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  1. #1
    Join Date
    Mar 2016
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    1

    Default Filing Form 1040-NR When You Have Lived Outside of the U.S. for the Entire Year

    Hypothetical Scenario:

    • I work as an employee (not a contractor) of a US corporation based in UT
    • I am not a permanent resident of the US (i.e. no green card or US citizenship)
    • I am an Indian citizen and live in India and work remotely
    • I get my paycheck credited to my US bank account
    • My employer deducts the federal and state taxes



    Question-1 : Can I file 1040NR if I have been outside of the US for the full year ? (my assumption is that it is for someone who has been in the US for less than a specified days. I am not sure if this is valid for someone who has not been in the US at all)

    Question-2 : If answer to Question 1 is yes , approximately how much standardized return should I expect on federal tax and state tax ? Should all of it be returned since i will also claim credit for the taxes I have to pay on the same income in India

    I am aware of form W8BEN which I can submit to my employer to declare that I am a non US person and have them deduct nothing from my income. I am just trying to have minimal modifications at my employers side

  2. #2
    Join Date
    Oct 2014
    Posts
    8,238

    Default Re: Filing 1040-Nr when I Have Been Outside the U.S. the Entire Year

    Quote Quoting phssyk1
    View Post
    Hypothetical Scenario:

    • I work as an employee (not a contractor) of a US corporation based in UT
    • I am not a permanent resident of the US (i.e. no green card or US citizenship)
    • I am an Indian citizen and live in India and work remotely
    • I get my paycheck credited to my US bank account
    • My employer deducts the federal and state taxes

    Question-1 : Can I file 1040NR if I have been outside of the US for the full year ? (my assumption is that it is for someone who has been in the US for less than a specified days. I am not sure if this is valid for someone who has not been in the US at all)
    Yes, you may file a Form 1040-NR even if you didn’t spend so much as a day physically present in the U.S. Indeed, I’ve had clients who have filed those returns for years and who have never, ever stepped foot in the U.S. Those nonresident aliens with U.S. source taxable income are required to file that return.


    Quote Quoting phssyk1
    View Post
    Question-2 : If answer to Question 1 is yes , approximately how much standardized return should I expect on federal tax and state tax ? Should all of it be returned since i will also claim credit for the taxes I have to pay on the same income in India
    As I understand the facts, the pay you received from the U.S. company was for work you performed for the company while working remotely in India. That income is not U.S. source income and not taxable in the U.S. at all. If that was your only income from the U.S. then you have no taxable income here either for federal or for state taxes and all of the income tax the employer withheld would be refunded to you. (Note that for nonresident aliens interest on bank deposits in the U.S. is also generally not subject to federal tax unless the interest is effectively connected with a U.S. trade or business. But the interest may be taxed by the state.) Since the income is not subject to tax, there is no federal foreign tax credit to claim for the tax you pay to India on that income. States do not generally provide a foreign tax credit. By the way, for the state tax you need to file a nonresident state income tax return. The federal Form 1040-NR only deals with the federal tax.

    Quote Quoting phssyk1
    View Post
    I am aware of form W8BEN which I can submit to my employer to declare that I am a non US person and have them deduct nothing from my income. I am just trying to have minimal modifications at my employers side
    I suggest you submit the W8-BEN and stop the withholding. This would not impose any significant burden on your employer. Indeed, an employer would generally prefer that as it makes things easier and less expensive for the employer.

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