[maxipriest]

Hi,

I studied (on F-1) for 4 years and then worked in US (on H1-B) for another 5 years for 1 company. While with the company, they had created a Profit Sharing Plan for me. I left in 2006 for good and moved to India. In 2008, I withdrew (lump-sum distribution) and they deducted 20% as Fed Tax. I received a 1099-R and it shows the Gross Distribution and same amount as taxable amount in 2a of the 1099-R. 2b has Total Distribtion checked and 7 has Distribtion code=1 . Fed Tax is 20% (box 4) of Gross Distribtion.

While in the US, I had also purchased a house - and since have been making mortgage payments on it.

Since leaving, I have been filling out both the Federal (1040 NREZ) and State (CT-part year/non-resident) tax but since there was no income, it went blank.

However, I still have the house and the mortgage interest, which is substantial.

My questions are:
1) What forms do I now need to fill out? 1040 NR that has Schedule A in it?

2) Can I claim the mortgage interest as Itemized Deduction even though I have not lived in US for 3 years now but I do pay mortgage and real-estate taxes? If yes, the 1040NR Schedule A doesn't seem to have a line for this? If no, is there any other way to claim this deduction?

3) Do I need to pay additional early distribution tax of 10% as stated in line 54 of 1040NR instructions?

4) Do I need to continue to file CT-1040 NR/PY even though I don't live there permanently, but do own a house there on which I pay mortgage and real estate taxes?

I do not have any rental income from the place - and it is being used by friend/family who take care of it as well.

5) If I can't get an itemized deduction, can I at least get the standard deduction?

It seems I will end up owing a huge amount in taxes both to Fed and State government if I can't claim the Standard deduction or Claim mortgage interested deduction through Itemized deduction. What should I do?

Thanks very much for all the advise I can get.

Regards

[AtlantaTaxExpert]

1 & 2) You can complete Form 1040NR-EZ, because, as a non-resident alien, noether the mortgage interest nor the real estate taxes are deductible. Sorry!

3) Yes.

4) There is no requirement to file a Connecticut return for 2008.

5) No; you can only itemize, but you have NO itemized deductions.

If I were you, I would rent the property to at least offset the costs of the mortgage payments and real estate taxes.

[maxipriest]

Dear Sir (AtlantaTaxExpert),

Thank you so much for your response and advise. It has at least saved me the tax I thought I'd also need to be the CT State.

A quick follow-up question. You mentioned I can complete 1040NR-EZ instead of 1040NR, but I don't see a line item on the EZ form for declaring the Distribution.

Will it come under:
a) line 3 (Wages, salaries, tips, etc. Attach Form(s) W-2-see Page 4)
b) line 4 (taxable refunds, credits, or offsets of state and local income taxes (see pg5)
Or another line?

Many thanks again

Regards

1 & 2) You can complete Form 1040NR-EZ, because, as a non-resident alien, noether the mortgage interest nor the real estate taxes are deductible. Sorry!

3) Yes.

4) There is no requirement to file a Connecticut return for 2008.

5) No; you can only itemize, but you have NO itemized deductions.

If I were you, I would rent the property to at least offset the costs of the mortgage payments and real estate taxes.

[maxipriest]

Hi again - one more question.

To my question 3 - whether I need to be additional 10% tax on early distribution, you had answered yes. However, again my question is - where in 1040NR-EZ do I report and calculate this?

Many thanks again

Regards

1 & 2) You can complete Form 1040NR-EZ, because, as a non-resident alien, noether the mortgage interest nor the real estate taxes are deductible. Sorry!

3) Yes.

4) There is no requirement to file a Connecticut return for 2008.

5) No; you can only itemize, but you have NO itemized deductions.

If I were you, I would rent the property to at least offset the costs of the mortgage payments and real estate taxes.

[AtlantaTaxExpert]

My error: you will need to use Form 1040NR to report the distributions under Form 1099-R. Sorry!