USC, working in India: treatment of work-days spent in the USA
Posted: Mon Jun 13, 2011 10:01 am
Hi,
Consider a US citizen, working in India (filing taxes in India as a resident), visiting the USA for short durations, such as 10 or 15 days in a year.
My current understanding is that: X % percentage of the annual salary (where X = percentage of days in the year spent in the USA; I am not sure how working-days and holidays are treated in calculating this percentage) is treated as being "US source income". This fraction is not eligible for foreign income exclusion or foreign tax credit. We will have to pay a tax on this part of the income to the USA.
Is this correct?
If this correct, then, to avoid double taxation, can we claim a foreign tax credit for the paid tax when we file taxes in India? If so, do we just consider US taxes paid during the period for which we files taxes in India? That is, if we file taxes in India in July 2011 (for the period April 2010 to March 2011), then do we claim credit on taxes paid to the USA during the period April 2010 to March 2011 (even though that would have been for the period January 2009 to December 2009 in the USA)? Or, do we claim credit for taxes paid to the USA in June 2011?
Thanks,
Rama
Consider a US citizen, working in India (filing taxes in India as a resident), visiting the USA for short durations, such as 10 or 15 days in a year.
My current understanding is that: X % percentage of the annual salary (where X = percentage of days in the year spent in the USA; I am not sure how working-days and holidays are treated in calculating this percentage) is treated as being "US source income". This fraction is not eligible for foreign income exclusion or foreign tax credit. We will have to pay a tax on this part of the income to the USA.
Is this correct?
If this correct, then, to avoid double taxation, can we claim a foreign tax credit for the paid tax when we file taxes in India? If so, do we just consider US taxes paid during the period for which we files taxes in India? That is, if we file taxes in India in July 2011 (for the period April 2010 to March 2011), then do we claim credit on taxes paid to the USA during the period April 2010 to March 2011 (even though that would have been for the period January 2009 to December 2009 in the USA)? Or, do we claim credit for taxes paid to the USA in June 2011?
Thanks,
Rama