I'm sure UBS would be happy to help you structure something to avoid both US and Swiss taxes.

NO no no. Don't let the company fire / re-hire you. It is the same job, they WANT you to telecommute! It would be the same if your job was in Miami, Florida and your wife found a job in Alaska and you wanted to join here there and the company still wanted you to telecommute. Think of it like that. For the US purposes.

Compartmentalize the two things. You're a guy I know you can do this.

Thanks BruceFan. These are very useful ideas. As you said these are just f*$^ing paperwork!

I'll talk to this company to digg more about US tax options. I'll also talk to my bank (Bank of America as well!) for changing my address to Switzerland.

Since you are on the US payroll of a US company, you will be expected to file your tax return regardless of where you live. Since you will spend a majority of your time outside the US, you will have to file a 1040NR (non-resident) for your Federal taxes.

Since the Swiss and US have a tax agreement, you can use that to offset your Swiss taxes.

Cheers,
KO

Keep in touch and best wishes for your move to Zurich in two months!!

I believe from a Swiss perspective, things are simple: If you live here most of the time you pay your taxes here. (I believe there is a defined rule of how many days but that does not matter as you plan to stay here all the time anyway) I guess that is pretty obvious and straight forward. In Europe, countries are relatively small and it is normal that you work in one and live in another, so there are plenty of agreements in place and it is not too difficult.
Your problem is that the US might be a bit more complicated in that area as you are a bit unusual for them. Especially since you are not a US national. This is not really Switzerland related as your wife could have found a job pretty much anywhere else in the world and you would have the same question. So I guess you should ask a professional, local US advisor... he will know better than us.

There are many passionate arguments about US citizens paying taxes regardless of location in the world. I like to think of it as a payment for services rendered, or possibly rendered in the future. Embassy evacuations by helicopter don't come cheap.

Your source of income is the US and therefore will be required to file
a US tax return.

Your US taxes will still be deducted at source. How would you access your salary? Direct deposit or remittance?

I did this for a while, but it was such a pain for the company that I switched to contracting. Then the pain started for me.

It's direct deposit. So did you pay taxes both in US (at source) and in Switzerland? Could you then get refund from US?

This is small start-up so they are very flexible. I hope before it starts to get too painful for them and want to switch, I can find a job in Zurich

So how would you get your money out? ATM?

In my case, I had to file taxes with both countries. But you don't pay twice. You only pay the difference of the greater between the two. Taxes are higher in Switzerland for me. There were a lot of deductions I could not make here. So I didn't have to pay any additional taxes to the US.

By the way, the IRS sees everything in US bank accounts, so no use trying to avoid it.

Do you not have any plans to return to the US?

Yeah, I think this is the biggest issue in the end... wire transfers are expensive and you'd probably want to try to see if you could only manage your life here with your wife by only transferring money 1 to 4 times per year... get a BofAm credit card, that helps, a bit.

Hi - my situation is a little different in that I'm a US citizen, but I do work for a US company still with no ties to Switzerland and my husband is the one who works here in Switzerland. Feel free to PM me and I can explain what I've been told about a work permit and US taxes.

alefsin: as far as I understand, the US will withhold some tax, and you'll have to file a tax return in the US. However, since you'll be a non-resident, the tax shouldn't be very high and you'll get some money back. You probably will not have to pay the Social Security and other insurances.

How does one pay taxes in Switzerland in such case? A person on a B permit earning less than 120K pays taxes at the source, and can't file a tax return. Is this correct? How can I pay Swiss taxes without filing a return? (I'm in a similar situation to the OP).

Another question is about the work permit. Is it even allowed to work for a foreign employer while waiting for B permit to be processed? It seems wasteful to prevent people from doing something useful and bringing money to the country without taking anyone's job (in Switzerland), but these things are often illogical.