Part III—Figuring Your Income Tax — 0126 Inst 1040-C (PDF)

Read the descriptions on line 1 of Form 1040-C for Groups I, II, and III to see which group(s) applies to you. If Group I or II applies, use lines 16 through 23 to figure your tax. If Group III applies, use lines 24 and 25 to figure your tax. If you are a nonresident alien to which both Groups II and III apply, use lines 16 through 25 to figure your tax.

business loss adjustment figured on Form 461, Limitation on Business Losses .

Excess business loss adjustment. Excess business losses for noncorporate taxpayers are limited to tax years beginning after 2020 and before 2029. Also, excess business losses are now computed without regard to any deduction allowed under section 172 or 199A and without regard to any deductions, gross income, or gains attributable to any trade or business of performing services as an employee. See Form 461 and its instructions for more information.

Line 20. Credits. If you are a Group I (resident alien) filer, you can claim the same credits as on Form 1040 (or 1040-SR). If you are a Group II (nonresident alien with income effectively connected with a U.S. trade or business) filer, you can generally claim the same credits as on Form 1040-NR.

Line 22. Other taxes. Enter on line 22 any other taxes such as those listed below. Also, use the 2025 Instructions for Form 1040 or the 2025 Instructions for Form 1040-NR for information on the additional taxes to include on this line.

Self-employment tax. This tax applies to resident aliens and to nonresident aliens if an international social security agreement in effect determines that the nonresident alien is covered under the U.S. social security system. The self-employment tax rate for 2026 is 15.3%. This includes a 2.9% Medicare tax and a 12.4% social security tax. Use Schedule SE (Form 1040) to figure your self-employment tax. See Schedule SE (Form 1040) and its instructions, available at IRS.gov/ScheduleSE , for more information.

You can find more information on international social security agreements (also known as totalization agreements) at IRS.gov/TotalizationAgreements .

Line 17. Adjustments. If you are a resident alien, you can take the adjustments allowed on Form 1040 (or 1040-SR). The current Instructions for Form 1040 have information on adjustments you can take.

If you are a nonresident alien and have income effectively connected with a U.S. trade or business, you can take the adjustments allowed on Form 1040-NR. See the Instructions for Form 1040-NR.

If you are a nonresident alien and all your income is not effectively connected with a U.S. trade or business, you cannot take any adjustments.

Social security and Medicare taxes on tip income not reported to employer. If you received tips of $20 or more in any month and you did not report the full amount to your employer, you must generally pay these taxes. See the Instructions for Form 1040 or the Instructions for Form 1040-NR.
Social security and Medicare taxes not withheld by employer. If you are an employee who received wages from an employer who did not withhold social security and Medicare taxes from your wages, you may owe these taxes. See the Instructions for Form 1040 or the Instructions for Form 1040-NR.
Additional Medicare Tax. For information about the Additional Medicare Tax, see the Instructions for Form 8959 .

• Net investment income tax. For information about the net investment income tax, see the Instructions for Form 8960 .

• Additional tax on IRAs, other qualified retirement plans, etc. If you received a distribution from or made an excess contribution to one of these plans, you may owe this tax. See the Instructions for Form 1040 or the Instructions for Form 1040-NR.

Household employment taxes. If you pay cash wages to any one household employee in 2026, you may owe this tax. See the Instructions for Form 1040 or the Instructions for Form 1040-NR.

Adjustments that you take on line 17 include the qualified business income deduction and the excess

Instructions for Form 1040-C (Rev. 1-2026) 7

Tax on accumulation distribution of trusts. Use Form 4970, Tax on Accumulation Distribution of Trusts , to

figure the tax.

Tax from recapture of investment credit. Use Form 4255, Recapture of Investment Credit, to figure the tax.

• Tax from recapture of low-income housing credit. Use Form 8611, Recapture of Low-Income Housing Credit , to figure the tax.

• Tax from recapture of federal mortgage subsidy. Use Form 8828, Recapture of Federal Mortgage Subsidy , to figure the tax.

Line 25. Tax. Generally, you must enter 30% of the amount on line 24. However, if you are entitled to a lower rate or an exemption from tax because of a treaty between your country and the United States, attach a statement showing your computation of the tax. Also, include the applicable treaty article(s).

You can find information on lower rates or an

TIP exemption from tax because of a treaty between

your country and the United States at IRS.gov/ TreatyTables.

Line 29. Other payments. Include on line 29 any of the following payments. See the Instructions for Form 1040 or the Instructions for Form 1040-NR for details on other payments to include on this line.

Earned income credit (EIC). This credit applies only to resident aliens. Enter any EIC that is due to you.
Additional child tax credit. For information on the credit and any changes for 2026, see Pub. 505, Tax Withholding and Estimated Tax . If you are a Group I

(resident alien) filer and you exclude any foreign earned income from your gross income (see section 911 and Form 2555, Foreign Earned Income ), you may not claim any additional child tax credit here on line 29. You are only allowed to claim the child tax credit to the extent allowable on line 20.

Net premium tax credit (PTC). For information about the net PTC, see the Instructions for Form 8962 and Pub. 974, Premium Tax Credit .

• U.S. income tax paid at previous departure during the tax period. Enter any tax you paid if you previously departed the United States during this tax period.

Excess social security and RRTA tax withheld. If you had two or more employers in 2026 who together paid you more than $184,500 in wages, too much social security tax or tier 1 railroad retirement (RRTA) tax may have been withheld. See Pub. 505 .
Credit for federal tax paid on fuels. Use Form 4136, Credit for Federal Tax Paid on Fuels , to figure the credit.