[AtlantaTaxExpert]

IntlTax:

I disagree, though I AM making an assumption in my explanation below, that assumption being that PK123 filed Form 1040, 1040A or 1040EZ as an H-1B visa holder in a tax year previous to 2007. If so, then the IRS DOES consider him/her to be a U.S. resident for tax purposes by virtue of the fact that he/she filed that prior-year resident tax return.

Further, even if PK123 never filed the resident tax return, the IRS will ASSUME, by virtue of the fact that PK123 has a H-1B visa, that he is a resident alien if the H-1B visa was effective prior to 1 January 2007.

In other words, PK123 will have to make the case that he/she has NOT met the Substantial Presence Test in order to avoid taxation on his/her 2007 salary.

If he/she met the test prior to 2007 by filing a resident alien return, he/she remains liable for all world-wide income in all subsequent years irrespective of his/her physical location for the duration of his/her H-1B visa unless and until he/she formally revokes/abandons the H-1B visa.

Just my humble opinion...

[IntlTax]

Do you have any citation to the IRC or to an IRS publication as to why an alien that does not have a green card and is not present in the U.S. on any day during the calendar year would be considered a resident alien?

[AtlantaTaxExpert]

No, I do not.

[pk123]

Hi IntlTax,

Thanks for your helpful advice. Let me put some information that I got from my friend who is not paying any tax and working as me in an international organization outside USA. He
Showed me his W2 form for 2007 and it does not show his salary on his w2 form so he files
1040 showing his salary is zero ( or minimal whatever ). Since his w2 form does not show his salary as USA income, he did not pay any tax (FICA) on his salary. I am not expert but
I have one question why his salary is not shown on his w2 from?

I hope this information will be helpful in explaining why he does not pay any though he is on H1B. He is not alone but here there are many people like this.

Regards,

PK

[AtlantaTaxExpert]

If he has no salary reported in Box 1, but is still getting a W-2, it is probably because he has to file a STATE tax return.

Most states do NOT honor tax treaty provisions that exempts salaries from federal income taxes.