H1B - Tax Treaty between US and home country

[hmwsze]

Hi,

I heard from a friend that people on H1B is able to reduce his US tax using Tax Treaty between US and home country. Anyone has such experience and how I can go about doing this? Please advise. Thanks.

[Nishant]

Tax treaty is for avoiding double taxation based on agreement between two countries.

For examples, if a person spends less than 6 months in US, s/he is considered resident for his home country and is expected to file income tax return for that country. When s/he files income return in that country for that year, s/he can claim rebate for income tax already paid in US to avoid additional tax on same income which is already taxed in US.

In reality, there are very few countries in world who have tax rates lower than US. Therefore on most occasions, person lands up in paying additional incometax to that country based on difference in income tax rates between the two countries.