Tax Credits and Payments This discussion covers tax credits and payments for residentaliens, followed by a discussion of the credits and payments fornonresident aliens. Resident Aliens Resident aliens generally claim tax credits and report taxpayments, including withholding, using the same rules that apply toU.S. citizens. The following items are some of the credits you may be able toclaim. Child care credit.You may be able to take this credit if you pay someone to care foryour dependent who is under age 13, or your disabled dependent ordisabled spouse, so that you can work or look for work. Generally, youmust be able to claim an exemption for your dependent. For more information, get Publication 503,Child and DependentCare Expenses, and Form 2441, Child and Dependent CareExpenses. Credit for the elderly or the disabled.You may qualify for this credit if you are 65 or over or if youretired on permanent and total disability. For more information onthis credit, get Publication 524, Credit for the Elderly or theDisabled, and Schedule R (Form 1040). Child tax credit.You may be able to take this credit if you have a qualifying child.For this credit a qualifying child: Is a U.S. citizen, national, or resident alien, Is claimed as a dependent on your tax return, Is your son, daughter, adopted child, grandchild, stepchild,or foster child, and Was under age 17 at the end of the year. Use the Child Tax Credit Worksheet in your forminstructions to figure the amount of your credit. Education credits.You may qualify for these credits if you paid qualified tuition andrelated expenses for yourself, your spouse, or your dependent. Thereare two education credits: the Hope credit and the lifetime learningcredit. You cannot claim these credits if you are married filingseparately. Use Form 8863, Education Credits (Hope and LifetimeLearning Credits), to figure the credit. For more information,see Publication 970. Foreign tax credit.You can claim a credit, subject to certain limits, for income taxyou paid or accrued to a foreign country on foreign source income. Youcannot claim a credit for taxes paid or accrued on excluded foreignearned income. To claim a credit for income taxes paid or accrued to aforeign country, you generally will file Form 1116, Foreign TaxCredit (Individual, Estate, Trust or Nonresident Alien Individual),with your Form 1040. For more information, get Publication 514,Foreign Tax Creditfor Individuals. Earned income credit.You may qualify for an earned income credit of up to $2,312 if yourchild lived with you in the United States and your earned income andmodified adjusted gross income were each less than $26,928. If two ormore children lived with you in the United States and your earnedincome and modified adjusted gross income were each less than $30,580,your credit could be as much as $3,816. If you do not have aqualifying child and your earned income and modified adjusted grossincome were each less than $10,200, your credit could be as much as$347. If you are married, you must file a joint return to qualifyunless you lived apart from your spouse during the last 6 months ofthe year and you are eligible to file as head of household. Caution: You, your spouse, and any qualifying child must have SSNs. Youcannot claim this credit using an ITIN. See IdentificationNumber, earlier. Advance earned income credit.You may be able to get advance payments of part of the credit forone child in 2000 instead of waiting until you file your 2000 taxreturn. Fill out the 2000 Form W-5, Earned Income CreditAdvance Payment Certificate. If you expect to qualify for thecredit in 2000, give the bottom part of the form to your employer.Your employer will include part of the credit regularly in your payduring 2000. If you received advance payments of the earned income credit in1999, you must file a 1999 tax return to report the payments. YourForm W-2 will show the amount you received. Other information.There are other eligibility rules that are not discussed here. Formore information, get Publication 596,Earned Income Credit. Adoption credit.You may qualify to take a tax credit of up to $5,000 for qualifyingexpenses paid to adopt an eligible child. The credit can be as much as$6,000 if the expenses are for the adoption of a child with specialneeds. To claim the adoption credit, file Form 8839, QualifiedAdoption Expenses, with your Form 1040 or Form 1040A. For moreinformation, get Publication 968, Tax Benefits forAdoption. Nonresident Aliens You can claim some of the same credits that resident aliens canclaim. You can also report certain taxes you paid, are considered tohave paid, or that were withheld from your income. Credits Credits are allowed only if you receive effectively connectedincome. You may be able to claim some of the following credits. Child care credit.You may qualify for this credit if you pay someone to care for yourdependent who is under age 13, or your disabled dependent or disabledspouse, so that you can work or look for work. Generally, you must beable to claim an exemption for your dependent. Married nonresident aliens can claim the credit only if they chooseto file a joint return with a U.S. citizen or resident spouse asdiscussed in chapter 1,or if they qualify as certain marriedindividuals living apart (see Married Persons Who Live Apartunder Filing Status in the Form 1040NR instructions). The amount of your child and dependent care expense that qualifiesfor the credit in any tax year cannot be more than your earned incomefrom the United States for that tax year. Earned income generallymeans wages, salaries, and professional fees for personal servicesperformed. For more information, get Publication 503. Child tax credit.You may be able to