L1 Perdiem

Old May 13th 2016, 8:25 pm
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Default L1 Perdiem

Hi,

My company is planning to send me onsite on L1 as perdiem +Indian salary.

Can anyone let me know if we need to pay tax when we stay on perdiem for more than 6 months in USA. If yes, how the tax gets calculated.

Also, is it right to stay in US on perdiem on L1 and it will not impact future visas

Thanks in advance
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Old May 13th 2016, 8:50 pm
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Default Re: L1 Perdiem

Originally Posted by BHPRIYA View Post
My company is planning to send me onsite on L1 as perdiem +Indian salary.
You will be in the US on an L1 visa. The US has no interest in how you actually get paid.


Can anyone let me know if we need to pay tax when we stay on perdiem for more than 6 months in USA.
This is a tax question, not an immigration question. You might have better luck if you post the question in the general USA forum.


Also, is it right to stay in US on perdiem on L1 and it will not impact future visas
Again, you're on an L1 visa... how you get paid doesn't much matter.

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Old May 13th 2016, 8:56 pm
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Default Re: L1 Perdiem

You'll file taxes either as a non-resident alien or as a resident alien, depending on whether or not you meet the substantial presence test.

See https://www.irs.gov/Individuals/Inte...-Presence-Test
and https://www.irs.gov/Individuals/Inte...esident-Aliens
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Old May 13th 2016, 10:27 pm
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Default Re: L1 Perdiem

Originally Posted by BHPRIYA View Post
Hi,

My company is planning to send me onsite on L1 as perdiem +Indian salary.

Can anyone let me know if we need to pay tax when we stay on perdiem for more than 6 months in USA. If yes, how the tax gets calculated.

Also, is it right to stay in US on perdiem on L1 and it will not impact future visas

Thanks in advance
Do you mean that, in addition to your usual salary, you will receive a per diem for your living expenses while you are in the US and you wonder if that will be considered to be additional compensation? As others have said, a question for your accountant.
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Old May 14th 2016, 3:08 am
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Default Re: L1 Perdiem

For almost 7 years I've been on an L-1 visa, wage and perdiem paid in GBP in the UK and submitted federal and state tax returns every year.

Colleagues that spent time, even less than 6 months, on this project were expected to submit tax returns.

My company contracted Grant Thornton to complete the returns.

Last edited by 1004ron; May 14th 2016 at 3:10 am.
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Old May 14th 2016, 4:01 am
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Default Re: L1 Perdiem

Hi All,

Thanks for the replies. So if my stay extends beyond 6 months on L1, should I pay tax on perdiem as well as Indian salary?

Last edited by BHPRIYA; May 14th 2016 at 4:17 am.
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Old May 14th 2016, 11:34 am
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Default Re: L1 Perdiem

You'll pay tax on all income
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Old May 14th 2016, 12:03 pm
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Default Re: L1 Perdiem

Originally Posted by BHPRIYA View Post
Hi All,

Thanks for the replies. So if my stay extends beyond 6 months on L1, should I pay tax on perdiem as well as Indian salary?
Of course, all income, even savings accounts and investments you may have outside the US.

What makes you think that tax will not be due for stays < 6 months?
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Old May 15th 2016, 4:40 am
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Default Re: L1 Perdiem

Hi,

I have read that we will be entitled to pay tax in US if stay extends beyond 183 days.

In that case, is it not like I end up paying more tax on perdiem (Indian sal+US per diem) when compared to being on US payroll.

I am sorry to ask these questions..but this is first time for me and I am not aware of tax policies in USA.

I have bee asked to choose between these 2 options by my employer saying
perdiem option would be beneficial for me and there will be no tax in this case as I will pay tax on my indian salary...

I am not able to figure out the benefits of being on perdiem structure.

Thanks in advance
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Old May 15th 2016, 12:47 pm
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Default Re: L1 Perdiem

Originally Posted by BHPRIYA View Post
I have read that we will be entitled to pay tax in US if stay extends beyond 183 days.
You are liable for US taxes if you meet or exceed the IRS' substantial presence test. You can get the details from the IRS web site. However, you can avoid that if you can demonstrate that you have a substantial tie to another country (I can't remember the exact wording). The US will tax you on your worldwide income. You might still have tax deducted from your pay, but you'd be able to claim that back if you file a US tax return.

As I wrote earlier - you'll get better information in the general USA forum, because that's where all the tax people hang out. This is not an immigration issue.

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Old May 15th 2016, 12:53 pm
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Default Re: L1 Perdiem

I will move this thread into the General US Forum as this is not an immigration issue.
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Old May 15th 2016, 1:00 pm
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Default Re: L1 Perdiem

Originally Posted by BHPRIYA View Post
I have read that we will be entitled to pay tax in US if stay extends beyond 183 days.
Where did you read that?
https://www.irs.gov/Individuals/Inte...-Presence-Test

>31 days you pay US Tax.

As Ian says, you need to create a new thread in the correct section if you intend discussing the tax query.

Edit: I see the MOD's have moved it for you.
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Old May 15th 2016, 5:55 pm
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Default Re: L1 Perdiem

Originally Posted by 1004ron View Post

>31 days you pay US Tax.
31 days this year and 183 days in the last three years including this year.

If he has not been in the USA during the last three years it would 183 days.


http://https://www.irs.gov/Individua...-Presence-Test
You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:
31 days during the current year, and
183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
All the days you were present in the current year, and
1/3 of the days you were present in the first year before the current year, and
1/6 of the days you were present in the second year before the current year.
Example:
You were physically present in the U.S. on 120 days in each of the years 2012, 2013, and 2014. To determine if you meet the substantial presence test for 2014, count the full 120 days of presence in 2014, 40 days in 2013 (1/3 of 120), and 20 days in 2012 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2014.
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Old May 15th 2016, 7:32 pm
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Default Re: L1 Perdiem

Not passing the substantial presence test doesn't necessarily mean you won't have to file taxes - you may have to file as a non-resident alien.

A. Who Must File
If you are any of the following, you must file a return:
A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during the year.
However, if your only U.S. source income is wages in an amount less than the personal exemption amount (see Publication 501, Exemptions, Standard Deduction, and Filing Information), you are not required to file.
A nonresident alien individual who is not engaged in a trade or business in the United States and has U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.
A representative or agent responsible for filing the return of an individual described in (1) or (2),
A fiduciary for a nonresident alien estate or trust, or
A resident or domestic fiduciary, or other person, charged with the care of the person or property of a nonresident individual may be required to file an income tax return for that individual and pay the tax (Refer to Treas. Reg. 1.6012-3(b)).
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Old May 16th 2016, 1:59 pm
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Default Re: L1 Perdiem

Originally Posted by BHPRIYA View Post
I have read that we will be entitled to pay tax in US if stay extends beyond 183 days.
You'll be entitled to pay tax regardless.

The 'substantial presence' test is to determine whether your out-of-US income is liable to US taxes. It's answering the question 'do you spend so much time in the US that the IRS can claim an interest in all your income'.

The 183 days threshold is calculated as:
1) whole or part days of current year
2) plus whole or part days of previous year divided by 3
3) plus whole or part days of year prior to that divided by 6

As others have said, get an accountant. while it's possible to do your own taxes, your circumstances are going to be complicated. Having an accountant do that will make sure all the boxes are ticked properly and (should) reduce the IRS's interest in examining you closely.
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