ 1040NR-EZxx/100”).

To pay by credit card.   You can use your American Express® Card, Discover® Card, MasterCard® card, or Visa® card. To pay by credit card, call toll-free or visit the website of either service provider listed on this page and follow the instructions. You will be asked to provide your social security number (SSN). If you do not have and are not eligible to get an SSN, use your IRS issued individual taxpayer identification number (ITIN) instead.

  A convenience fee will be charged by the service provider based on the amount you are paying. Fees may vary between the providers. You will be told what the fee is during the transaction and you will have the option to either continue or cancel the transaction. You can also find out what the fee will be by calling the provider's toll-free automated customer service number or visiting the provider's website listed on this page.

  If you pay by credit card before filing your return, please enter on page 1 of Form 1040NR-EZ in the upper left corner the confirmation number you were given at the end of the transaction and the amount you were charged (not including the convenience fee).

  
  Official Payments Corporation
1-800-2PAY-TAX SM (1-800-272-9829)
1-877-754-4413 (Customer Service)
www.officialpayments.com
  Link2Gov Corporation
1-888-PAY-1040 SM (1-888-729-1040)
1-888-658-5465 (Customer Service)
www.PAY1040.com

  
Tip
You may need to (a) increase the amount of income tax withheld from your pay by filing a new Form W-4, or (b) make estimated tax payments for 2007. See Income Tax Withholding and Estimated Tax Payments for 2007 on page 10.

What if you cannot pay?   If you cannot pay the full amount shown on line 26 when you file, you can ask to make monthly installment payments for the full or a partial amount. You may have up to 60 months to pay. However, even if your request to pay in installments is granted, you will be charged interest and may be charged a late payment penalty on the tax not paid by the due date. You also must pay a fee. To limit the interest and penalty charges, pay as much of the tax as possible when you file. But before requesting an installment agreement, you should consider other less costly alternatives, such as a bank loan or credit card payment.

  To ask for an installment agreement, you can apply online or use Form 9465. To apply online, go to www.irs.gov, use the pull-down menu under “I need to...” and select “Set Up a Payment Plan.” If you use Form 9465, you should receive a response to your request for installments within 30 days. But if you file your return after March 31, it may take us longer to reply.

Line 27—Estimated tax penalty.   You may owe this penalty if:
  • Line 26 is at least $1,000 and it is more than 10% of the tax shown on your return, or

  • You did not pay enough estimated tax by any of the due dates. This is true even if you are due a refund.

  The “tax shown on your return” is the amount on line 17 minus any tax shown on Form 4137.

Exception.    You will not owe the penalty if your 2005 tax return was for a tax year of 12 full months and either of the following applies.
  1. You had no tax shown on your 2005 return and you were a U.S. citizen or resident for all of 2005, or

  2. The total of lines 18, 19, and 20 on your 2006 return is at least as much as the tax shown on your 2005 return. Your estimated tax payments for 2006 must have been made on time and for the required amount.

  
Caution
If your 2005 adjusted gross income was over $150,000 (over $75,000 if you checked filing status box 2 for 2006), item (2) applies only if the total of lines 18, 19, and 20 on your 2006 return is at least 110% of the tax shown on your 2005 return.

  Figuring the penalty. If the Exception above does not apply and you choose to figure the penalty yourself, see Form 2210 to find out if you owe the penalty. If you do, you can use the form to figure the amount.

  Enter the penalty on Form 1040NR-EZ, line 27. Add the penalty to any tax due and enter the total on line 26. If you are due a refund, subtract the penalty from the overpayment you show on line 23. Do not file Form 2210 with your return unless Form 2210 indicates that you must do so. Instead, keep it for your records.

  
Tip
Because Form 2210 is complicated, you can leave line 27 blank and the IRS will figure the penalty and send you a bill. We will not charge you interest on the penalty if you pay by the date specified on the bill. If your income varied during the year, the annualized income installment method may reduce the amount of your penalty. But you must file Form 2210 because the IRS cannot figure your penalty under this method. See the Instructions for Form 2210 for other situations in which you may be able to lower your penalty by filing Form 2210.

Third Party Designee

If you want to allow a friend, family member, or any other person you choose to discuss your 2006 tax return with the IRS, check the “Yes” box in the “Third Party Designee” area of your return. Also, enter the designee's name, U.S. phone number, and any five numbers the designee chooses as his or her personal identification number (PIN). But if you want to allow the paid preparer who signed your return to discuss it with the IRS, just enter “Preparer” in the space for the designee's name. You do not have to provide the other information requested.

If you check the “Yes” box, you are authorizing the IRS to call the designee to answer any questions that may arise during the processing of your return. You are also authorizing the designee to:

  • Give the IRS any information that is missing from your return,

  • Call the IRS for information about the processing of your return or the status of your refund or payment(s),

  • Receive copies of notices or transcripts related to your return, upon request, and

  • Respond to certain IRS notices about math errors, offsets, and return preparation.

