Dual status question


L

lubosch

My question is seemingly simple but it is very clear that
the more I will read the documents, the more I get confused
because they are full of contradictions while I would
appreciate some predictability.

I spent previous years including 2004, 2005, 2006 on H1B
visa in Boston and filed tax returns as a U.S. and
Massachusetts resident. On 06/30/2007, the visa expired, I
resigned from my job, and I left the U.S. on July 4th for
the Czech Republic, my homeland.

Will I file the U.S. tax returns for 2007 as a resident,
non-resident, dual status resident, or something else? In
other words, what forms should I exactly send next year and
what amounts should be written on them? The same question
for Massachusetts...

If you know - or have a good guess - if I happen to have
income in the Czech Republic in 2007, what should I do
there? Is that correct just to ignore the U.S. income
there?

If you send a copy of your answer to lubos.motl at
gmail.com, it will be appreciated.

Thankfully Yours
Lubos

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P

parrisbraeside

lubosch said:
My question is seemingly simple but it is very clear that
the more I will read the documents, the more I get confused
because they are full of contradictions while I would
appreciate some predictability.

I spent previous years including 2004, 2005, 2006 on H1B
visa in Boston and filed tax returns as a U.S. and
Massachusetts resident. On 06/30/2007, the visa expired, I
resigned from my job, and I left the U.S. on July 4th for
the Czech Republic, my homeland.

Will I file the U.S. tax returns for 2007 as a resident,
non-resident, dual status resident, or something else? In
other words, what forms should I exactly send next year and
what amounts should be written on them? The same question
for Massachusetts...

If you know - or have a good guess - if I happen to have
income in the Czech Republic in 2007, what should I do
there? Is that correct just to ignore the U.S. income
there?

If you send a copy of your answer to lubos.motl at
gmail.com, it will be appreciated.
What does your treaty say? Usually, if you spend more time
in the US than in another country, you are considered a full
year resident. Also, does Massachusetts recognize that
treaty? Some states don't.

For your home country, again, you need to look at the rules
for your country. It is unlikely you are going to get the
answer in the same newsgroup you get the information for the
US.

Nor are you necessarily going to get the answer emailed to
your in-box. My newsgroup machine is deliberately separate
from my email. So I personally can't.

In general, for the US return, you can claim a foreign
income exclusion for the income earned outside of the US. If
that isn't enough, you will also get a foreign income tax
credit for that income earned outside the US which you can't
take a foreign income exclusion. You will not get an earned
income credit since you are not in the US so $1,000 of your
refund is gone.

In general, for the foreign return, most countries allow
only the foreign income tax credit for the income earned in
the US. The US is generally the only country allowing an
foreign income exclusion and that is only because they tax
on citizenship, not residency.

The specifics will depend on your particular case. I would
hire a specialist in your country to complete and file your
final US return as the rules are generally too complex to
get into on the web. Nor can you file early. Your payment
date for the US is April 15 or next business day and your
filing date is June 15, or nbd.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
A

A.G. Kalman

lubosch said:
My question is seemingly simple but it is very clear that
the more I will read the documents, the more I get confused
because they are full of contradictions while I would
appreciate some predictability.

I spent previous years including 2004, 2005, 2006 on H1B
visa in Boston and filed tax returns as a U.S. and
Massachusetts resident. On 06/30/2007, the visa expired, I
resigned from my job, and I left the U.S. on July 4th for
the Czech Republic, my homeland.

Will I file the U.S. tax returns for 2007 as a resident,
non-resident, dual status resident, or something else? In
other words, what forms should I exactly send next year and
what amounts should be written on them? The same question
for Massachusetts...

If you know - or have a good guess - if I happen to have
income in the Czech Republic in 2007, what should I do
there? Is that correct just to ignore the U.S. income
there?

If you send a copy of your answer to lubos.motl at
gmail.com, it will be appreciated.
As you were a resident in 2007 (you met the substantial
presence test) and will not be a resident in 2008, your last
day of residency in the U.S. is your last day present on
U.S. soil in 2007. That makes you a Dual Status alien for
2007.

For the period in 2007 you were a resident alien, you are
taxed on your worldwide income. For the period that you were
no longer a resident you would only be subject to U.S. tax
on income for U.S. sources.

Pub 519, starting on page 30 explains how a Dual Status
alien files a tax return for the last year of residency.

As to the Czech Republic, you would have to contact them to
see what your filing requirements are. The tax treaty
between the two nations does allow for the elimination of
double taxation on the same income. Depending upon Czech tax
law, you just might not have any double taxation.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
L

lubosch

Thank you very much for your recipe to find the answer but I
still don't know how to follow the recipe. The Czech-US tax
treaty has a lot of words about residency

http://www.fifoost.org/tschechien/steuern/dba_us-cz/node5.php

that don't seem to have anything to do with the presence in
one country or another, and I don't know what it means in my
case and whether the word "resident" means the same in all
contexts and whether it holds for the same year or its part
- simply I still don't understand anything.

On the other hand, this page seems to say that Massachusetts
recognizes all federal treaties:

http://www.mass.gov/?pageID=dorterminal&L=4&L0=Home&L1=Individuals+and+Families&L2=Personal+Income+Tax&L3=Personal+Income+Tax+FAQs&sid=Ador&b=terminalcontent&f=dor_help_nonres&csid=Ador#8

That's pretty scary that I would have to hire a tax expert
even though I did nothing special whatsoever. It is all so
overwhelming that it seems more acceptable to ignore the tax
return (and refunds) altogether and sit in the prison if
necessary because it is still better than several months of
huge nerves and uncertainty which is what you indicate.

Thanks anyway
Lubos

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
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A

A.G. Kalman

A.G. Kalman said:
lubosch wrote:
As you were a resident in 2007 (you met the substantial
presence test) and will not be a resident in 2008, your last
day of residency in the U.S. is your last day present on
U.S. soil in 2007. That makes you a Dual Status alien for
2007.

For the period in 2007 you were a resident alien, you are
taxed on your worldwide income. For the period that you were
no longer a resident you would only be subject to U.S. tax
on income for U.S. sources.

Pub 519, starting on page 30 explains how a Dual Status
alien files a tax return for the last year of residency.

As to the Czech Republic, you would have to contact them to
see what your filing requirements are. The tax treaty
between the two nations does allow for the elimination of
double taxation on the same income. Depending upon Czech tax
law, you just might not have any double taxation.
I should have added a statement about MA. MA is going to
tax the same income that is taxable on your federal return.
Basically that means that MA is going to tax the income that
you received prior to departing the U.S. plus any income you
received after departing that is MA sourced.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 

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