I am an Indian citizen who was working in the US on an H1B visa till Aug 2007 and have filed using the 1040 form in 2006, 2007. After that I was seconded by my US company to country X for an expat assignment from Aug 2007 till Jan 2009. During my assignment in country X, I was still being paid by my US based company and I was still on the payroll. The company that I was seconded to paid for my taxes in country X. While I was in country X, I got married to an Indian citizen and we visited (spouse on a H4 dependent visa) the US only once in 2008 for just 11 days.

My wife and I returned to the US after my assignment in Jan 2009 under the H1B/H4 visa status. Now as I was trying to figure out how to file my taxes, I have found out that would fail the substantial presence test and therefore would have to file the 1040NR.

I need assistance to -

1. Which form to file - 1040 or 1040NR?
2. Can I claim the foreign tax?
3. Can I claim my spouse as a dependent?
4. How to obtain an ITIN number for my spouse as she cannot obtain SSN?


Thanks.

Did your company issue you W2 for income paid in foreign country? Did they withhold SS tax, Medicare tax and U.S. income taxes?

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Originally Posted by MukatA

Did your company issue you W2 for income paid in foreign country? Did they withhold SS tax, Medicare tax and U.S. income taxes?

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There was no foreign income. All of my salary was paid in the US on my usual pay roll. There was an overseas premium amount and that was the only difference. But, since I was living in country X for an extended duration, my worldwide income was being taxed in that country and was being paid by the company that I was seconded to, and not my US company.

To answer your question - all of my salary amount was taxed in the US - Fed, SS, Medicare and yes, I have the full amount shown on the W2.

In 2008 you were not in the U.S. You are not a U.S. citizen or U.S. resident in 2008. You must pay tax to country X.

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Originally Posted by MukatA

In 2008 you were not in the U.S. You are not a U.S. citizen or U.S. resident in 2008. You must pay tax to country X.

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But, given the fact that I was on payroll in the US and got paid in US and a W2 was issued mean that I am liable to US tax as well?

No, you are NOT liable for U.S. if you are not a U.S. citizen or green card holder.

Agreed. You should be able to get a refund for not only income taxes withheld, but also for FICA taxes withheld.

To claim the FICA tax refund, you should FIRST try to get the refund from the employer.

If they refuse, get a refusal letter on company letterhead and then submit Form 843 and 8312 with support documents to get a complete refund of FICA taxes.

jg_tax - How did your company manage to continue to pay your salary in US while you were not in the US i.e. your H-1B was probably not valid since you were not physically present in the US?