Do Indians (specifically people from India) live income tax free in the United States for 5 years?

No.I do not think so. Considering there would be a huge population loss in India and a massive increase in America.

Thanks Prark. Although I am pretty sure the population of Indians living in the US is increasing greatly.

I’m afraid your friend believed right wing mass email campaigns. This is simply not true.

The Internal Revenue Service tax code is very complex. The US has tax treaties with certain countries. The tax treaty with India is listed by the US as “India TIAS Jan.1, 1991”

From the IRS: “The United States has tax treaties with a number of foreign countries. Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from U.S. taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and specific items of income. Under these same treaties, residents or citizens of the United States are taxed at a reduced rate, or are exempt from foreign taxes, on certain items of income they receive from sources within foreign countries. Most income tax treaties contain what is known as a “saving clause” which prevents a citizen or resident of the United States from using the provisions of a tax treaty in order to avoid taxation of U.S. source income.

If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for the applicable U.S. tax return.

Many of the individual states of the United States tax income which is sourced in their states. Therefore, you should consult the tax authorities of the state from which you derive income to find out whether any state tax applies to any of your income. Some states of the United States do not honor the provisions of tax treaties.

This page provides links to tax treaties between the United States and particular countries. For further information on tax treaties refer also to the Treasury Department’s Tax Treaty Documents page.”

http://www.irs.gov/businesses/international/article/0,,id=96739,00.html

The Indian contract workers that you are referring to come to the US as an employee of a contracting company. When a company hires their services, they don’t hire the individual worker, but hire a contracting service to provide individuals to do certain work. The company pays money to the contracting service, who in turn pays the contractors. The contracting company pays taxes as a business operating in the US. Depending on the payment structure, some contract workers are paid in Indian funds to Indian bank accounts.

@bkcunningham, GA

There was a chain e-mail about this just like the one about Obama canceling the national day of prayer, forming death panels, requiring every third child have their middle toes amputated… ok, I made the last one up. But it makes about as much sense as the rest, no?

Again, sounds like a simplification and distortion of the truth for shock-value and hate-mongering.

To answer your question: No.

It’s true that tax codes are unnecessarily complex (or else accountants would be out of an industry), but all you have to do is ask an Indian American.

These sorts of lies are meant to polemicize neighborhoods on racial grounds – trying to conflate economic problems with issues of social identity. They’re very effective in places with little diversity, high prejudice.

And when someone is adamant about a belief in a tax law – unless they’re an accountant or lawyer – you’d have to wonder why they’re getting emotional. Identity politics is a dirty, but effective tool during times of economic crisis (high unemployment, reduced social mobility, etc.)

Thanks so much for all of youor thoughtful answers!

@ftc68 Great answer. You said what I was thinking only much clearer and better.

BarnacleBill is pretty much correct.