Can a nonresident alien deduct mortgage interest (on home owned in U.S.), property taxes or anything else on CA Source Income on his/her 540NR return? This person did not claim them on the 1040NR since they were exempt from tax based upon UK/US Treaty. What about foreign taxes if they paid tax on that income in the UK as well?

As noted, non-resident aliens CANNOT claim mortgage interest or property taxes as itemized deductions on his FEDERAL return, so it is unlikely these items are deductible on the California return. The same logic applies for foreign taxes paid to the U.K.

However, more detailed research would be required to be sure, but I will not perform such research without compensation.

Recommend you query the California Franchise Tax Board via email using the link below:

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Hello! Thanks very much for the candid response. I am a CA CPA but this is not my specialty. I would tend to agree w/ your assumption re: CA itemized deductions but cannot be sure either. I am a Deloitte Alumni and fortunately have access to those resources. I am waiting for a response from a partner in this area now. If you'd like, I can pass on any information received. Thanks so much.

Yes, please post the answer.

I have a number of clients in California who MAY benefit from the answer if California does allow such deductions.

Further, this forum is about sharing information, so please share.

There is essentially nothing available in the way of deductions for those filing as a nonresident in CA. However, keep in mind that, if you owe CA tax, it may be worth deducting that tax on your resident return filed in your home country. So, if it that return has already been filed (i.e. UK Inland Revenue return), it may be worth revising if the amount is material.

Thanks for sharing.