Dear Tax Experts,
I am a Non Resident Alien from India. (I satisfied substantial presence test for less than 183 days and other criteria). I worked in US on L1 visa for 179 days.
I have a taxable income of 32677 USD in tax year 2008.

Certain part of this income (3000 USD) was paid to me in my home currency (Indian Rupee) on which I have already paid tax in India. On my W2 form, the total wages are shown including the part of the income paid in Indian currency.


I am filing form 1040NR-EZ.

1. I would like to know, if I can claim deduction under the India US treaty for the part of the wages (3000 USD) which were taxed in India? [ Line 6 of form 1040 NR EZ]

2. I was staying in US in Pennsylvania state and my state tax was 1022 USD. Do I need to file state taxes separately?


Thanks in advance for your help and invaluable advice.

1. Even the income was paid in Indian curreny, it is U.S. income, and it is not India income. You will not get any foreign income tax benefit in the U.S.

2. If you are single, then you will file nonresident tax return Form 1040NR or 1040NR-EZ. You can claim moving expenses. Your U.S. Tax Return: Moving Expenses

3. Yes, you will also file state tax return.

Thanks for quick reply.
I went through your blog and it is quite informative.

I need to know refarding claiming deductions in my case.

I am married and my wife and daughter did not travel to US.

1. What should be my filing status: Single or Married?

2. Can I claim any standard deduction or any itemized deductions? How much amount can I claim as deduction?

Thanks a ton.

Steeler:

Here is the process:

You can file jointly with your wife and you both CHOSE to be treated as resident aliens. This will allow you to claim the $10,900 joint standard deduction plus two $3,500 personal exemption (for yourself and your wife).

You will need to submit Forms W-7 to apply for an ITINs for your wife. A notarized photocopy of their passport needs to be stapled to the W-7.

The downside is that:

• you must WAIT to meet the Substantial Presence Test before you can file, which means you must wait until 2 June 2009.

• you must declare ALL 2008 world-wide income, but you can at least partially offset any double taxation by claiming a Foreign Tax Credit (Form 1116).

Even with the downside, this is probably the best way for you to file.


As part of the ITIN application process, you make photocopies of the FIRST page of the passport that has the picture on it. You then take these photocopies to a local bank to have them notarized, usually at no charge. If the bank will not do it, go to a local IRS office (call first to make sure they provide the service) to have the IRS officials certify the photocopy as a true copy of the passport.

The tax return and Forms W-7 will be sent to you for review and approval before they are printed, signed, packaged and mailed to you for signature. A tax return is a legal document which must have original signatures by the taxpayers.

Upon receipt of the package, you take the STATE tax return and put it to the side for future filing (see below).

You will then sign the federal return, have your wife sign the return and W-7, then staple the notarized photocopies of the passport to the W-7 and paper clip both forms to the tax return. You then mail the tax return to the IRS.

The IRS receives the W-7, issues the ITIN, inserts the ITIN on the tax return and processes the return. The IRS then mails the ITIN to you in a separate envelope. This process takes between 4 weeks and three months, depending on the workload at the ITIN processing center.

You then neatly print the ITIN on the state return and mail the return to the state.

Steeler:

Here is the process:

You can file jointly with your wife and you both CHOSE to be treated as resident aliens. This will allow you to claim the $10,900 joint standard deduction plus two $3,500 personal exemption (for yourself and your wife).

You will need to submit Forms W-7 to apply for an ITINs for your wife. A notarized photocopy of their passport needs to be stapled to the W-7.

The downside is that:

• you must WAIT to meet the Substantial Presence Test before you can file, which means you must wait until 2 June 2009.

• you must declare ALL 2008 world-wide income, but you can at least partially offset any double taxation by claiming a Foreign Tax Credit (Form 1116).

Even with the downside, this is probably the best way for you to file.


As part of the ITIN application process, you make photocopies of the FIRST page of the passport that has the picture on it. You then take these photocopies to a local bank to have them notarized, usually at no charge. If the bank will not do it, go to a local IRS office (call first to make sure they provide the service) to have the IRS officials certify the photocopy as a true copy of the passport.

The tax return and Forms W-7 will be sent to you for review and approval before they are printed, signed, packaged and mailed to you for signature. A tax return is a legal document which must have original signatures by the taxpayers.

Upon receipt of the package, you take the STATE tax return and put it to the side for future filing (see below).

You will then sign the federal return, have your wife sign the return and W-7, then staple the notarized photocopies of the passport to the W-7 and paper clip both forms to the tax return. You then mail the tax return to the IRS.

The IRS receives the W-7, issues the ITIN, inserts the ITIN on the tax return and processes the return. The IRS then mails the ITIN to you in a separate envelope. This process takes between 4 weeks and three months, depending on the workload at the ITIN processing center.

You then neatly print the ITIN on the state return and mail the return to the state.

I was working in the US I 2004 under an L1A work permit. I did not move to the US and traveled home on weekends, my company paid hotel bills, did I have to pay fed and state tax? I was doing this for 6 months.

If you worked in 2004, you were supposed to file tax returns for BOTh the federal and state.

More than likely, you actually DID pay taxes (it was withheld from your pay) and were due a refund.

It is too late to claim the refund now, and for sure both the IRS and state tax department have closed the file, so do not worry about it.