Income Tax Deductions for H1b Employees: What will come back

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Hi,
I am looking for information on if a person is working ( and paying income taxes) while working in USA, what will one get at year end.. I arrived here in mid Aug and will move back to India in May 2014.
1. I heard that if you are in USA for less then 180 days, one does not pay any taxes (kind of refund). Is this 180 day limit for each Financial year or overall stay.
2. What is the limit of No Tax (like until 1.5 lacs INR in india you do not pay income tax) in USA. I see the IRS website tells arond 8K whereas my friends have been telling me 36k
3. If I move back to india in May 2014, when do I claim for income tax refund (Jan 2015 or later)?


Regards
Varun

[raghvi]

Hi,
I am looking for information on if a person is working ( and paying income taxes) while working in USA, what will one get at year end.. I arrived here in mid Aug and will move back to India in May 2014.
1. I heard that if you are in USA for less then 180 days, one does not pay any taxes (kind of refund). Is this 180 day limit for each Financial year or overall stay.
2. What is the limit of No Tax (like until 1.5 lacs INR in india you do not pay income tax) in USA. I see the IRS website tells arond 8K whereas my friends have been telling me 36k
3. If I move back to india in May 2014, when do I claim for income tax refund (Jan 2015 or later)?


Regards
Varun

1. Its by financial year.
2. I dont think its as high at 36 K. More like around 7.5-8.5 K. It depends upon filing status, State, check with a local tax expert. You would be taxable in most of the cases but the %age will change. And like in India there are tax exemption investments, but I doubt you would be doing any so in US. So better check with a tax expert.
3. You would have to file twice. US Financial Year is from Jan till Dec. For Aug 2013-Dec 2013, you would most likely get a W2 in Feb-March 2014, and can file return for that by July 2014. For Jan 2013- May 2014 you would get W2 by around Feb-2015 so you will file return for that by July 2015.

This is my opinion not legal advice.

[immihelp]

Your friends know better than IRS web site?

No tax limit is something like $8,000.

If you are on H1 you are considered US resident and you have to pay tax accordingly. Obviously, your income will be a lot higher than $8,000/year.

You will have to just file the tax returns for each calendar year you are in the US and see how much you have to pay. Most likely, whatever your employer is deducting from your paycheck is close to what you have to pay in income taxes.

[venukbh]

When will financial year begin

After reading the thread, I understood that we will get back some amount if stay in USA is less then 180 days in a Financial year.

So please request to answer my below questions.
1. when does Financial year start and end?
2. I read that current financial year began on 1 October 2014 and will end on 30 September 2015. So is this is correct?
3. I would like to start on June 20th 2015, so will I be eligible for any tax returns based on the above financial year? If not, will I be eligible if I start in july?


At last, I know/understand that this would be an info, suggestion but not a legal advice.

[immihelp]

For tax purposes, financial year is the same as the calendar year: From January 1 to December 31

[venukbh]

For tax purposes, financial year is the same as the calendar year: From January 1 to December 31

So, will I be eligible for tax refund if I come to US in July?

[inadmissible]

Venu, everyone who pays more to the tax collectors than they ultimately owe gets a refund. Obviously, it comes down to how much is withheld from your paycheck and remitted to the tax collectors (fed + state), and how much in taxes you actually owe.

[venukbh]

Venu, everyone who pays more to the tax collectors than they ultimately owe gets a refund. Obviously, it comes down to how much is withheld from your paycheck and remitted to the tax collectors (fed + state), and how much in taxes you actually owe.

Thanks for the response. I too know that the tax paid in excesses will be returned. But my question is, is there any option that the tax will be refunded if the stay is less than 180 days in a financial year?

[raghvi]

Thanks for the response. I too know that the tax paid in excesses will be returned. But my question is, is there any option that the tax will be refunded if the stay is less than 180 days in a financial year?

Yes it would be.

This is my opinion not legal advice.

[inadmissible]

Thanks for the response. I too know that the tax paid in excesses will be returned. But my question is, is there any option that the tax will be refunded if the stay is less than 180 days in a financial year?

If you are here just for one day, or even if you never are physically present here but have us source income, the same is true. If you paid more in than you owe, you are entitled to a refund.

[venukbh]

If you are here just for one day, or even if you never are physically present here but have us source income, the same is true. If you paid more in than you owe, you are entitled to a refund.

I am not asking if I pay more tax, then I will get refund or not. I am asking if there is an option that we will get our paid tax completely return when the stay is less than 180 days or not.

[inadmissible]

Do you mean are you exempt from paying tax as a non-resident alien?

No, you will always be subject to United States taxation with respect to your United States source income.

The only difference between resident and non-resident aliens is whether you pay United States taxes on ONLY your United States source income, or whether you pay United States taxes on your worldwide income.

There are certain exemptions, but none of them apply to individuals earning wages.

[venukbh]

Do you mean are you exempt from paying tax as a non-resident alien?

No, you will always be subject to United States taxation with respect to your United States source income.

The only difference between resident and non-resident aliens is whether you pay United States taxes on ONLY your United States source income, or whether you pay United States taxes on your worldwide income.

There are certain exemptions, but none of them apply to individuals earning wages.

Please let me know if my question is not understandable?

Just confirm if there is any option/rule that the tax will be returned if the stay is < 180 days?

[inadmissible]

I thought I understood your question, but none of my answers satisfied your concerns, so I guess I do not understand your question.

You are entitled to a refund to excess tax withheld regardless of how many days you are present in the United States.

You owe taxes on United States source income regardless of how many days you are present in the United States.

[venukbh]

I thought I understood your question, but none of my answers satisfied your concerns, so I guess I do not understand your question.

You are entitled to a refund to excess tax withheld regardless of how many days you are present in the United States.

You owe taxes on United States source income regardless of how many days you are present in the United States.

Thanks inadmissible for continuously replying my concern. I understood that I've to pay tax for my sources of income in US.
But what I heard is if the stay is < 180 days, the paid tax will be returned. Is this true?