[InChina]

My 6 year H1B term expired in Nov 2010 while I was working for my American Company in China. However I will continue to work in China for a year and then go back to the US, probably in Dec 2011. While I am no longer on H1B, do I still have to pay medicare and FICA taxes? What happens to my status while I am abroad working in China but getting paid by the american company? Am I a resident aline or non resident alien for tax purposes?

[AtlantaTaxExpert]

If you are being paid by an American company from an American source, then the FICA (Social Security and Medicare) taxes will be withheld automatically UNLESS you notify your U.S. company that you are no longer on a U.S. work visa and thus NOT LIABLE for FICA taxes.

Further, for the time you were physically IN China, you are NOT LIABLE for U.S. income taxes regardless of your visa status. You did not specify how long you have been in China, but you may want to amend your 2007, 2008 and 2009 returns if you spent any time outside of the U.S. in those years.

Contact me at [email protected] if you want details on how to amend your U.S. tax returns.

[InChina]

Thank you very much AtlantaTaxExpert. I moved to China only in June of 2010. Till then I was in the US and have been filing my taxes. Only this year I would have to file my taxes differently since I was in China since June 2010 right?

[AtlantaTaxExpert]

Okay, then dis-regard the advice to amend the returns prior to 2010.

For 2010, you would file as a dual-status alien, filing BOTH Forms 1040 and 1040NR to differentiate the source of your income.

The income earned while physically present in the United States would be reported on Form 1040, while the income earned while in China would be reported on the Form 1040NR.

You would pay taxes ONLY on the income earned while present in the U.S.

Note that the dual-status return is NOT a return for amateurs; you should get PROFESSIONAL help from someone with experience filing this type of return.

If you want MY help, contact me at [email protected].