Hi

I work for a multinational software company.
I came to US from India on L1-B visa in May 2008 and will be returning back in November 2008.
This is my first visit to the US and I am not married.
My stay in US will be around 180 to 185 days. I am not getting Indian salary during this period and the only income is the US salary.

For US Tax purposes, I understand that if I return back to India before completing 183 days in US, I will have the Non Resident Alien status; but if I return after completing 183 days, it will have Resident Alien Status.

Can you please tell me the difference with respect to the US Tax applicable to me in the above two situations?

1. What is the difference in the tax rates applicable to me in the above two situations ?

2. Can I get benefit of the Tax Treaty with India in any of the above two situations ? If yes, please explain.

3. Which situation is better for me? Going back after 180 days or after 185 days ?


Thank you

Anshuman

In the U.S. you can file non-resident tax return even if you have completed 183 days or more in 2008. You can not file resident tax return if you leave the U.S. before Dec 31, 2008. On your non-resident tax return, you will get exemption deduction and itemized deduction. You can also deduct many items of daily expenses and travel expenses.

You must worry more about India taxes. Make sure that you do not spend more than 181 days in India in the FY 2008-09, otherwise, you must report your worldwide income. Read Becoming or Retaining Non-resident Status (http://mytaxes.in/index.php?topic=108.0)

You will file as a non-resident alien, filing Form 1040NR IF your salary is being paid by a U.S. company or the U.S. subsidiary of your parent company.

Because you are in the U.S. for less than one year, you can deduct your daily living expenses (food, housing, transportation, incidental expenses) while in the U.S. on Schedule A of the Form 1040NR as employee business expenses.

This assumes that you are NOT receiving a per diem stipend.