Dual status question

My question is seemingly simple but it is very clear that the more I will read the documents, the more I get confused because they are full of contradictions while I would appreciate some predictability. I spent previous years including 2004, 2005, 2006 on H1B visa in Boston and filed tax returns as a U.S. and Massachusetts resident. On 06/30/2007, the visa expired, I resigned from my job, and I left the U.S. on July 4th for the Czech Republic, my homeland. Will I file the U.S. tax returns for 2007 as a resident, non-resident, dual status resident, or something else? In other words, what forms should I exactly send next year and what amounts should be written on them? The same question for Massachusetts... If you know - or have a good guess - if I happen to have income in the Czech Republic in 2007, what should I do there? Is that correct just to ignore the U.S. income there? If you send a copy of your answer to lubos.motl at gmail.com, it will be appreciated. Thankfully Yours Lubos

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Reply to
lubosch
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lubosch wrote:

What does your treaty say? Usually, if you spend more time in the US than in another country, you are considered a full year resident. Also, does Massachusetts recognize that treaty? Some states don't. For your home country, again, you need to look at the rules for your country. It is unlikely you are going to get the answer in the same newsgroup you get the information for the US. Nor are you necessarily going to get the answer emailed to your in-box. My newsgroup machine is deliberately separate from my email. So I personally can't. In general, for the US return, you can claim a foreign income exclusion for the income earned outside of the US. If that isn't enough, you will also get a foreign income tax credit for that income earned outside the US which you can't take a foreign income exclusion. You will not get an earned income credit since you are not in the US so $1,000 of your refund is gone. In general, for the foreign return, most countries allow only the foreign income tax credit for the income earned in the US. The US is generally the only country allowing an foreign income exclusion and that is only because they tax on citizenship, not residency. The specifics will depend on your particular case. I would hire a specialist in your country to complete and file your final US return as the rules are generally too complex to get into on the web. Nor can you file early. Your payment date for the US is April 15 or next business day and your filing date is June 15, or nbd.

Reply to
parrisbraeside

As you were a resident in 2007 (you met the substantial presence test) and will not be a resident in 2008, your last day of residency in the U.S. is your last day present on U.S. soil in 2007. That makes you a Dual Status alien for

2007. For the period in 2007 you were a resident alien, you are taxed on your worldwide income. For the period that you were no longer a resident you would only be subject to U.S. tax on income for U.S. sources. Pub 519, starting on page 30 explains how a Dual Status alien files a tax return for the last year of residency. As to the Czech Republic, you would have to contact them to see what your filing requirements are. The tax treaty between the two nations does allow for the elimination of double taxation on the same income. Depending upon Czech tax law, you just might not have any double taxation.
Reply to
A.G. Kalman

I should have added a statement about MA. MA is going to tax the same income that is taxable on your federal return. Basically that means that MA is going to tax the income that you received prior to departing the U.S. plus any income you received after departing that is MA sourced.

Reply to
A.G. Kalman

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