if you are working for a consulting company on W2 and working at a client site. Can you submitt the bills directly to your client for the expenses incured at client site and get the check from the clent directly on your name?

On H1 can you accept checks from anyone else other than your employer?

Please advice me as I have lotof money struck as expenses and I don't know which way to get them back. Please help......................


Does this effect my taxes anyway?????

AtlantaTaxExpert

HelpPls:

I answered your corrollary question earlier; answer is below.

I understand your concern about getting a check from someone other than your employer while on H-1 status. However, if the check is merely reimbursement of expenses, it really makes no difference who writes the check. The INS only gets concerned if the money is income earned, not expenses reimbursement.


HelpPls:

If the payments from the client are in fact reimbursements for food and travel expenses (for which you submit a claim backed up by receipts of what you actually spent), then theirs is an accountable plan.

Accepting payments from such a plan does not constitute payment of income that must be reported to the IRS on Form 1099-MISC. This being the case, it is okay for you to get the payment directly from the client.

Ask the client if they are going to report the check amounts to the IRS on Form 1099-MISC. If not, then it is definitely okay, as there will be no paper trail to show you received the money.

helppls

Thanks a lot for your answer. But one thing I don't understand is you said there is no paper trail to show that i recived money. But there are checks on my name from the client that itself are the proof that I accepted money from the client. Please clarify this. If INS checks my bank activity they will see these checks. Will this cause any problem.

Thanks,
Vijay

oormi

Hi!

For 2005 taxes I have a question. I was on F1 for 3 months of 2005 after which I transferred to H1. So for my federal tax return how do I distinguish between the two and which form do I fill. Can i still claim the standard deduction that I could as an F1? or is there an added itemised deduction that i can claim as an h1? please help.

AtlantaTaxExpert

HelpPls:

While you are correct that the checks provided written proof that you received the money, this money is not reported to the IRS with your name and SSN attached to it. Hence, the IRS has no way of knowing your received the money. That is what I meant by an audit trail.

As for checking your bank records, the IRS neither the time, manpower or inclination to randomly check taxpayer's bank accounts in hope of finding extra income. They only do so when they receive information that leads them to believe they will find something worth investigating.

Oormi:

You will file normal (Form 1040/1040A/1040EZ) tax returns for 2005 instead of the non-resident return (Form 1040NR/1040NR-EZ).

You will be able to claim the standard deduction on the normal returns, or you can itemize if your itemized deductions exceed your stamdard deduction (not likely unless you have purchase a home and are making mortgage payments and paying real estate taxes).

It is possible that your employer, being aware that your visa status has changed, may issue you two separate W-2s, one for your F-1visa status and the other for your H-1 visa status. However, if only one W-2 is prodiced, go ahead and file the normal tax return.

The W-2 should show a shortfall in withholding for Social Security and Medicare taxes (I assume you did not have Social Security and Medicare taxes withheld while you were on F-1 visa status), but it is likely that the IRS will not even notice (they tend to focus on the income tax portion of the W-2). If they do notice, they will contact you and you can then explain your new visa status.