You are not authorizing the designee to receive any refund check, bind you to anything (including any additional tax liability), or otherwise represent you before the IRS. If you want to expand the designee's authorization, see
Pub. 947.

The authorization will automatically end no later than the due date (without regard to extensions) for filing your 2007 tax return (see When To File on page 2). If you wish to revoke the authorization before it ends, see Pub. 947.

Other Information (Page 2)

Item D

Enter the type of U.S. visa (for example, F, J, M, etc.) you used to enter the United States. Also enter your current nonimmigrant status. For example, enter your current nonimmigrant status shown on your current U.S. Citizenship and Immigration Services (USCIS) Form I-94, Arrival-Departure Record. If your status has changed while in the United States, enter the date of change. If your status has not changed, enter “N/A.

Item E

You are generally required to enter your date of entry into the United States that pertains to your current nonimmigrant status (for example, the date of arrival shown on your most recent USCIS Form I-94).

Exception.   If you are claiming a tax treaty benefit that is determined by reference to more than one date of arrival, enter the earlier date of arrival. For example, you are currently claiming treaty benefits (as a teacher) under article 20 of the tax treaty between the United States and the Republic of Korea (South Korea). You previously claimed treaty benefits (as a student) under article 21 of that treaty. Under article 21, paragraph 4, of that treaty, the combination of consecutive exemptions under articles 20 and 21 may not extend beyond 5 tax years from the date you entered the United States as a student. If article 21, paragraph 4, of that treaty applies, enter in item E the date you entered the United States as a student.

Item J

If you are a resident of a treaty country (that is, you qualify as a resident of that country within the meaning of the tax treaty between the United States and that country), you must know the terms of the tax treaty between the United States and the treaty country to properly complete item J. You may download the complete text of most U.S. tax treaties at www.irs.gov. Technical explanations for many of those treaties are also available at that site. Also, see Pub. 901 for a quick reference guide to the provisions of U.S. tax treaties.

If you are claiming treaty benefits on Form 1040NR-EZ, you must provide all of the information requested in item J.

Caution
If you are claiming tax treaty benefits and you failed to submit adequate documentation to a withholding agent, you must attach all information that would have otherwise been required on the withholding document (for example, all information required on Form W-8BEN or
Form 8233).

Reminders

Sign and Date Your Return

Form 1040NR-EZ is not considered a valid return unless you sign it. You can have an agent in the United States prepare and sign your return if you could not do so for one of the following reasons:

  • You were ill.

  • You were not in the United States at any time during the 60 days before the return was due.

  • For other reasons that you explained in writing to the Internal Revenue Service Center, Austin, TX 73301-0215, U.S.A., and that the IRS approved.

A return prepared by an agent must be accompanied by a power of attorney. Form 2848 may be used for this purpose.

Be sure to date your return and show your occupation in the United States in the space provided. If you have someone prepare your return, you are still responsible for the correctness of the return.

Child's return.   If your child cannot sign the return, you can sign the child's name in the space provided. Then, add “By (your signature), parent for minor child.

Paid preparer must sign your return.   Generally, anyone you pay to prepare your return must sign it in the space provided. The preparer must give you a copy of the return for your records. Someone who prepares your return but does not charge you should not sign your return.

Address Change

If you move after filing your return, always notify the IRS in writing of your new address. To do this, use Form 8822.

Income Tax Withholding and Estimated Tax Payments for 2007

If the amount you owe or the amount you overpaid is large, you may be able to file a new Form W-4 with your employer to change the amount of income tax withheld from your 2007 pay. For details on how to complete Form W-4, see the Instructions for Form 8233.

In general, you do not have to make estimated tax payments if you expect that your 2007 Form 1040NR-EZ will show a tax refund or a tax balance due the IRS of less than $1,000. If your total estimated tax for 2007 is $1,000 or more, see Form 1040-ES (NR). It has a worksheet you can use to see if you have to make estimated tax payments. However, if you expect to be a resident of Puerto Rico during all of 2007 and you must pay estimated tax, use
Form 1040-ES.

How Long Should Records Be Kept?

Keep a copy of your tax return, worksheets you used, and records of all items appearing on it (such as Forms W-2, 1099, and 1042-S) until the statute of limitations runs out for that return. Usually, this is 3 years from the date the return was due or filed, or 2 years from the date the tax was paid, whichever is later. You should keep some records longer. For example, keep property records (including those on your home) as long as they are needed to figure the basis of the original or replacement property. For more details, see Pub. 552.

Requesting a Copy of Your Tax Return

If you need a copy of your tax return, use Form 4506. There is a $39 fee for each return requested. If your main home, principal place of business, or tax records are located in a Presidentially declared disaster area, this fee will be waived. If you want a free transcript of your tax return or account, use Form 4506-T or call us at 1-800-829-1040.

