PAGER/SGML Page 1 of 48 Instructions for Form 1040NR Userid: ________ DTD INSTR04 Fileid: D:\USERS\8fllb\documents\epicfiles\2007Instructions1040NR.sgm Leadpct: 0% Pt. size: 9.5 ❏ Draft ❏ Ok to Print (Init. & date) 7:48 - 6-DEC-2007 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. 2007 Instructions for Form 1040NR U.S. Nonresident Alien Income Tax Return Section references are to the Internal Revenue Code unless otherwise noted. use a different address this year. See Where To File on page 4. General Instructions deduction. The deduction rate for Domestic production activities What’s New for 2007 Tax benefits extended. The following tax benefits were extended through 2007. • Deduction for educator expenses in figuring adjusted gross income. • District of Columbia first-time homebuyer credit. Alternative minimum tax (AMT) exemption amount decreased. The AMT exemption amount is decreased to $33,750 ($45,000 if a qualifying widow(er); $22,500 if married filing separately). For If you are 2007 is increased to 6%. Unreported social security and Medicare tax on wages. an employee and your employer did not withhold social security and Medicare tax, see Form 8919 to figure and report this tax. Refundable credit for prior-year minimum tax. If you have an unused minimum tax credit carryforward from 2004, see Form 8801 to find if you can take this credit. Health savings account (HSA) funding distributions. You may be able to elect to exclude from income a distribution made from your IRA to your HSA. See the instructions for lines 16a and 16b beginning on page 12. New recordkeeping requirements for contributions of money. charitable contributions of money, regardless of the amount, you must maintain as a record of the contribution a bank record (such as a cancelled check) or a written record from the charity. The written record must include the name of the charity, date, and amount of the contribution. See Gifts to U.S. Charities that begins on page 26. Exemption for housing a person displaced by Hurricane Katrina expires. The additional exemption amount for housing a person displaced by Hurricane Katrina does not apply for 2007 or later years. Telephone excise tax credit. credit was available only on your 2006 return. If you filed but did not request it on your 2006 return, file Form 1040X using a simplified procedure explained in its instructions to amend your 2006 return. If you were not required to file a 2006 return, see the 2006 Form 1040EZ-T. What’s New for 2008 IRA deduction expanded. You may be able to deduct up to $5,000 ($6,000 if age 50 or older at the end of the year). You may be able to take an IRA deduction if you were covered by a This Cat. No. 11368V ! At the time these instructions went to print, Congress was considering legislation that CAUTION would increase the amounts above. To find out if this legislation was enacted, and for more details, see the Instructions for Form 6251. IRA deduction expanded. covered by a retirement plan, you may be able to take an IRA deduction if your 2007 modified adjusted gross income (AGI) is less than $62,000 ($103,000 if a qualifying widow(er)). If you were You may be able to deduct up to an additional $3,000 if you were a participant in a 401(k) plan and your employer was in bankruptcy in an earlier year. Standard mileage rates. The 2007 rate for business use of your vehicle is 481/2 cents a mile. The 2007 rate for use of your vehicle to move is 20 cents a mile. The special rate for charitable use of your vehicle to provide relief related to Hurricane Katrina has expired. Elective salary deferrals. The maximum amount you can defer under all plans is generally limited to $15,500 ($10,500 if you only have SIMPLE plans; $18,500 for section 403(b) plans if you qualify for the 15-year rule). See the instructions for line 8 on page 10. Mailing your return. If you are filing the return for an estate or trust, you will Department of the Treasury Internal Revenue Service retirement plan and your 2008 modified AGI is less than $63,000 ($105,000) if a qualifying widow(er)). You may be able to deduct up to an additional $3,000 if you were a participant in a 401(k) plan and your employer was in bankruptcy in an earlier year. Personal exemption and itemized deduction phaseouts reduced. Taxpayers with adjusted gross income above a certain amount may lose part of their deduction for personal exemptions and itemized deductions. The amount by which these deductions are reduced in 2008 will be only 1/2 of the amount of the reduction that otherwise would have applied in 2007. Capital gain tax rate reduced. The 5% capital gain tax rate is reduced to zero. Tax on children’s income. 8615 will be required to figure the tax for the following children with investment income of more than $1,800. Form 1. Children under age 18 at the end of 2008. 2. The following children if their earned income is not more than half their support. a. Children age 18 at the end of 2008. b. Children over age 18 and under age 24 at the end of 2008 who are full-time students. The election to report a child’s investment income on a parent’s return and the special rule for when a child must file Form 6251 will also apply to the children listed above. Expiring tax benefits. The following benefits are scheduled to expire and will not apply for 2008. • Deduction for educator expenses in figuring adjusted gross income. • The exclusion from income of qualified charitable deductions. • Credit for nonbusiness energy property. • District of Columbia first-time homebuyer credit (for homes purchased after 2007).