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amfan2 · Sep 23, 2008, 07:17 PM

Hi

I am a UK citizen that came to the US on an L1B visa in May 2007. Due to a change in circumstances, I will be returning to the UK as my employment base in October, but still working for my US employer.

1. Will I still have to pay US taxes on my salary during the remaining tax year?
2. I will need to visit the US for business purposes for short durations, so what do I need do with my current visa status? I will no longer be L1B status so how does one 'cancel' that?

AtlantaTaxExpert · Sep 24, 2008, 08:23 AM

1) Yes and no. You will have to report the income, but if you stay outside of the U.S. for at least 11 months, you will be able to "exclude" the income under the Foreign Income Exclusion (Form 2555.

2) Contact the U.S. Customs and Immigration Service and/or U.S. State Department to get your L-1B status cancelled. Once that is done, you revert to non-resident alien status and your income, which is being earned OUTSIDE of the U.S. no longer is subject to U.S. taxes even though it originates from a U.S. company.

The Texas Tax Expert · Sep 27, 2008, 12:45 PM

The foreign earned income exclusion is not relevant in your case.

This is what has happened. You have become a US tax resident under the substantial presence test (assuming you were in the US the whole time that you mentioned). You should have filed a dual status return in 2007 and you will file a dual status return in 2008. You will cease being a US resident once you relocate to the UK and establish a tax home there.

amfan2 · Sep 27, 2008, 08:58 PM

Originally Posted by The Texas Tax Expert

The foreign earned income exclusion is not relevant in your case.

This is what has happened. You have become a US tax resident under the substantial presence test (assuming you were in the US the whole time that you mentioned). You should have filed a dual status return in 2007 and you will file a dual status return in 2008. You will cease being a US resident once you relocate to the UK and establish a tax home there.

Thanks to you and Atlanta for your information.

I submitted a 1040-C along with the required paperwork and was issued a sailing/departure permit. My current taxes are correct to departure date and I therefore have no further liability as an overseas employee.