[khanmurtuza]

I am on H1B and due to visa stamping issue I was working from INDIA for all 2008, how should I file for tax and is there any tax benefits for working from India like there is for working from home in US.

[MukatA]

If you have not been to the U.S. then you are just like a foreign person and you do not file the U.S. tax return or pay U.S. taxes.

[khanmurtuza]

To be more clear I was working from home(in INDIA) for my employer in US and was getting paid in US so I think I have to pay taxes as it was deducted from my paychecks, now is there any benefits I get similar to work from home benefits or any other.

[MukatA]

Why was your employer paying you in the U.S. Please provide complete information.
Just because you have visa and you are still in India, things don't change. The income of a foreign person working in a foreign country, even paid by U.S. employer ,is not taxable in the U.S.

[khanmurtuza]

Ok I am on H1b from oct 2007, and due to issues with my visa stamping since dec 2007 I am not able to travel back to US and my employer over their had allowed me to work remotely, so I am here in India working for my old employer and getting paid as well as my taxes are deducted. This issue of visa stamping is still pending and to be noted my H1 visa is still valid and now I want to file my tax return. Hope this clears your question.

[khanmurtuza]

Any help here...

[AtlantaTaxExpert]

Khanmurtuza:

Much depends on whether you ever return to the U.S. I had a client who had a similar problem when he returned to Pakistan. He was delayed so long that his H-1B visa expired!

I successfully argued to the IRS that, due to his involuntary restriction to remain in Pakistan, his H-1B status terminated the date he departed the U.S. and therefore was NOT liable for either income taxes or FICA (Social Security and Medicare) taxes for the years in question. He was rather happy about the large refunds he got as a result.

BOTTOM LINE: You need to hold off on filing.

If your stamping issue is resolved and you return to the U.S. then you are liable for U.S. income and FICA taxes as if you never left.

If, however, the stamping issue does NOT resolve itself and you must stay in India, then your tax situation is identical to my Pakistani client: you are NOT liable for either income taxes (by the IRS OR the state in which you are assessed taxes) or the FICA taxes.

However, you probably ARE liable for Indian taxes on the U.S.-sourced income, because, after all, you ARE working in India.

[Miss Emkay]

Ok I am on H1b from oct 2007, and due to issues with my visa stamping since dec 2007 i am not able to travel back to US and my employer over their had allowed me to work remotely, so I am here in India working for my old employer and getting paid as well as my taxes are deducted. This issue of visa stamping is still pending and to be noted my H1 visa is still valid and now I want to file my tax return. hope this clears your question.

Isn't your case explained by example of "Christina Brooks" in IRS publication 519 US Tax Guide for Aliens? It appears you don't owe taxes to IRS on the income you made working for a US employer. Do you agree? Any experts opinion on this?

[AtlantaTaxExpert]

I will modify my guidance somewhat: No taxes are owed on income earned while in a foreign country, even though the income source is the U.S.

It turns out that my earlier assumption about his visa status is NOT valid. His visa status is irrelevent; what matters is his physical location, so he owes ZERO income taxes to the U.S.

He probably DOES owe income taxes to India, though.

[IntlTax]

I agree that his visa status is irrelevant. I disagree that he has U.S. source income. For services, income is sourced to where the services are provided. Since the services were provided outside the U.S. the income is foreign source income. He does not owe U.S. tax because he is a nonresident alien and because the income is not U.S. source income.