Amended Return

File Form 1040X to change a return you already filed. Also, use
Form 1040X if you filed
Form 1040NR-EZ and you should have filed a Form 1040, 1040A, or 1040EZ, or vice versa. Generally, Form 1040X must be filed within 3 years after the date the original return was filed, or within 2 years after the date the tax was paid, whichever is later. But you may have more time to file Form 1040X if you are physically or mentally unable to manage your financial affairs. See
Pub. 556 for details.

Interest and Penalties

You do not have to figure the amount of any interest or penalties you may owe. Because figuring these amounts can be complicated, we will do it for you if you want. We will send you a bill for any amount due.

If you include interest or penalties (other than the estimated tax penalty) with your payment, identify and enter the amount in the bottom margin of Form 1040NR-EZ, page 1. Do not include interest or penalties (other than the estimated tax penalty) in the amount you owe on line 26.

Interest.   We will charge you interest on taxes not paid by their due date, even if an extension of time to file is granted. We will also charge you interest on penalties imposed for failure to file, negligence, fraud, substantial valuation misstatements, substantial understatements of tax, and reportable transaction understatements. Interest is charged on the penalty from the due date of the return (including extensions).

Penalty for late filing.   If you do not file your return by the due date (including extensions), the penalty is usually 5% of the amount due for each month or part of a month your return is late, unless you have a reasonable explanation. If you do, attach it to your return. The penalty can be as much as 25% of the tax due. The penalty is 15% per month, up to a maximum of 75%, if the failure to file is fraudulent. If your return is more than 60 days late, the minimum penalty will be $100 or the amount of any tax you owe, whichever is smaller.

Penalty for late payment of tax.   If you pay your taxes late, the penalty is usually ½ of 1% of the unpaid amount for each month or part of a month the tax is not paid. The penalty can be as much as 25% of the unpaid amount. It applies to any unpaid tax on the return. This penalty is in addition to interest charges on late payments.

Penalty for frivolous return.   In addition to any other penalties, the law imposes a penalty of $500 for filing a frivolous return. A frivolous return is one that does not contain information needed to figure the correct tax or shows a substantially incorrect tax because you take a frivolous position or desire to delay or interfere with the tax laws. This includes altering or striking out the preprinted language above the space where you sign.

Other penalties.   Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. See Pub. 519 for details on some of these penalties.

Gift To Reduce Debt Held By the Public

If you wish to make such a gift, make a check payable to “Bureau of the Public Debt.” You can send it to: Bureau of the Public Debt, Department G, P.O. Box 2188, Parkersburg, WV 26106-2188. Or you can enclose the check with your income tax return when you file. Do not add your gift to any tax you may owe. See Amount You Owe beginning on page 8 for details on how to pay any tax you owe.

Tip
You may be able to deduct this gift on your 2007 tax return as a charitable contribution. But you must file Form 1040NR to do so.

Taxpayer Assistance

IRS assistance is available to help you prepare your return. But you should know that you are responsible for the accuracy of your return. If we do make an error, you are still responsible for the payment of the correct tax.

In the United States, you may call 1-800-829-1040. For TTY/TDD help, call 1-800-829-4059. If overseas, you may call 215-516-2000 (English-speaking only). This number is not toll free. The hours of operation are from 6:00 a.m. to 11:00 p.m. Eastern time. These hours are subject to change.

If you wish to write instead of call, please address your letter to: Internal Revenue Service, International Section, P.O. Box 920, Bensalem, PA 19020-8518. Make sure you include your identifying number (defined on page 4) when you write.

Assistance in answering tax questions and filling out tax returns is also available in person from IRS offices in London, Paris, and Frankfurt. The offices generally are located in the U.S. embassies or consulates.

The IRS conducts an overseas taxpayer assistance program during the filing season (January to mid-June). To find out if IRS personnel will be in your area, contact the consular office at the nearest U.S. embassy.

Solving problems.   You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to www.irs.gov/localcontacts or look in the phone book under “United States Government, Internal Revenue Service.

How can you get IRS tax forms and publications?   
  • You can download them from the IRS website at www.irs.gov.

  • In the United States, you can call 1-800-TAX-FORM (1-800-829-3676).

  • You can send your order to the National Distribution Center, P. O. Box 8903, Bloomington, IL 61702-8903, U.S.A.

  • You can pick them up in person from our U.S. embassies and consulates abroad (but only during the tax return filing period).

Help With Unresolved Tax Issues

The Taxpayer Advocate Service is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

You can contact the Taxpayer Advocate Service by calling their toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see if you are eligible for assistance. If overseas, call 01-787-622-8940 (English-speaking only) or 01-787-622-8930 (Spanish-speaking only). These numbers are not toll-free. You also can call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, The Taxpayer Advocate Service of the IRS - How to Get Help With Unresolved Tax Problems. You can file Form 911, Application for Taxpayer Assistance Order, or ask an IRS employee to complete it on your behalf. For more information, go to
www.irs.gov/advocate.

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