Working for an Indian company in L2.

arun_l1

New Member
My company will be sponsoring L1A (or L1B if L1A is not applicable based on lawyer's feedback) soon and L2 for my wife. My wife would like to move to US with me but at the same time she do not want to quit her job in India, continue to be part of India payroll but work from US. Her company is subsidiary or Indian branch of an US based MNC but I do not know if that matters as her company may not apply for her L1. So she has to go on L2.

My question is whether it is perfectly legal for an L2-visa holder to work for an Indian company while she is in US. Please let me know.
 
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newacct

Well-Known Member
It is legal for L2 spouse to do any work in the US. But the company will need to be set up to withhold US (federal and state and other payroll) taxes on the income.
 

arun_l1

New Member
Thanks for the information - One clarification - the earnings will be entirely in India. Can she not just pay the tax in India as per double taxation avoidance treaty ?
 

arun_l1

New Member
I think there Form 8840 where one can establish connection to home country to be a tax resident in India instead of US
 

newacct

Well-Known Member
The source of income is determined by where the work was performed, which in this case is the US. Therefore, the income will be taxed by the US regardless of whether the person is a US tax resident or nonresident (though if they are present more than half the year, they will become residents for US tax purposes, and they cannot become nonresident by claiming closer connection to a foreign country). If the person is a tax resident of India, the income will also be taxed in India, in which case the person can claim a Foreign Tax Credit on Indian taxes. If the person is not a tax resident of India, the income should not be taxed in India. In either case, the person pays full taxes in the US.
 
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