[lmcconnell]

A UK Citizen currently working in Haiti will be working from the US for less than 183 days. He is a L1 Visa holder and will relocate to Switzerland once he leaves the US. What is his tax liabilty while working in the US?
Thank you!

[AtlantaTaxExpert]

There are TWO considerations:

1) Your physical location.

2) The SOURCE of your income

As a foreign citizen (UK), you are liable for U.S. taxes ONLY when you are physically located inside of the United States, and then ONLY IF your stay in the United States exceeds 183 days. Income earned while being physically located in Haiti is NOT subject to U.S. income taxes irrespective of the income source.

Further, if your stay in the United States is NOT over 183 days, you have NO U.S. tax liability IF the source of your income is a foreign company.

However, if your income source is from a U.S. company, the you ARE liable for U.S. income taxes for any income earned while you are physically located inside of the United States, be it for 1 day, 10 days, 100 days, or the entire calendar year.

If you have more detailed questions, or if you need professional help filing your return, you can email me at [email protected].

[lmcconnell]

The income source is from a U. S. company with employees working worldwide. So it appears the employee would be subject to federal and state withholding, correct? Also, would the employee be subject to social security and medicare tax?
Thank you so much for your assistance!

[AtlantaTaxExpert]

Please re-read my answer after the word "However".

Only those employees who are working WITHIN the United States for the U.S.-based employer are subject to U.S. income and FICA (Social Security and Medicare) taxes.

Example: You are hired from the U.K. from said U.S. company in January 2011, and you travel to Haiti, where you work for four months (February through May 2011). The income earned while in Hait is EXEMPT from all U.S. taxes, because you are living and working in Haiti. Presumably, you would be subject to Haitan taxes.

You then move to Albany, NY, in the U.S. where you stay for another four months (June through September 2011). Starting on the day you arrived, your salary becomes subject to U.S. income and FICA taxes, as well as NY state income taxes, for the four month period of your stay. At the end of September 2011, you return to the U.K.

Come January, 2011, your U.S. employer should send you a W-2 to document and report ONLY that income earned from June to September 2011. You would need to make sure that your employer did NOT include the income earned in Haiti in your W-2.

Copies of that W-2 is also sent to the Social Security Administration, the IRS and the NY state Department of Finance and Taxation. Since they have a copy of your W-2, BOTH the IRS and NY state will expect you to file a tax return.

For the IRS, you would file as a non-resident alien, filing Form 1040NR and Form 2106 because your job, being only four months long, qualifies as a temporary job, thus making you eligible to claim your daily living expenses (food, local transportation, rent, utilities, and incidental expenses) as an itemized expense.

For NY state, you would file Form IT-203 as a non-resident of NY state who earned income while living (temporarily) in the state of New York.

[lmcconnell]

Thank you so much for your assistance!

[AtlantaTaxExpert]

Glad to help!