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Publication 519


Resident and nonresident aliens can claim similar deductions on their U.S. tax returns. However, nonresident aliens generally can claim only deductions related to income that is effectively connected with their U.S. trade or business.

Resident Aliens(p26)

You can claim the same deductions allowed to U.S. citizens if you are a resident alien for the entire tax year. While the discussion that follows contains some of the same general rules and guidelines that apply to you, it is specifically directed toward nonresident aliens. You should get Form 1040 and its instructions for more information on how to claim your allowable deductions.

Nonresident Aliens(p27)

You can claim deductions to figure your effectively connected taxable income. You generally cannot claim deductions related to income that is not connected with your U.S. business activities. Except for certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income.

Ordinary and necessary business expenses.(p27)

You can deduct all ordinary and necessary expenses in the operation of your U.S. trade or business to the extent they relate to income effectively connected with that trade or business. For information about other business expenses, see Pub. 535.

Qualified business income deduction.(p27)

Beginning in 2018, you may be able to deduct up to 20% of your qualified business income from your qualified trade or business, plus 20% of your qualified REIT dividends and qualified PTP income. For more information, see Line 38 in the Instructions for Form 1040NR.


You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc. to the extent that they relate to income that is effectively connected with a trade or business in the United States.
However, you can only deduct business losses of up to $250,000 ($500,000 if married filing a joint return) in 2018. The excess business loss is treated as a net operating loss carryover. Complete Form 461 and file it with your tax return if your business losses are more than $250,000. For more information, see Form 461 and the Instructions for Form 461.

Educator expenses.(p27)

If you were an eligible educator in 2018, you can deduct as an adjustment to income up to $250 in unreimbursed qualified expenses you paid or incurred during 2018 for certain professional development courses, and for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services), and other supplementary equipment and materials you use in the classroom. For more information, see your tax form instructions.

Individual retirement arrangement (IRA).(p27)

If you made contributions to a traditional IRA for 2018, you may be able to take an IRA deduction. But you must have taxable compensation effectively connected with a U.S. trade or business to do so. A Form 5498 should be sent to you by May 31, 2019, that shows all contributions to your traditional IRA for 2018. 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 a traditional IRA even if you cannot deduct them. If you made nondeductible contributions to a traditional IRA for 2018, you must report them on Form 8606.
For more information, see Pub. 590-A.

Moving expenses.(p27)

Beginning in 2018, the deduction for moving expenses is suspended unless you are a member of the U.S. Armed Forces on active duty and, due to a military order, you move because of a permanent change of station. For more information, see Pub. 3, Armed Forces' Tax Guide, and Pub. 521. Use Form 3903 to figure the amount to deduct.

Services or reimbursements provided by government to members of the U.S. Armed Forces.(p27)

Don't include in income the value of moving and storage services provided by the government because of a move pursuant to a military order incident to a permanent change of station. Similarly, don't include in income amounts received as a dislocation allowance, temporary lodging expense, temporary lodging allowance, or move-in housing allowance. For more information, see Pub. 3.

Self-employed SEP, SIMPLE, and qualified retirement plans.(p27)

If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U.S. trade or business.
Get Pub. 560 for further information.

Penalty on early withdrawal of savings.(p27)

You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. However, if the interest income is effectively connected with your U.S. trade or business during the year, you can deduct on line 30 of Form 1040NR the amount of the early withdrawal penalty that the banking institution charged.

Student loan interest deduction.(p27)

If you paid interest on a student loan in 2018, you may be able to deduct up to $2,500 of the interest you paid. Generally, you can claim the deduction if all the following requirements are met.
  1. Your filing status is any filing status except married filing separately.
  2. Your modified adjusted gross income is less than $80,000.
  3. No one else is claiming you as a dependent on his or her 2018 tax return.
  4. You paid interest on a loan taken out only to pay tuition and other qualified higher education expenses for yourself, your spouse, someone who was your dependent when the loan was taken out, or someone 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 or $4,150 for 2018, or
    3. You could be claimed as a dependent on someone else's return.
  5. The loan is not from a related person or a person who borrowed the proceeds under a qualified employer plan or a contract purchased under such a plan.
  6. The education expenses were paid or incurred within a reasonable period of time before or after the loan was taken out.
  7. The person for whom the expenses were paid or incurred was an eligible student.
Use the worksheet in the Form 1040NR or Form 1040NR-EZ instructions to figure the deduction. For more information, see Pub. 970.