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IRS.gov Website
Instructions for Form 1040-NR
taxmap/instr2/i1040nr-015.htm#en_us_publink11368vd0e7578

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Tax Computation on Income Effectively Connected With a U.S. Trade or Business(p28)

rule
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Line 38—Itemized deductions.(p28)
rule
Enter the total itemized deductions from line 15 of Schedule A on page 3 of the form. However, your deduction may be limited if your adjusted gross income is above a certain amount depending on your filing status. See the instructions for Schedule A, line 15, for more details.
taxtip
Residents of India who were students or business apprentices may be able to take the standard deduction instead of their itemized deductions. See chapter 5 of Pub. 519 for details.
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Line 40—Deduction for exemptions.(p29)
rule
You can claim exemptions only to the extent of your income that is effectively connected with a U.S. trade or business.
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Individuals.
(p29)
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Multiply $4,000 by the total number of exemptions entered on line 7d. But use the Deduction for Exemptions Worksheet—Line 40 to figure the amount, if any, to enter on line 40 if your AGI from line 37 is more than:
taxtip
If you were a resident of South Korea, you must figure the exemptions for your spouse and children according to the proportion your U.S. effectively connected income bears to your total income. See chapter 5 of Pub. 519 for more details.
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Estates.
(p29)
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Enter $600 on line 40.
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Trusts.
(p29)
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If you are filing for a trust whose governing instrument requires it to distribute all of its income currently, enter $300 on line 40.
If you are filing for a qualified disability trust (defined in section 642(b)(2)(C)(ii)), enter $4,000 on line 40. However, if the trust's modified AGI is more than $258,250, then fill out the Deduction for Exemptions Worksheet—Line 40 to determine the amount to enter on this line. You figure the trust's modified AGI by applying section 67(e) without regard to section 642(b). See How to figure AGI for estates and trusts in the instructions for Form 1041, line 15c. When those line instructions refer to the trust's exemption, use zero.
If you are filing for any other trust, enter $100 on line 40.
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pencilDeduction for Exemptions Worksheet—Line 40
See the instructions for line 40, earlier.
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Caution:(p29).
If you are filing for a qualified disability trust (see Trusts, earlier), use this worksheet only if the trust's modified AGI* is more than $258,250. Also, skip line 1, enter $4,000 on line 2, enter the trust's modified AGI on line 3, and enter $258,250 on line 4.

1.Is the amount on Form 1040NR, line 37, more than the amount shown on line 4 below for your filing status?
No. stop Multiply $4,000 by the total number of exemptions claimed on Form 1040NR, line 7d, and enter the result on Form 1040NR, line 40.
Yes. Go to line 2.
2.Multiply $4,000 by the total number of exemptions claimed on Form 1040NR, line 7d2.
3.Enter the amount from Form 1040NR, line 373.  
4.Enter the amount shown below for the filing status box you checked on page 1 of Form 1040NR:
  • Box 1 or 2, enter $258,250
  • Box 3, 4, or 5, enter $154,950
  • Box 6, enter $309,900
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. 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% (0.02) and enter the result as a decimal7.
8.Multiply line 2 by line 78.
9.Deduction for exemptions. Subtract line 8 from line 2. Enter the result here and on Form 1040NR, line 40 9.
*Figure the trust's modified AGI by applying section 67(e) without regard to section 642(b).
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Line 42—Tax.(p29)
rule
Include in the total on line 42 all of the following taxes that apply.
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Tax Table or Tax Computation Worksheet.(p30)
rule
If you are filing for an estate or trust, use the Tax Rate Schedules, later.
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Individuals.(p30)
rule
If your taxable income (line 41) is less than $100,000, you must use the Tax Table, later in the instructions, 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 Computation Worksheet after the Tax Table.
However, do not use the Tax Table or Tax Computation Worksheet to figure your tax if any of the following applies.
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Form 8615.(p30)
rule
You generally must use Form 8615 to figure the tax for any child who had more than $2,100 of unearned 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, and who:
  1. Was under age 18 at the end of 2015,
  2. Was age 18 at the end of 2015 and did not have earned income that was more than half of the child's support, or
  3. Was a full-time student at least age 19 but under age 24 at the end of 2015 and did not have earned income that was more than half of the child's support.
But if the child files a joint return for 2015 or if neither of the child's parents was alive at the end of 2015, do not use Form 8615 to figure the child's tax.
A child born on January 1, 1998, is considered to be age 18 at the end of 2015; a child born on January 1, 1997, is considered to be age 19 at the end of 2015; a child born on January 1, 1992, is considered to be age 24 at the end of 2015.
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Schedule D Tax Worksheet.(p30)
rule
If you have to file Schedule D (Form 1040), and line 18 or 19 of Schedule D is more than zero, use the Schedule D Tax Worksheet in the Instructions for Schedule D to figure the amount to enter on Form 1040NR, line 42.
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Qualified Dividends and Capital Gain Tax Worksheet.(p30)
rule
Use the Qualified Dividends and Capital Gain Tax Worksheet, later, to figure your tax if you do not have to use the Schedule D Tax Worksheet and if any of the following applies.
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pencilQualified Dividends and Capital Gain Tax Worksheet—Line 42
1.Enter the amount from Form 1040NR, line 41 1.  
2.Enter the amount from Form 1040NR, line 10b 2.    
3.Are you filing Schedule D (Form 1040)?        
 Yes. Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or line 16 is blank or a loss, enter -0-. 3.    
 No. Enter the amount from Form 1040NR, line 14.     
4.Add lines 2 and 34.    
5.Subtract line 4 from line 1. If zero or less, enter -0- 5.  
6.If you checked the filing status:
  • Box 1, 2, 3, 4, or 5, enter $37,450
  • Box 6, enter $74,900

