OPT/H1B tax and mortgage questions

lalgac · Post by **lalgac** » Sun Feb 13, 2011 12:17 am

I am a Canadian citizen and worked in New York under OPT (F1 visa) for 9 months and H1B for the rest 3 months in 2010. Shall I file 1040NR or 1040R? Do I need to file a Canada tax return too? (No income from Canada, and didn't live in Canada for whole year.)

I have a joint home mortgage in Canada. Can I declare the mortgage interests and the property tax paid in 2010 as deductible for US income tax? If yes, how much can I declare (full paid amount or only half of it due to the joint situation)?

Thanks for your help in advance!

nelsona · Post by **nelsona** » Sun Feb 13, 2011 10:14 am

For Canada you need to file in Canada as long as you are considered resident there. The earliest you could be considered non-resident is the day you started H1. Then it would depend on your Cdn ties and US ties after that date.

For US, you have 4 choices, which I've described here fully many times:
1. 1040NR for the whole year.
2. 1040NR using XXV.
3. dual-status return, or
4. full 1040 joint return.

You can only use (2) if you are still resident of Canada for full year.
you can choose between (1) and (3) regardless of what your Cdn status is.
you can choose 4 if you can't use (2) and (4) is better than 1 and 3.

lalgac · Post by **lalgac** » Sun Feb 13, 2011 8:06 pm

Thanks nelsona. 1040NR for the whole year seems a better choice for me. Any suggestions regarding to the mortgage interests question? Let me be clear, my family still live in Canada, only me came to US for study and work. Thanks again.

nelsona · Post by **nelsona** » Sun Feb 13, 2011 9:40 pm

You can read the instructions for 1040NR. The fact that the mortgage is on a Cdn property does not disqualify it from eligibility.

BUT, don't worry too much about lowering your US tax. Your overall tax including on your Cdn return, which will includes your US income, won't be reduced by lowering your US tax. It will just shift more of the tax to Canada.

lalgac · Post by **lalgac** » Mon Feb 14, 2011 12:38 am

Thanks nelsona!

shaionee · Post by **shaionee** » Tue May 24, 2011 6:43 am

How does rental income on a 1st mortgage affect mortgage affordability on a second home? For example if my 1st mortgage is $1000 per month and i charge a rental income of $1000 per month, is it a wash? Or do i get the $1000 rental income added to my gross monthly income and have the $1000 mortgage payment added to my monthly liabilities?