[gianni_me]

Hello,
I recently moved to US and for 2011 I am Resident Alien for tax purpose. In 2011, while I was living in the USA, my former employer (an Italian University) credited on my Italian bank account some back payment. For this income I did paid tax in Italy. My understanding is that I do need to report the mentioned income in my 2011 tax return and pay tax (double taxation?) on it. Does anybody know if that is the case or if there is a way to avoid double taxation?
Thanks a lot,
Gianni

[AtlantaTaxExpert]

Gianni:

First, you may or may NOT be a resident alien for tax purposes. You ARE a resident alien if you are married and filing jointly with your wife. If, however, you are single and did not spend EVERY SINGLE DAY in the United States in 2011, then you are dual-status, even though you met the 183-day Substantial Presence Test.

If you file as a resident, then you file Form 1116 to claim the Foreign Tax Credit for the Italian taxes you paid.

If you file dual-status, you may NOT have to report that Italian income. It depends on WHEN you got the money, during the resident portion of the dual-status period or during the non-resident portion.

Complicated? Yes, it is, which is why, if you are filing a dual-status return, you MUST get professional help. The dual-status return is NOT for amateurs!!! Further, if you get professional help, make sure they have experience filing dual-status returns.

If you my professional help, double-click on my title above and scroll down to my profile/signature. You will find my email address there.

[IntlTax]

You avoid double taxation by claiming the Italian taxes as a credit against your U.S. tax. See Form 1116.

[gianni_me]

Thanks a lot for the prompt email and the information. Indeed the all tax related process is quit complex. Using the FORM 1116 seems to be the right way to go. I will do my homework about it, but I will likely follow AtlantaTaxExpert suggestion and seek professional help.
Thanks again to both of you.
Gianni

[AtlantaTaxExpert]

Glad to help!