I am an Indian working in L1 visa for last 5 years in US and want to go back to India in Feb 2008. I have questions on Resident Status in US and India for the years 2007 and 2008. I have spent only 150 days in India in the years Jan 2003 to Dec 2007 and the remaining time is in USA. I came to US in Oct 2002.

My assumption is as follows:
US Tax - Resident for 2007 and Resident for 2008.
India Tax - Non-Resident for 2007-08 and Resident for 2007-08

From a US and India taxation perspective, will it help me if I leave before completing 31 days in 2008 - so that I do not become a Resident in 2008. Then, will I be taxed in US for for my Jan salary ?

Since I will be a Non-Resident from Indian tax perspective for the year 2007-08, what will happen to my Feb and Mar 2008 salary? Will I be required to pax and if so, to which country?

I am clear that my income from Apr 2008 to Mar 2009 will be under Indian Tax laws, as I will be resident for that year.

AtlantaTaxExpert

For 2007, you will file as a resident alien.

For 2008, you will file a dual-status return, which means yu will be taxed ONLY on income earned while in the U.S.

I cannot answer the Inidan Tax questions.

MukatA

[quote=rmv]
From a US and India taxation perspective, will it help me if I leave before completing 31 days in 2008 - so that I do not become a Resident in 2008. Then, will I be taxed in US for for my Jan salary ?

What ever may be your status, for any income in the U.S. you pay tax in the U.S.
This is true in India also. Any foreign person earning in India (getting paid by India sources) must pay tax in India.
For 2008, if you complete 31 days in the U.S., you will file as Dual Status resident.
If you do not complete 31 days in the U.S., you will file as Non resident alien. In both the cases you will file 1040NR, except as Dual Status Resident you will write Dual Status Resident on top of the form. You won't get standard deduction; will get exemption deduction.

AtlantaTaxExpert

Agreed!

rmv

Thanks Atlanta Tax Expert and MukatA for your replies..

MukatA

You file your 2008 U.S. tax return in 2009 by April 15, 2009 (or June 15, 2009) if you are not in the U.S. on April 15, 2009.
But, you may not even meet the filing requirement for 2008 based on your total income for 2008. I think, for the year 2008, a non-resident with earned income of $3,500 is not required to file. You may like to file to get refund of federal income tax or state income tax withheld.

AtlantaTaxExpert

Agreed.