Hello ATE & others,

I was reading pub501, pub901 and 1040NR-EZ instructions regarding the $5000 exemption for students from India. However, I am unclear about the correct way to report it in 1040NR-EZ. Could you please let me know which of the following is appropriate?

1. Deduct it from total income and then enter the remainder of income in line 3 (Wages,salaries etc.), enter $5000 in line 6 and report it on page 2 (section j)

OR

2. Report as a standard deduction in line 11, enter $5000 in line 6 and report it on page 2 (section j)

Thanks...

AtlantaTaxExpert

Use option 2 if you are submitting Form 1040EZ.

anishs

ATE - So in case of using option 2... in line 11 i will have to report $5000 and the state taxes i aready paid correct?
So if i paid $3000 in state taxes and $5000 treaty deduction - the total entry in line 11 would be $8000?

Please confirm - would me much appreciated

thanks!!

AtlantaTaxExpert

Negative.

The deduction you can claim is either the standard deduction of $5,000 or all of the itemized deductions, whichever is greater.

Example: You work in NY city and have $2,500 withheld in NY state taxes and $1,000 in NYC taxes. You also gave $2,000 to the Katrina fund as a charitable donation. Your total itemized deduction is $5,500, so you put $5,500 on the Itemized Deduction on Form 1040NR, and file Schedule A with the form.

Example: Same as above, but you gave nothing to charity. In that case, your itemized deduction is only $3,500, so you claim the standard deduction on Line 11 of Form 1040NR-EZ.