[peter1944]

Hi,

I have a employment contract with the U.S. company for the period of four years. When I came to the U.S. at the beginning of 2009 I had a J1 visa valid for 18 months till the beginning of July 2010 (I could work from January 1, 2009 till July 1, 2010). While still in the U.S. my employer applied for H1B visa so that I could stay in the U.S. for full four years. Thankfully, I received the new H1B visa, but it would kick off on October 1, 2010. Because of the 3 months time gap (between July 2010 when J1 visa expired and October 2010 when H1B visa kicked off) I had to leave the U.S. to my home country, because I was not allowed to work in the U.S. when I did not have any valid visa.

While in my home country I still provided services for my company. Accordingly, the company continued to wire on my U.S. bank account my monthly salary and withheld federal and state taxes. Basically, I was still on the payroll and no changes were made to the salary, even though I was outside the U.S, because everybody knew that I would be coming back to the U.S. in October.

My company will provide on W-2 the information that I have received 12 monthly salaries and the amount of taxes withheld.

The questions I have are as follows:
1) when I file and pay in the U.S. taxes for 2010 should I file for all 12 monthly salaries or just for the salaries I received when I had a valid working visa - between January-June 2010 (6 months) and October-December 2010 (3 months).

2) Is it a problem that I pay my taxes for all 12 monthly U.S. salaries even though I was not allowed to work in the U.S. for three months in 2010? I would prefer to file for all 12 monthly salaries since all the taxes have been withheld here and it will streamline the whole process, i.e. it will save me a hassle of withholding taxes in my home country for these three months (my concern is that if I have to pay my taxes in the U.S. only for 9 months when I had a valid U.S. visa, it would mean that I should have made some tax withholdings on my U.S. salary to my home country's tax authorities, since I received the salary and was in my home country).

3) If I file for my 12 monthly salaries, would my company run into any troubles that they paid the salary to a person who had no U.S. working visa between July and October 2010?

Thank you in advance for your help.

[AtlantaTaxExpert]

Regardless of your visa status, income earned OUTSIDE of the United States is EXEMPT from U.S. income taxes, irrespective of what the W-2 says. The FICA (Social Security and Medicare) taxes still apply, but if you file Form 1040NR-EZ with Form 8833 to explain the treaty position (or U.S. tax law if there is no treaty), you can exclude the salary earened while in your home country.

A letter from your employer stating the time you worked while outside of the U.S. would help support this position and should be attached to the tax return

If you need professional help preparing these forms, email me at [email protected].

[peter1944]

Hi,

Thank you for your answer. I inquired with the tax authorities in my home country and they informed me that the salary that I received on my U.S. bank account when I was in my home country for 3 months (between the time my J1 visa expired and H1B kicked in) is not subject to my home country's taxes. They said I did not return to my home country was not permanent, but it was only for a very short period with the intention to go back to the U.S. Therefore, this income for three months is not subject to my home country's taxes.

I received two W-2 for 2010: one for 10 months and one for two months.

So, my plan would be to file in the U.S. for all the salaries I received in 2010. I would pay for:
1) first 10 months (January-October) as J1 visa holder (actually I had J1 till the end July 2010; next three months: August-October I did not have a visa, but my tax withholdings were made as if I were on J1 visa)
2) last two months (November-December) as H1B visa holder.

Do you think there is any problem with that? Especially the time period: August to October as if were on J1 visa, while in fact I was outside the country and did not have any visa?

Do you think my company may have any problems that it paid me the salary when I was outside the U.S. because of lack of visa?

Thank you in advance for your help.