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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13343
Experience:  15years with H & R Block. Divisional leader, Instructor
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I want to check if a Indian company can send their employee

Customer Question

Hi, I want to check if a Indian company can send their employee to US on L1 visa and still pay the salary domestically in India and pay some allowances in US?
If yes, how is tax will be calculated. Would he be required to file tax in US or India?
Submitted: 8 months ago.
Category: Tax
Expert:  Robin D. replied 8 months ago.

Hello

The first year the individual is in the US they would be a dual resident if they meet the 183 days to be resident alien. The would file a 1040NR reporting the income earned while physically in the US. Then the time after they reach residency they would file the 1040 form.

Even if the income is paid in India the work is performed in the US so it is US sourced income.

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Customer: replied 8 months ago.
Hi Robin,
Thanks for your answer. In case the person spend less than 183 days in US. Will he still be considered as a resident alien for tax purposes?
In that case will he still have to file the tax return in US.
Expert:  Robin D. replied 8 months ago.

No he would be a non resident alien with US sourced income and would file the 1040NR.

It is where the service is performed that makes this US sourced and requiring tax in the US on this income.

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Expert:  Robin D. replied 8 months ago.

Checking to see if you responded again

Expert:  Robin D. replied 8 months ago.

Kunal you still there

Expert:  Robin D. replied 8 months ago.

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Customer: replied 8 months ago.
Hi Robin, I think your answers are very generalize and not specific to visa type and tax treaty to the particular country. Even 1040NR does not work for the L1 visa type.
Expert:  Robin D. replied 8 months ago.

No my answer is correct.

You may not like it but the correct answer is that the person is taxed in the US on US sourced income.

When work is performed in the US that is most certainly US sourced income.

Your post "Even 1040NR does not work for the L1 visa type" I am not sure what you mean by that.

An L1 VISA holder is not exempt like other VISAs,

Expert:  Robin D. replied 8 months ago.

As far as the treaty:

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year;

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

(c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State

Th"c" above would be met if an employee is in the US working for the Indian employee. So the non resident taxation would apply if they had not met the 183 days.

Customer: replied 8 months ago.
Hi Robin,
Thanks for this. So if I am understanding it correctly, If a employee is working in US on deputation and it being employed by his Indian employer and getting the salary in India and stay less than 183 days in a year in US. He will considerred as non resident alien for tax purposes and US taxation will not apply to him. Is that correct?
Expert:  Robin D. replied 8 months ago.

Does not apply to fees paid to a director of a U.S. corporation and the exemption does not apply if the employee's compensation is borne by a permanent establishment (or in some cases a fixed base) that the employer has in the United States.