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    sheismai's Avatar
    sheismai Posts: 2, Reputation: 1
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    #1

    Mar 6, 2014, 11:54 AM
    First year choice
    Hello,

    I was working on CPT and OPT in 2012 so filed 1040NR. In 2013 I was on OPT until October 1st when I got my H1. I also bought a home on October 17th so I have been paying mortgage interest and taxes that I would like to possibly deduct.

    Should I be filing 1040NR or using the first year choice to file an extension to satisfy the substantial presence test for 2014 (so I can file 1040 in June)?

    I am not married and have no children. I just want to know if it's worthwhile to opt for the first year choice in my situation rather than filing for the 1040NR.

    Also, if I do opt for the first year choice, how do I file the 1040? Will the 1040 be for the entire year's income? Or 1040NR from Jan 2013 to SEp 2013 and then 1040 for Oct 2013 to Dec 2013?

    Thank you!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Mar 6, 2014, 02:02 PM
    Because of the mortgage interest deduction plus real estate taxes, dual-status MAY be the better option for you, but it requires you WAIT until 1 June 2014 to file.

    What is your home country? How much mortgage interest and real estate taxes are listed on the Form 1098 the bank sent you?
    sheismai's Avatar
    sheismai Posts: 2, Reputation: 1
    New Member
    		  
    #3

    Mar 12, 2014, 01:45 AM
    I've only had the property for the last 3 months of 2013 and I didn't have to start making payments until December. My 1098 form says about $2000 in interest and $350 in mortgage insurance. There was also a payment made from my lender eskrow account for around $2100 (This payment was made in October when I bought the house but was due on December. Should be able to deduct this as well right?).

    My home country is Pakistan.

    1) Also did you mean dual-status or first year choice? Is there a difference?
    2) if I choose the dual-status/first year choice route at this point I would just do the 1040 NR with the extension form and pay any taxes I'm due correct? When I do eventually file in June what forms do I file to say I was a non-resident till September and resident after October? Would I have to figure out income received in the two periods? I apologize if this sounds like a dumb question.

    To be clear, I bought the home in the United States, NOT in Pakistan. Do I need to go the first choice route or can I just deduct property taxes, mortgage interest by attaching a schedule A to my 1040NR?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Mar 12, 2014, 08:48 AM
    Since you are from Pakistan, you CANNOT claim the standard deduction. Further, you CANNOT deduct mortgage interest and real estate taxes if you file as a non-resident alien filing Form 1040NR.

    Given these facts, filing dual-status is DEFINITELY the way to go, because you can deduct the interest ($2,000) and probably the mortgage insurance ($350; depdns on your level of income) and the $2,100 escrow payment IF it was for real estate taxes of the Schedule A you could file with the dual-status return, which would be Form 1040.

    If you need professional help filing this return, this IS what I do! Please email me at the email address in my profile if interested.
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