Should I prorate the salary and taxes in my W-2 so that 1040 has the amounts before I left the US and 1040 NR has the amounts after I left the US? Yes, you would prorate the amount between before you left and after you left and enter it on the forms according to your residency status during the time you received the income.
As I cannot use standard deduction as a non resident, should I prorate the itemized deduction (state taxes in the W2) between the two returns? Yes, this again would be prorated based on your residency at the time you received the income. However, be careful with taking an itemized deduction for the states during the time you did not live in the US as you may get a refund of the taxes withheld for the state.
Which tax rate will apply in each return if I am pro rating the salary/income? The 1040 NR return will have lower amounts so should a lower tax rate apply? Income tax rate will vary based on your income and your 2023 Tax bracket on that return.
After reading IRS guidance and various tax forums, it appears interest on treasuries and CDs is not taxable for non residents (https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens-exclusions-from-income). I did receive 1099. Should I pro rate and include interest in the 1040 but exclude it from the 1040 NR? If it is not taxable on the 1040NR, then you would only include the amount you received while living here on your resident return. The amount you received after leaving the country and becoming a nonresident would not be part of your US Resident return.
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