take this credit if you have a qualifying child.For this credit a qualifying child: Is a U.S. citizen, national, or resident alien, Is claimed as a dependent on your tax return, Is your son, daughter, adopted child, grandchild, stepchild,or foster child, and Was under age 17 at the end of the year. Use the Child Tax Credit Worksheet in the Form 1040instructions to figure the amount of your credit. Education credits.If you are a nonresident alien for any part of the year, yougenerally cannot claim the education credits. However, if you aremarried and choose to file a joint return with a U.S. citizen orresident spouse as discussed in chapter 1,you may be eligible forthese credits. Foreign tax credit.If you receive income from sources outside the United States thatis effectively connected with a trade or business in the UnitedStates, you can claim a credit for any income taxes paid or accrued toany foreign country or U.S. possession on that income. If you do not have foreign source income effectively connected witha U.S. trade or business, you cannot claim credits against your U.S.tax for taxes paid or accrued to a foreign country or U.S. possession. You cannot take any credit for taxes imposed by a foreign countryor U.S. possession on your U.S. source income if those taxes wereimposed because you are a citizen or resident of the foreign countryor possession. If you claim a foreign tax credit, you generally will have toattach to your return a Form 1116 which contains additionalinformation about the credit and limits. Credit for prior year minimum tax.If you paid alternative minimum tax in a prior year, get Form 8801,Credit for Prior Year Minimum Tax--Individuals, Estates, andTrusts, to see if you qualify for this credit. Earned income credit.If you are a nonresident alien for any part of the tax year, yougenerally cannot get the earned income credit. However, if you aremarried and choose to file a joint return with a U.S. citizen orresident spouse as discussed in chapter 1,you may be eligible for thecredit. Caution: You, your spouse, and any qualifying child must have SSNs. Youcannot claim this credit using an ITIN. See IdentificationNumber, earlier. See Publication 596for more information on the credit. Adoption credit.You may qualify to take a tax credit of up to $5,000 for qualifyingexpenses paid to adopt an eligible child. The credit can be as much as$6,000 if the expenses are for the adoption of a child with specialneeds. To claim the adoption credit, file Form 8839 with your Form1040NR. For more information, get Publication 968. Married nonresident aliens can claim the credit only if they chooseto file a joint return with a U.S. citizen or resident spouse asdiscussed in chapter 1,or if they qualify as certain marriedindividuals living apart (see Married Persons Who Live Apartunder Filing Status in the Form 1040NR instructions). Tax Withheld You can claim the tax withheld during the year as a payment againstyour U.S. tax. You claim it in the "Payments" section on page 2of Form 1040NR. The tax withheld reduces any tax you owe with Form1040NR. Withholding from wages.Any federal income tax withheld from your wages during the tax yearwhile you were a nonresident alien is allowed as a payment againstyour U.S. income tax liability for the same year. You can claim theincome tax withheld whether or not you were engaged in a trade orbusiness in the United States during the year, and whether or not thewages (or any other income) were connected with a trade or business inthe United States. Excess social security tax withheld.If you have two or more employers, you may be able to claim acredit against your U.S. income tax liability for social security taxwithheld in excess of the maximum required. See Social Securityand Medicare Taxes in chapter 8for more information. Regulated investment company credit.If you are a shareholder in a regulated investment company ormutual fund, you can claim a credit for your share of any taxes paidby the company on its undistributed capital gains. You will receiveinformation on Form 2439, Notice to Shareholder of UndistributedLong-Term Capital Gains, which you must attach to your return. Tax withheld at the source.You can claim as a payment any tax withheld at the source oninvestment and other fixed or determinable annual or periodic incomepaid to you. Fixed or determinable income includes interest, dividend,rental, and royalty income that you do not claim to be effectivelyconnected income. Wage or salary payments can be fixed or determinableincome to you, but usually are subject to withholding as discussedabove. Taxes on fixed or determinable income are withheld at a 30%rate or at a lower treaty rate. Tax withheld on partnership income.If you are a foreign partner in a partnership, the partnership willwithhold tax on your share of effectively connected taxable incomefrom the partnership. The partnership will give you a statement onForm 8805, Foreign Partner's Information Statement of Section1446 Withholding Tax, showing the tax withheld. A partnershipthat is publicly traded may withhold on your actual distributions ofeffectively connected income. In this case, the partnership will giveyou a statement on Form 1042-S. In either case, claim the taxwithheld as a payment on line 61b of Form 1040NR. Claiming tax withheld on your return.When you fill out your tax return, take extra care to enter thecorrect amount of any tax withheld shown on your informationdocuments. The following table lists some of the more commoninformation documents and shows where to find the amount of taxwithheld. Form Number Location ofTax Withheld RRB-1042S Box 12 SSA-1042S Box 9 W-2 Box 2 W-2c Line 2 1042-S Column (g) 8805 Line 11 8288-A Box 2