6.
  
7.Enter the smaller of line 1 or line 67.  
8.Enter the smaller of line 5 or line 78.  
9.Subtract line 8 from line 7. This amount is taxed at 0%9.
10.Enter the smaller of line 1 or line 410.  
11.Enter the amount from line 9 11.  
12.Subtract line 11 from line 1012.  
13.If you checked the filing status:
  • Box 1 or 2, enter $413,200
  • Box 3, 4, or 5, enter $232,425
  • Box 6, enter $464,850
13.  
14.Enter the smaller of line 1 or line 1314.  
15.Add lines 5 and 915.  
16.Subtract line 15 from line 14. If zero or less, enter -0-16.  
17.Enter the smaller of line 12 or line 1617.  
18.Multiply line 17 by 15% (0.15)18.
19.Add lines 9 and 1719.  
20.Subtract line 19 from line 1020.  
21.Multiply line 20 by 20% (0.20)21.
22.Figure the tax on the amount on line 5.
  • If the amount on line 5 is less than $100,000, use the Tax Table to figure the tax.
  • If the amount on line 5 is $100,000 or more, use the Tax Computation Worksheet*
22.  
23.Add lines 18, 21, and 2223.
24.Figure the tax on the amount on line 1.
  • If the amount on line 1 is less than $100,000, use the Tax Table to figure the tax.
  • If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet*
24.
25.Tax on all taxable income. Enter the smaller of line 23 or line 24. Also include this amount on Form 1040NR, line 42 25.
*Estates and trusts must use the Tax Rate Schedules.
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Schedule J (Form 1040).(p30)
rule
If you had income from farming or fishing (including certain amounts received in connection with the Exxon Valdez litigation), your tax may be less if you choose to figure it using income averaging on Schedule J.
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Line 43—Alternative minimum tax.(p30)
rule
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 6251 for 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 in Adjustments and Preferences, later, or you are claiming a net operating loss deduction, a general business credit, or the foreign tax credit, you must complete Form 6251. Otherwise, to see if you should complete Form 6251, add the amount on line 39 of Form 1040NR to the amounts on lines 1 and 13 of Schedule A (Form 1040NR). If the total is more than the dollar amount shown below that applies to you, fill in Form 6251.
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Disposition of U.S. real property interests.(p30)
rule
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 Nonresident Aliens in the Instructions for Form 6251.
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Adjustments and Preferences.(p30)
rule
caution
Form 6251 should be filled in for a child if Form 8615 must be used to figure the child's tax and the child's AGI on Form 1040NR, line 37, exceeds the child's earned income by more than $7,400. To find out when Form 8615 must be used, see Form 8615 in the instructions for line 42.
For help with the alternative minimum tax, go to IRS.gov/AMT.
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Line 44—Excess advance premium tax credit repayment.(p30)
rule
The premium tax credit helps pay premiums for health insurance purchased from the Marketplace. If advance payments were made for coverage for you, your spouse, or your dependent, complete Form 8962. If the advance payments were more than the premium tax credit you can claim, enter the amount from Form 8962, line 29.
You may have to repay excess advance premium tax credit payments even if someone else enrolled you, your spouse, or your dependent. You may also have to repay excess advance premium tax credit payments if you enrolled someone in coverage through the Marketplace whom you do not claim as a dependent on your return. For more information, see the Instructions for Form 8962.