Deductions Resident and nonresident aliens can claim similar deductions ontheir U.S. tax returns. However, nonresident aliens generally canclaim only deductions related to income that is effectively connectedwith their U.S. trade or business. Resident Aliens You can claim the same deductions allowed to U.S. citizens if youare a resident alien for the entire tax year. While the discussionthat follows contains some of the same general rules and guidelinesthat apply to you, it is specifically directed toward nonresidentaliens. You should get Form 1040 and instructions for more informationon how to claim your allowable deductions. Nonresident Aliens You can claim deductions to figure your effectively connectedtaxable income. You generally cannot claim deductions related toincome that is not connected with your U.S. business activities.Except for personal exemptions, and certain itemized deductions,discussed later, you can claim deductions only to the extent they areconnected with your effectively connected income. Ordinary and necessary business expenses.You can deduct all ordinary and necessary expenses in the operationof your U.S. trade or business to the extent they relate to incomeeffectively connected with that trade or business. The deduction fortravel expenses while in the United States is discussed, later, underItemized Deductions. For information about other businessexpenses, see Publication 535. Losses.You can deduct losses resulting from transactions that you enteredinto for profit and that you were not reimbursed for by insurance,etc., to the extent that they relate to income that is effectivelyconnected with a trade or business in the United States. Individual retirement arrangement (IRA).You may qualify to establish a traditional IRA whether or not youare covered by a qualified retirement plan at work. You can contributethe smaller of $2,000 or your taxable compensation effectivelyconnected with your U.S. trade or business to an IRA each year. If youor your spouse are covered by a plan at work, or you are self-employedand had a Keogh, SEP, or SIMPLE retirement plan, you can only deductthese contributions subject to certain limits. For more information, see Publication 590,IndividualRetirement Arrangements (IRAs) (Including Roth IRAs and EducationIRAs). Moving expenses.If you are a nonresident alien temporarily in the United Statesearning taxable income for performing personal services, you candeduct moving expenses to the United States if you meet both of thefollowing tests. hotel rooms BournemouthYou are a full-time employee for at least 39 weeks duringthe 12 months right after you move, or if you are self-employed, youwork full time for at least 39 weeks during the first 12 months and 78weeks during the first 24 months right after you move. Your new job location is at least 50 miles farther (by theshortest commonly traveled route) from your former home than yourformer job location was. If you had no former job location, the newjob location must be at least 50 miles from your former home. You cannot deduct the moving expense you have when returning toyour home abroad or moving to a foreign job site. Figure your deductible moving expenses to the United States on Form3903, and deduct them on line 27 of Form 1040NR. For more information on the moving expense deduction, seePublication 521. Reimbursements.If you were reimbursed by your employer for allowable movingexpenses, your employer should have excluded these reimbursements fromyour income. You can only deduct allowable moving expenses that werenot reimbursed by your employer or that were reimbursed but thereimbursement was included in your income. For more information, seePublication 521. Moving expense or travel expense.If you deduct moving expenses to the United States, you cannot alsodeduct travel expenses (discussed, later, under ItemizedDeductions) while temporarily away from your tax home in aforeign country. Moving expenses are based on a change in yourprincipal place of business while travel expenses are based on yourtemporary absence from your principal place of business. Keogh and self-employed SEP and SIMPLE plans.If you are self-employed, you may be able to deduct contributionsto a qualified retirement plan that provides retirement benefits foryourself and your common-law employees, if any. To make deductiblecontributions for yourself, you must have net earnings fromself-employment that are effectively connected with your U.S. trade orbusiness. Get Publication 560,Retirement Plans for Small Business (SEP,SIMPLE, and Keogh Plans), for further information. Penalty on early withdrawal of savings.You must include in income all effectively connected interestincome you receive or that is credited to your account during theyear. Do not reduce it by any penalty you must pay on an earlywithdrawal from a time savings account. However, if the interestincome is effectively connected with your U.S. trade or businessduring the year, you can deduct on line 30 of Form 1040NR the amountof the early withdrawal penalty that the banking institution charged. Student loan interest.You may be able to deduct interest you pay on a qualified studentloan. You can deduct student loan interest if all of thefollowing apply. You paid interest in 1999 on a qualified studentloan. At least part of the interest paid in 1999 was paid duringthe first 60 months that payments were required to be made. Your filing status is any status except married filingseparately. Your modified adjusted gross income is less than$55,000. You are not claimed as a dependent on someone's 1999 taxreturn. For more information see Publication 970,Tax Benefits forHigher Education.