Hi, I am working on an H1b visa and living in VA where I pay taxes and my wife is a resident of MD, We are buying a house in MD as Co-owners, how do taxes work for me?

[rahulk09]

As the loan is in my name though I won't stay at our house in MD, we will be paying property taxes in MD. First is it legal to buy a house in another state on h1b and second how are my taxes going to work?

[Anonymous_]

@pk?

[pk · Accepted solution]

@rahulk09 , Namaste Rahul ji.

(a) are you both on work visa  or is your spouse a US person ( citizen / GreenCard )?

(b) when did you enter US this time and were there  days  ( how many ? )  present during 2020, & 2021 ?

(c)  The effects of the purchase of a house,  would effect you only to the extent of being able to deduct the mortgage interest  and only if you itmemize   on your  Federal tax return. These days most people use  standard deduction.

(d) As a resident of one state , there is no restriction to buying property in the same state or another state.  When and if you dispose off the property  teh gain would be taxed  ( generally ) by the federal tax and  your home state  and also the state where the property is situated.  There is  also credits for having paid  taxes to a different  state than your home state.

(e) Welcome  to having joined the ranks of homeowners.

Is there more I can do for you ?

Namaste ji

pk

[rahulk09]

@pk  Thanks for replying!!

(a) are you both on work visa  or is your spouse a US person ( citizen / GreenCard )? We both are on Visa I am on H1b and wife on J1

(b) when did you enter US this time and were there  days  ( how many ? )  present during 2020, & 2021 ? we visited India In march 2023 and came back in the end of March 2023

Do I need to file non-resident tax return for MD along with my home state of VA?

Also my wife is co-owner so she could get return in MD as first time home buyer?

[pk]

@rahulk09 , thank you for your response to my questions -- I still need to know when you entered the country and when did your spouse enter USA--please .   Iam trying to determine if you are Resident for Tax purposes or you are still a Non-Resident Alien for the tax year 2022.   Note if you are not a resident for tax purposes, you cannot use TurboTax but must use  a tax professional or some service like SprinTax.

Assuming that you and your spouse are both residents for tax purposes, you can generally prepare  & e-file form 1040 ( supported by TurboTax ).  It also will mean that  ( again depending on exact facts and circumstances ) file a Married Filing Joint  return for federal purposes..

For your State taxes , if your home ( where you live / use as main residence ) , bank, driver's license etc. to prove residence in that state ) is  in ONE  State and you work in a different State then you may have to file two state returns ---- the home state covering your world income and a Non-Resident State for the other state.

Does this help  and do you need more details  -- I will have to look up the two states that are mentioned here  and will come back in a short while --- but you have to tell me which state is your home state.

Also there  is no First Timme Home Buyer's credit anymore -- that was initiated in 2009 and 2010 -- thereafter  there is no new federal credit.

pk

[TomD8]

Something else to be aware of: MD and VA have tax reciprocity for W-2 income.  Taxpayers who are residents of one of those states but who work in the other only have to file a tax return in their resident state, assuming all their income is W-2 salary or wages.

[rahulk09]

Thanks @pk I entered on 6th Feb 2016 on H1b and my wife entered on 5th Aug 2021 on J1 Visa. I am currently a Resident of VA and working in Virginia, My wife resident of Maryland and works in Maryland. So, I am buying a house in Maryland where I and my wife are owners, but I will not be staying there unless I change my job next year the loan is in my name, and will be paying property taxes in MD. So, do I need to file taxes in Maryland or I could do my returns only for Virginia

[pk]

@rahulk09 ,  from your latest post ( thank you for the clarifications ), 

1. For federal purposes, you and your spouse can indeed file Married Filing jointly, as long as your spouse has a tax id  ( she probably has an SSN, depending whether she is student/trainee or a researcher/teacher on J-1 ),  and a resident for tax purposes.  Your total world income will be taxed.

2. For State ( based on what I understand of your situation ) --- you lived / domiciled  in different states   ( One spouse in Maryland , the other in Virginia , you come under one of the exceptions where in you are allowed to file Married Filing Separate  for the State of Maryland.  Thus your wife would be allowed to file MFS for Maryland  ( allocating only her income to be taxed by Maryland.  By corollary and because these two states are reciprocal states , you would be bake to file VA return as MFS and paying taxes ONLY on your world income.  VA has instructions on how to file MFS in VA with Federal status as MFJ.  Please read through these -- it may or may not be worth it  ( depending your exact facts & circumstances.

3. I would strongly recommend a consultation with a tax professional, just to be sure that you have the best tax outcome.  Of course you have to weigh the benefits ( taxwise ) against the cost.  Also you can run the TurboTax ( esp. if installed on your own machine -- CD / Download ) the three different scenarios and see the tax benefit ( if any ).

If you need more on this , I can page one of the other volunteers whom would be more familiar with MD & VA tax codes.

Is there more I can do for you ?

Namaste  Rahul ji

pk