[Trishala Raj]

Hi,

My company send me to Qatar in July 2012 to work there. I am on H1 B visa. I get paid in dollars there . When I file my return for 2014, will I file as non resident alien? I have been told that I do not have to report any income I earned in Qatar as I was full year in Qatar.

Now ,I plan to roll over my 401 k to an IRA and from there to a Roth IRA by Dec 31st. I am assuming I will be taxed when I move the money to Roth. At what rate will I be taxed? Will it be at the lowest rate as I don't have another income to report?

Is rolling over a good idea? Any suggestions?

Can tax be withheld from a 401k?

As I am taking the withdrawal overseas are there any consequences?

Hope someone can answer my doubts.

Thanks.

[AtlantaTaxExpert]

Income earned in a foreign country while on a H-1B visa is NOT subject to U.S. income taxes. However, your company may not know this, and may have reported it on your W-2.

You will file as a non-resident alien, filing Form 1040NR.

As for the rollover, you WILL be taxed on the IRA rollover to the Roth IRA as ordinary income, The tax rate will depend on your overall income level, which you have not shared.

[Trishala Raj]

Income earned in a foreign country while on a H-1B visa is NOT subject to U.S. income taxes. However, your company may not know this, and may have reported it on your W-2.

You will file as a non-resident alien, filing Form 1040NR.

As for the rollover, you WILL be taxed on the IRA rollover to the Roth IRA as ordinary income, The tax rate will depend on your overall income level, which you have not shared.

Thank you for your response. I really appreciate it.
Does the below paragraph have any impact on me when I make the rollover?

I am rolling my 401k to ira and then to a Roth by the year end

[AtlantaTaxExpert]

The rollover from the 401 K to the traditional IRA is tax-free.

However, the rollover from the traditional IRA to the Roth IRA WILL incur normal taxes, but no 10% Early Withdrawal Penalty.

[Trishala Raj]

Atlanta Tax Expert,

My company has not reported my income due to my visa status. I am transferring 100k from my 401k to IRA and then to Roth by Dec 31st. So is it correct, that I am going to get taxed on this 100 k and can you tell me which tax bracket I would be?

Thanks in advance

[AtlantaTaxExpert]

If you are single, you are in the 25% marginal tax bracket.

Assuming you will file Form 1040NR with NO itemized deductions, you will pay $20,437 for the rollover.

[Trishala Raj]

I am married with 2 kids. Is it correct that I can file as single in my 1040 NR? Which is a better option? To file as single or MFJ?

Thanks,

[AtlantaTaxExpert]

If you file as a non-resident, filing Form 1040NR, you CANNOT file jointly.

You must file as a MARRIED non-resident alien.

[Trishala Raj]

So if I file single NR alien or married NR alien, I assume, I am in the25% tax bracket . Does it matter which way I file?

Thanks.

[AtlantaTaxExpert]

The tax increases about $400 if you file Married versus filing Single.

[Trishala Raj]

Thank you. I appreciate your help

[AtlantaTaxExpert]

Glad to help!

[Trishala Raj]

Atlanta tax Expert, my company issued a check from my 401k before Dec 31st. But It has not been deposited to an IRA and then to a Roth. Is it too late to do so? Or do I have until April 15th.

[AtlantaTaxExpert]

You have time to do the rollover yourself, but NOT until 15 April 2015.

The check must be deposited into a rollover IRA account within 60 days of the issuance date on the check. If you fail to meet that deadline, you are considered to have taken an early distribution and the 10% Early Withdrawal will apply in addition to the taxes noted earlier.

[Trishala Raj]

Thank you. I have one more doubt. One of my friends did mention that I can rollover my 401k only when I leave my company. Is this true?

[AtlantaTaxExpert]

That is normally the case, but the rules are established by your company, NOT the IRS.

If your employer allows you to roll the money over, then do so.