Hi,

Could you please suggest me the most effective (tax-saving) method of filing return for the case below - ( I am Single)

Resident of India (till September 30, 2012)
Salary Income = $ 35000
Other Income = 0
Tax Liability as per Indian laws = $ 5000
But Tax Deducted at source is higher at $ 7500
Do I need to file a return in India to claim this $2500 back

Resident of USA (from October 1,2012 and plan to stay for atleast 2 years)
Salary Income + Relocation Allowance = $ 50000
Other Income = 0
State Taxes = 0

Would filing as a resident be more beneficial or Dual-Satus ?

Thanks
Niraj

1. For India tax return you will spend 182 days or more in India during the financial year so you will report worldwide income. You will claim credit for taxes paid to U.S.
If you leave India on or before Sept 27, 2012 for employment, you do not need to report the U.S. income.

2. You will be in U.S. for 93 days in 2011. So if you are not a U.S. citizen or green card holder, you are nonresident. However, you can choose to file dual status after you complete SPT in 2012. You can not file resident tax return. Your U.S. Tax Return: Substantial Presence Test (http://taxipay.blogspot.com/2008/04/substantial-presence-test.html)

Filing dual-status offers no benefit tax-wise, so file as a non-resident alien for the U.S. return.

Thanks MukatA and ATE for the prompt responses.

As per your advise and from tax saving perspective I have decided to do the following

1. Relieve employment from India by September 25th, to pay tax in India as non-resident

2. Also, in the US file as non-resident without waiting for STP - as for single person it doesn't seem to add much value

Is it possible to file a non-resident income tax return in both the countries or is there any rule that the tax-payer has to file resident return in one country

Thanks
Niraj

You MUST file as either a non-resident or a dual-status alien for the U.S. return. I have no idea how that affects your Indian return.

Thanks ATE,

Any advantage of Dual Status over non-resident? - Like in getting standard deductions and personal expenses deduction

You can claim the same expenses on a non-resident return (if you are eligible to claim them).

In both returns (non-residnet or dual-status), ypou are NOT eligible to claim the standard deduction.

Hence, there is NO advantage filing dual-status over non-resident.

Thanks for the help

Your are welcome.