Ask Experts Questions for FREE Help !
Ask
    arramiah1's Avatar
    arramiah1 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Nov 30, 2008, 12:38 PM
    Contractor in India, what is US tax percent
    I am an independent contractor working in Chennai, India. I am working with an American company based in Philadelphia, providing software services from my home office in Chennai. My client says they have to withhold US taxes for me. Is this true that I have to pay US income tax even if I work from India as a contractor? If yes, and they DO have to withhold taxes in the USA, what is the percentage that they will be withholding? If my hourly rate is $40, what is the percentage that they would be cutting? Also, if the USA do withhold taxes, then can I claim a Foreign Tax Credit in India under the Indo-US Double Taxation Avoidance Agreement?
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Dec 1, 2008, 04:03 AM

    Assuming you are not a U.S. citizen or resident, your income is not taxable in the U.S. Employer should not withhold any taxes.

    Your income is taxable in India. You can not claim any tax credit in India as it is not income earned in a foreign country.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Dec 1, 2008, 09:47 AM
    I agree with MukatA!

    If you are located in India and are working as an independent contractor, you have NO U.S. tax liability.

    Your U.S. clients should know this. If not, a simple phone call to the IRS International Tax Hotline (215-516-2000) will set them straight.

    You may need to provide some paperwork to clarify your status as an out-of-country contractor, but NO taxes should be withheld.
    IntlTax's Avatar
    IntlTax Posts: 831, Reputation: 23
    Tax Expert
    		  
    #4

    Dec 1, 2008, 06:47 PM

    As indicated above, you should owe no U.S. tax. Some U.S. employers don't understand this. If they do withhold, you can file a Form 1040NR and claim a refund.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Percent changes [ 2 Answers ]

Can anybody help me out with this? On December 31, 1995, there were an estimated 411 prison inmates per 100,000 U.S. residents. This number rose to an estimated 476 inmates per 100,000 U.S. residents by December 31, 2002. a.What percentage of the U.S. population were prison inmates at the...

1099 contractor living in India? [ 8 Answers ]

I am a US citizen, that is going to be moving to India. My husband will have a job in India, and I plan to be an independent software contractor, working out of my home in India. Can the company that hires me as an independent contractor just give me a 1099, or do I have to be resident in the US to...

What percent can I get preggie? [ 15 Answers ]

We have an intercourse 3 days after my period.. and we usde condom.. After that I bleed for half day.. can I be pregnant?? Enlighten me.. Help...

Percent change [ 1 Answers ]

I did the calculations for common-size comparison for years 2000 to 2001. To do the % change, do I use the actual numbers from the balance sheet or the percents from the common-size comparisons? THX!:confused:

Sub-contractor / CONTRACTOR liability [ 1 Answers ]

We Had Flooring Installed In Our Home. The Company Who We Bought The Flooring Promised The Flooring To Be Glued Down. Instead Their Sub-contracted Foreign Installers Drilled Through The Concrete. Water Is Now Shooting Up Through The Holes Like A Fountain. The Company Told Us That The Damage...

View more questions Search