Hello,

I moved to the US from Canada on a TN (now H1B) status in August 2005 and so will be filing my US taxes as a nonresident alien for 2005. (I didn't meet substantial presence.) My question is: does anybody know if nonresident aliens can deduct state and local SALES taxes? I live in Florida, so there is no state income tax to deduct; I bought a car when I moved here and so paid quite a bit of sales tax.

I know residents are allowed to deduct sales taxes for 2004 and 2005, but I can't any evidence of nonresidents being able to do it in 2005. And then, in 2004's Pub. 519 "Tax Guide for Aliens", there's a sentence that claims I can deduct sales taxes under "what's new for 2004." However, that sentence has disappeared in 2005's version of Pub. 519.

If it turns out that nonresident aliens can't deduct sales taxes, am I better off filing as a dual-status alien so I can use Form 1040?


Thank you for your help,

Ron

Ron:

Yes, you can deduct the sales taxes. You can use the table provided in the instruction manual for Form 1040 plus whatever you paid for the car.

BTW, if you converted to the H-1B visa prior to November 1st, you should file a dual-status return. Thought you should know!

Thanks for the quick reply! This is great to know. The IRS literature is a bit complex.

As for your second comment, I converted to the H1B in January, so I'll file as a resident alien for 2006, and a nonresident in 2005. I think this means that for 2006, I will have to file form 8891 to defer the taxes on gains made in my Canadian RRSP, which I hold but am not touching. Am I correct?

Thanks again.

Yes, I believe that is correct, but I have no experience with Form 8891. Suggest you address that issue on the forum at the following website which specializes in taxes for aliens:

www.thetaxguy.com