Hello,

I am Manjunath travelled to USA on H1B visa and stayed at Whiteplains city, Newyork state and I stayed in USA for 153 days and returned back to India. Since I stayed at USA for less than 180 days, will I am eligible for both Federal and State tax exemption for they year 2012, for which I will be submitting my w4 form in January 2013.

Regards,
Manju

Manju:

No, because the income earned is U.S.-sourced. However, you CAN claim daily living expenses, which may result in a total refund when you file the tax return.

If you need professional help filing, email me at the email address in my profile (if you cannot see it below).

This is from IRS publication 901: Tax Treaties.
"Income that residents of India receive for personal services performed in the United States as employees (dependent personal services) is exempt from U.S. income tax if the residents meet three requirements.
•They are present in the United States for no more than 183 days during the tax year.
•The income is paid by, or on behalf of, an employer who is not a resident of the United States.
•The income is not borne by a permanent establishment, fixed base, or trade or business the employer has in the United States."

On H1-B, you received income from U.S. employer, so the income is taxable. You will file nonresident tax return and you will get itemized deductions including lodging, food and travel expenses.

What about if someone landed in us on 29th June 2013 on H1B and started working on 1st July 2013. Is s/he is eligible for 100% tax rebate?

No, you are not, because the earned income is U.S.-sourced.