Taxes - non resident


Y

Yossarian

Hello Everyone,
quick question for an expat: I am italian, I work in USA with a Visa.
I live in the USA for more than 183 days, which makes me a resident
for tax purposes. So I pay the taxes in the USA even if my paycheck
comes from the italian headquarters of the company.
I discussed this with my tax return preparer and he is saying that the
income earned in the periods during the year when I am living and
working in Italy (for the italian HQ) should not count as "US taxable
income" and so they should not be declared in the tax return.
Is this interpretation correct?

Thanks in advance for the answers
 
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P

parrisbraeside

Hello Everyone,
quick question for an expat: I am italian, I work in USA with a Visa.
I live in the USA for more than 183 days, which makes me a resident
for tax purposes. So I pay the taxes in the USA even if my paycheck
comes from the italian headquarters of the company.
I discussed this with my tax return preparer and he is saying that the
income earned in the periods during the year when I am living and
working in Italy (for the italian HQ) should not count as "US taxable
income" and so they should not be declared in the tax return.
Is this interpretation correct?

Thanks in advance for the answers
Not necessarily.

We do not have enough information to provide you with a definitive
answer. Here is what is needed:
- Which 183+ days were you resident in the US?
- What visa are you in the US under?
- When was your previous US tax return for? Which tax year?
- Have you ever applied for US residency or citizenship before?

If you came to the US in 2010 and stayed in the US since that point to
the end of the year and never filed a US return and your visa allows
you to be a resident of the US, then the tax preparer is correct as
you are an emmigrant to the US and declare the income from the point
of arrival to the end of the year.

If you came to the US in 2009, left and returned to the US during 2010
and everything else remains the same, then you declare the other
income as you were resident the full year.

Other cases do apply.
 
Y

Yossarian

Not necessarily.

We do not have enough information to provide you with a definitive
answer. Here is what is needed:
- Which 183+ days were you resident in the US?
- What visa are you in the US under?
- When was your previous US tax return for? Which tax year?
- Have you ever applied for US residency or citizenship before?

If you came to the US in 2010 and stayed in the US since that point to
the end of the year and never filed a US return and your visa allows
you to be a resident of the US, then the tax preparer is correct as
you are an emmigrant to the US and declare the income from the point
of arrival to the end of the year.

If you came to the US in 2009, left and returned to the US during 2010
and everything else remains the same, then you declare the other
income as you were resident the full year.
Hello,
the Visa is E1, which is a non resident alien Visa.
In past years (2010 included) I lived almost the entire year in USA so
I have always declared the entire income.
With a new contract now every year I work the months of February,
March, September and December in Italy for the italian HQ, and the
other months in the US soil for the american branch (in both cases I
am officially employed by the italian HQ and I receive the paycheck
from them). In this case should the income for those 4 months be
included in the american tax return?
 
P

parrisbraeside

Hello,
the Visa is E1, which is a non resident alien Visa.
In past years (2010 included) I lived almost the entire year in USA so
I have always declared the entire income.
With  a new contract now every year I work the months of February,
March, September and December in Italy for the italian HQ, and the
other months in the US soil for the american branch (in both cases I
am officially employed by the italian HQ and I receive the paycheck
from them). In this case should the income for those 4 months be
included in the american tax return?
You certainly don't qualify as an emigrant or immigrant. The
indication is that you were in the US before and after the tax year.
So, it does appear you have to declare all income for the entire year
on the US tax return. However, you may elect to use the Foreign Earned
Income Exclusion (FEIE) or the Foreign Tax Credit (FTC). In general,
the latter is better but your situation may turn out better for the
former.

Please note that the preparer in the first part of your question may
have been referring to the former, that is declaring then excluding
the foreign income. However, your explanation appears that there was a
step missed.
 
R

removeps-groups

You certainly don't qualify as an emigrant or immigrant. The
indication is that you were in the US before and after the tax year.
So, it does appear you have to declare all income for the entire year
on the US tax return. However, you may elect to use the Foreign Earned
Income Exclusion (FEIE) or the Foreign Tax Credit (FTC). In general,
the latter is better but your situation may turn out better for the
former.
Does he have to declare his worldwide income on the US tax return or
just the US income?

If you have a visa that lets you file 1040, thus taking allowing you
to take the standard deduction, various credits, like H-1 or I think
F-1 after you've been in the country for 5 years, then do you have to
file 1040? Can you elect to file or not file 1040? If you're making
millions in dividends in your home country on non-US stocks, it might
be better to file 1040-NR because the income won't get onto your US
tax return, and it might not be in the foreign tax return either
because they don't tax their citizens who are not residents, or they
don't tax dividends (eg. South Africa), or their dividend tax is lower
than the US tax. So first, do you have to file 1040 or can you elect
to? Second, once you make an election to file 1040, can you revoke
that election?
 
P

parrisbraeside

Does he have to declare his worldwide income on the US tax return or
just the US income?

If you have a visa that lets you file 1040, thus taking allowing you
to take the standard deduction, various credits, like H-1 or I think
F-1 after you've been in the country for 5 years, then do you have to
file 1040?  Can you elect to file or not file 1040?  If you're making
millions in dividends in your home country on non-US stocks, it might
be better to file 1040-NR because the income won't get onto your US
tax return, and it might not be in the foreign tax return either
because they don't tax their citizens who are not residents, or they
don't tax dividends (eg. South Africa), or their dividend tax is lower
than the US tax.  So first, do you have to file 1040 or can you elect
to?  Second, once you make an election to file 1040, can you revoke
that election?
I would suggest that, once you are a resident, the filing options is
fairly clear. Otherwise, you'd get US citizens attempting to file
1040NR returns.
 
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R

removeps-groups

I would suggest that, once you are a resident, the filing options is
fairly clear. Otherwise, you'd get US citizens attempting to file
1040NR returns.
But being a resident means green card. Does having a visa that allows
you to file as a resident means that you have to?
 

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