Hi,

I am a L1 visa holder from india and was working in Massachusetts from aug 2005 to dec 2005 as a contractor from my original company in india.

I used to receive the US salary from aug 2005 to dec 2005 for which I have the W2.

During the same period I also used to receive my indian salary (paid by my company in india).

This indian salary given was nothing but a part of US salary.
My US Pay slips show some amount as "indian salary"

I notice that in the W2 issued to me this indian salary has not been deducted since I have already paid the tax for this amount in india.

Can I subtract this india salary amount from my US taxable income and pay the tax?

How should I be considering this india salary amount in my tax returns for 2005?

Regards
Madhusudhan S.

I believe that, as a L-1 visaholder, you must file as a resident alien.

That being the case, you cannot subtract your Indian salary from your W-2, because the U.S. taxes ALL income from resident aliens.

You can, however, claim either a Foreign Tax Credit (Form 1116) or ask to have the Indian-based income exempted from taxes (Form 2555).

Is it mandatory to claim a Foreign Tax Credit in this case?

No, it is NOT mandatory. The Foreign Earned Income Exclusion (Form 2555) may have been possible, though NOT likely based on the information originally posted. Further, the poster does NOT have to claim the credit, but the result would be that the Indian salary would be taxed by BOTH the United States and India, not really the optimum solution.

Also, he had to file jointly with his wife in order to file as a resident. Otherwise, he would file as a non-resident alien, in which case the Indian salary is NOT subject to U.S. income taxes.

BTW, why ask about a case that is OVER five years old?