Non Resident Tax

[user17577024912]

I was on H1-B, working in CA but in Dec 2023 i came back to my home country for some family emergency and had to apply for a visa to come back to US. Apparently, my visa went into administrative processing and to this date, its still in processing. In the mean time, my company extended remote work to me but had to let me go in Oct 2024. My salary got credited into my CA bank account and from there i was sending it back home while i was still working remotely.

For the whole year, i wasn't in US for a single day so didn't meet the substantial presence test. When i was trying to file my tax on turbo tax, the system showed my federal tax owed as $72 and CA refund as $5000 something dollars but later on i found out that turbo tax doesn't support filing of tax if i dont meet the presence test so i was referred to Sprint tax. After filling out the forms, Sprint tax showed my federal tax owed as $1800 (not sure about my CA refund as it never got to that stage). I filed for an extension when i found out i wouldn't be able to file through turbo tax just in case.

Now, i don't really have $1800 to give as the federal amount due. Plus i'm not sure how there can be such a high difference in tax owed and refund due to my absence from US. What to do?

[pk]

@user17577024912  

I am surprised that you are filing an NRA return  ( form 1040-NR ) for 2024.

Please tell me more about  --

(a) when did you enter the USA with H-1B ?

(b) when did you leave the US ?    When did you apply for Visa extension/re-issue and why ?

(c) Do you have any assets in the USA ?  Any family etc. in the USA ?

(d) Why do you think you have file a tax return for the year 2024 ?

(e) Which country are you from ?  Is that where you are now ?

Generally , your income is sourced where the work is performed i.e. when you do remote work in your tax-home ( where you are now ), the income is local sourced and not US income.  US generally will not tax this income.  Of course  every thing depends on exact facts and circumstances.  An existing tax treaty also may have an impact.

Please answer my questions and I will circle back -- yes ?

pk

[user17577024912]

a. i was in USA on an F1-OPT and my status changed to H1-B somtime around Aug 2021. Since then i was on H1-B
b. I left USA in Dec 2023 on a family emergency. The goal was to come back in 2,3 months but i had to extend my stay (i was working remotely the whole time)  for a month or two more. In the meanwhile, my visa stamp expired around March-April 2024. I applied for visa stamp renewal and then my visa application went into administrative processing as they required a few more documents from my company which i sent but i didn't hear back from them before i was let go in Nov 2024.
c. No assets in USA. No Family.
d. I got a w2 from my company that's why i thought maybe i have to file for tax return. Also because while i was working remotely with the company, i was getting my salary in the same CA bank account where i got my salary earlier.
e. I'm from Pakistan. Yes, i'm still here.

[pk]

@user17577024912 , salam aliqum.

I have to refresh my memory on the details of US-Pakistan tax treaty, just in case there are some effects.

Thank you for your response.  Please could you give me couple of days to come back to you -- I need to digest the info you have provided.

While I have never been to Pakistan   ( I grew up in NE India --Khasi hills ) --- where in Pakistan are you located ?

pk

[pk]

@user17577024912 , 

Based on your post and timeline you provided, 

(a) Since you worked in Pakistan for Jan through Nov of 2024, the W-2 is in error. At most your employer should have issued a 1099-NEC -- just to document the amounts paid to you ( whether to bank in California or somewhere else.).   I say this because  1. IRS generally recognizes earning source  as the same as where the work is performed ---  except in clearly defined very short term assignment e.g. you go to a customer site to repair machinery or update /test software .  This is not your case --- you were not allowed to come back to the USA and probably did not have a return ticket to prove your intent.

(b) Under  US-Pakistan tax treaty, a US resident working in Pakistan for less than 183 days  is generally not taxed on income from foreign employer.  You cannot assert this  because you are a citizen and resident of Pakistan and stayed the whole 2024 in Pakistan.

(c) This leads to an issue ---- you do not have to file a tax return in the USA.  However, not filing a return means the taxes withheld by the US ( fed and State) cannot be refunded  to you without a filing.  You also need to file a return for Pakistan to be able to tax you on this income.

I would strongly suggest that you consult a  local tax professional / CPA to help you in filing a  Pakistani IT return and  (if possible) claim double taxation benefit  because you have already paid US taxes.

You may also contact your employer in the USA  for any help  ( they have already transferred Fed, State and FICA taxes to the respective orgs.)

Is there more I can do for you .

Salam Aliquom

pk