[mithil]

Hi,
I landed in US on L1 on 3rd June 2007 and willl be back on 30th Sep. My salary is being paid by the Indian counterpart, converted to $ and transferred to My US account. The company currently witholds tax from my salary based on the yearly projected salary. (yearly salary 60K, salary for 4 months 20K, tax deducted based on 60K).
1)since I will be returning back before 183 days, is my federal and state tax liability 0?
2) If yes, do I have to file a return to get back the tax witholded from my salary?
3) what forms do I need to fill in?
4) What documents do I need from my employer?
5) Can I file returns online.
6) do I need to file a separate return for state (VA)
I will be filling tax in India for the rest of the year. Thanks.

[AtlantaTaxExpert]

1) In my opinion, you will owe ZERO U.S. taxes. Ask your employer WHY they are withholding taxes. However, the state may have a different attitude.

2) If your employer generates a W-2, then the IRS will consider your salary taxable income. You need to address this with your employer to prevent that W-2 from being generated.

3) If you file, you will file as a non-resident alien (Form 1040NR or 1040NR-EZ).

4) See #2 above.

5) No.

6) No, if there is no W-2. If a W-2 is generated, then you will have to file a non-resident tax return with VA.

[The Texas Tax Expert]

The treaty would exempt the income but only if the income is not borne by a permanent establishment that your employer has in the US. Your employer should have a good idea about whether the cost of your salary is being borne by the US operation. You should ask, however.

[AtlantaTaxExpert]

I agree with TTE. While I assumed that the salary was NOT borne by a U.S,-based permanent establishment, your initial posting is not clear on that issue.