Tax Treaty interpreatation of article

[Pacun]

TP was here from July 16, 2010 but payroll was process by HQ in South America. In December, US branch issued 2 checks and withheld Federal and State Taxes. TP has an L-1 Visa and filed his 2010 taxes in South America using global income. Wife lived in South America the whole 2010 and HE was present for only 168 days. This is what the tax treaty reads and I need a little help understanding it (I believe he has to file just to claim withholding).

ARTICLE 15

Dependent Personal Services

1. Salaries, wages, and other similar remuneration derived by a resident of a

Contracting State in respect of an employment shall be taxable only in that State unless the

employment is exercised in the other Contracting State. If the employment is so exercised, such

remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a

Contracting State in respect of an employment exercised in the other Contracting State shall be

taxable only in the first-mentioned State if:

a) the recipient is present in the other State for a period or periods not exceeding

in the aggregate 183 days in any twelve month period beginning or ending in the taxable

year concerned;

the remuneration is paid by, or on behalf of, an employer who is not a

resident of the other State; and

c) the remuneration is not borne by a permanent establishment or a fixed base that

the employer has in the other State.

[jainen]

>>process by HQ in South America<<

I don't think it matters where the bookkeeping was done. He worked for a U.S. subsidiary and is still here more than six months later. The company itself obviously believes the wages are taxable in the United States. Tell him to pay his fair share, and welcome to America!

[Pacun]

>>process by HQ in South America<<

I don't think it matters where the bookkeeping was done. He worked for a U.S. subsidiary and is still here more than six months later. The company itself obviously believes the wages are taxable in the United States. Tell him to pay his fair share, and welcome to America!

Thank you. I should use form 1040NR for 2010 because he was here only 168 days (I meant), the tax treaty and his ties were stronger to South America.

I just modified my post a little to state that he was here ONLY 168 days and wife was not here at all in 2010.

I like people with this type of visa because: They are well educated, want to pay their taxes and they don't want to risk their visas by taking a deduction if they don't have documentation. This could be my future market.

[jainen]

>>use form 1040NR for 2010 because he was here only 178 days<<

Are you saying he left the United States on January 10th of 2011, and was not here at all in 2008 or 2009?

[Pacun]

>>use form 1040NR for 2010 because he was here only 178 days<<

Are you saying he left the United States on January 10th of 2011, and was not here at all in 2008 or 2009?

No, the person still here and will be here for the next couple of years. I thought I was going to file 1040NR for 2010 and 1040 for 2011. (I made a correction to the correction).