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sachinas · May 7, 2007, 11:39 AM

Hello

I have lived in the US for the past 7 years on a work visa. I will be moving to India this month and plan to continue working with my company here. My company does not have an office in India. Since I will be rendering services from India, I understand my tax liability is to the Indian Government. But unless I understand it wrong, my company will continue to deduct federal tax at source. How should I claim that back ? Do I need to wait till the end of the year, file the return on 1040NR and claim Foreign Tax Credit (since the effective tax rate in India is more than that in the US) ? Is there any way for my company to not deduct taxes at source in the first place once I move to India ? Any help is appreciated.

AtlantaTaxExpert · May 8, 2007, 09:41 AM

Based on your information, you should be able to claim the Foreign Income Exclusion (Form 2555) and also the Foreign Tax Credit (Form 1116).

sachinas · May 8, 2007, 10:09 AM

Thanks. Is the income my company would be paying me in US $ a foreign income, because I will physically be in India ? Secondly, will the company have to deduct it and then I'll claim it as a refund or is the income "excluded" from withholding too ?

AtlantaTaxExpert · May 9, 2007, 12:48 PM

Your company will pay you normally and is NOT involved in the claiming of either the Foreign Income Exclusion or the Foreign Tax Credit.