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Question About Tn Visa US Income Tax

Sharon asks…

8000$ tax credit – mortgage interest deduction?

My question is related to the 2010 income tax season ahead.

My fiance and I bought a new construction home in Georgia and signed the sales agreement before April 1 of 2010 and closed before June 30, 2010. This is our first home and this is our primary residence.

Here is a little bit of our background :

I am a Canadian citizen who is here on a TN visa. I arrived in Atlanta in October of 2009 and am working fulltime for a US firm. I filed both US and Canadian taxes for the 2009 year but will only file on the US side next year sicne I dont have any other Canadian income.

My fiance is a dual citizen of Canada and the US. However he is selfemployed through his canadian company which is rendering consulting services to a firm out in Massachussets. He only files Canadian taxes since he is paid by his Canadian company.

Even though we meet the timeframe requirements, we want to know, if either one of US, or both of US will be able to :

1) Apply for the 8000$ tax credit in 2010
2) Deduct mortgage interest in our income tax

Please advise!

Thanks
AC

Best Answer:

Your post is setting off multiple alarm bells.

1. Your fiance is dual resident. The US doesn’t care. As a US citizen, he is required to file a US tax return if his worldwide income is more than $9350. ($3650 once he marries you.)

2. Where is your fiance physically doing the work? If he’s working in the US, it’s considered US source work and not eligible for the foreign earned income exclusion. (If he’s working in Canada, the income is foreign source and could be eligible, but you can’t exclude the income unless you file and attach the correct forms.)

3. If your fiance is doing the work in the US and is being taxed twice on the same income (eg, the FEIE doesn’t apply if your husband is in the US a lot), he can file and use the foreign tax credit to reduce the impact of double taxation.

4. Once you get married, nothing would prevent you from filing a joint return, but frankly I wouldn’t if he hasn’t been properly filing his US tax returns. He could have a huge tax liability and any joint refund would be applied to it.

5. As for the first time homebuyer credit, since you were single at the time you filed, you can split the credit “in any reasonable manner” between the two of you. If you paid half, claiming half is reasonable.

5. Mortgage interest is a 1040 schedule A deduction. If this is your primary residence (or even your second home) and the loan is secured by the house, it’s eligible. However, since you do not own 100% of the house, your deduction is limited to the amount of interest you actually owed and paid. If you own 1/2 of the house and made the payments, claim half. If you own 1/2 of the house and paid nothing, claim nothing.

6. If your fiance is living and working in Canada, his self-employment taxes (which are different than income tax) are paid into the Canadian system.

Posted From Yahoo! Answers (for informational purposes only)

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