[Bidi]

Hi,

I worked in the US until April 13, 2006 under a H1-B visa. Because my visa expired, I went back to France but kept working for the same American compagny (from a computer at home). I am still getting paid on my American bank account. My tax status was changed to "x" (non-Resident Alien living and working outside the US) when I left the US, so taxes were deducted from my salary only until April. My W-2 form shows my earnings from January to April 2006. I did not get any 1099-MISC form for my may to December 2006 earnings.

I do meet the substantial presence test for 2006. My question is how do I file my taxes ? Can I pay all taxes for 2006 in the US (preferred option) ? I have never paid taxes in France so I am "unknown" here. Or do I have to pay taxes for jan-april in the US and for may-dec in France ? Do I have to pay the full year in France ? Is there a tax treaty between the 2 countries ?

Thanks.

BB

[AtlantaTaxExpert]

BB:

There IS a tax treaty between the U.S. and France. You can get a synopsis from IRS Pub 901.

Now, in terms of general tax principles, you pay taxes on the income you made while in the U.S. to the IRS, then pay taxes on the money you made while physically in France to the French government. That may change if you have an intent to return to the U.S. anytime in the next few years.

The driving consideration is your PHYSICAL location. If in France, pay French taxes. If in the U.S. pay U.S. taxes. Both countries have provisions to give credit if you are paying taxes to BOTH countries on the same income.

[loricar]

Hi,

I worked in the US until april 13, 2006 under a H1-B visa. Because my visa expired, I went back to France but kept working for the same American compagny (from a computer at home). I am still getting paid on my American bank account. My tax status was changed to "x" (non-Resident Alien living and working outside the US) when I left the US, so taxes were deducted from my salary only until april. My W-2 form shows my earnings from january to april 2006. I did not get any 1099-MISC form for my may to december 2006 earnings.

I do meet the substantial presence test for 2006. My question is how do I file my taxes ? Can I pay all taxes for 2006 in the US (preferred option) ? I have never paid taxes in France so I am "unknown" here. Or do I have to pay taxes for jan-april in the US and for may-dec in France ? Do I have to pay the full year in France ? Is there a tax treaty between the 2 countries ?

Thanks.

BB

Franco American treaty, do a Google search and find the parts that apply to your situation. Good luck, although it sounds to me as if you will end up declaring part of the income in France . Bummer,
loricar

[MukatA]

If you completed SPT for 2006, then you become dual status-- resident in the beginning of the year and non-resident at the end of the year.

This is from Publication 519-- Tax For Aliens, p. 31, col 1: For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources and on certain foreign source income treated effectively connected with a U.S. trade or business.

So it appears that for 2006, you will report all the income to the U.S. and pay taxes in the U.S. Then for 2007, if you still continue with the same employer, you don't file U.S. tax return unless you are back in the U.S.