[hbawarichie10]

Dear experts,

I am having a bit complicated question(to me atleast). I started my job in US in Oct 2008 on H1_B visa and I continued to stay there up to March 2010. I paid the taxes for financial year 2008/2009 in US. Now my employer deputed me to Switzerland for 1-2 years. I am getting the same salary from my employer direct deposited in US Bank and I withdraw it from swiss bank. My question is that Do my salary continued to get deducted my taxes(state and federal taxes).
Someobody suggested me that since I donot live in US now, so my salary shouldnot get deducted any taxes. Is this true??

[AtlantaTaxExpert]

Once you leave the U.S. and work in Switzerland, your income is NO LONGER TAXED by the United States. This is a matter of tax treaty AND U.S. tax law.

It WILL be taxed by Switzerland, however.

[hbawarichie10]

Thanks for the information. Just confirming that Does it matter who is paying me. Because California State University is paying me the salary so they are not sure of deductions and so they are continuing deducting my salary on the pretext that state university is paying me so there should be deductions. They warn me that if I did not get my salary deducted , I might have to pay all the taxes in the year end. I just want to be sure before asking them to stop deducting.
P.S:I donot live in US nor my family(just I am gettting salary from them since I work for them in swiss)

[AtlantaTaxExpert]

Because you neither work nor live in California, the state of California has NO LEGAL STANDING to tax your income.

The same concept applies to the Federal income tax: as a non-resident alien, you MUST be physically present within the borders of the United States in order for your salary to be subject to federal income taxes. You will have to file Form 1040NR with Form 8833 to claim this tax exemption, citing the relevant portions of either the U.S.-Switzerland Tax Treaty or the Internal Revenue Code, but no federal income tax will be due.

The FICA (Social Security and Medicare) tax withholding is a different matter, however. By default, the FICA tax WILL be withheld unless there is some prior coordination on this matter with the Social Security Administration to arrange for the Swiss-equivalent of the FICA tax to be withheld from your salary.

[hbawarichie10]

Hello Atlanta Tax Expert,

In continuation with my earlier query, I got your advice and enquired from my State University and asked to stop my tax deductions. They told me that they cannot do so , only I need to change Employee Acation Request form and asked me to change the exemptions from 4 to 99 for both federal and state. But the thing is that If I calculate my taxes after doing so, still I was deducted
Fed Medicar-EE
Fed Soc Sec-EE

Am I still be deducted Social Security + Medicare, since I am not living in US any more. How to stop doing this. And Can I claim in the year end when filing my taxes fot those which they already deducted after I moved to Switzerland.

Plus They deducted taxes on my relocation re-imbursement to switzerland. Do I claim back ?

Your advice is greatly appreciated.

[AtlantaTaxExpert]

The exemption of the FICA (Social Security and Medicare) tax has to be corrdinated with both trhe Social Security Administration and the Swiss government agency that collects the FICA tax-equivalent for the Swiss givernment. If that coordination is done, then you can be exempted from FICA taxes. Otherwise, no.

Further, you will NOT be able to request a refund of the FICA taxes using Form 843.

[IntlTax]

HB, you might want to complete and give Form W-8BEN to your employer. The form should claim treaty benefits under the U.S.-Swiss treaty (assuming that you qualify for such benefits [because you are resident there]). This is likely to stop all U.S. withholding.