Hello Everyone,

I am presently working on my OPT in New York city and a resident of NJ. My salary deductions include FICA, Medicare, FED Withholding & NY State Withholding.
Being on OPT status, how much of these deductions I am exempted from? Also, since I am a NJ resident, am I exempt from NY State withholding as well?

What forms will I need to fill while filing a tax return for FY 10? (Including Non Resident for NY State if applicable)

Thank You,

Pankaj

Pankaj:

You are obligated to pay federal income taxes.

You are also obligated to pay STATE income taxes in the state where you work and the state where you live. The state where you live will give you a CREDIT for the taxes paid to the working state. Since NY state tax is generally higher than NJ state tax, the credit that NJ gives usually completely offsets the NJ state tax liability.

BOTTOM LINE: Have the employer withhold ONLY New York state income taxes.

Since you do NOT live in NY city, you are NOT liable for NYC income tax.

Under U.S. tax law, you are exempt from FICA (Social Security and Medicare) taxes while on OPT, since OPT status is the same as international student status. You should download IRS Pub 519 from Internal Revenue Service (http://www.irs.gov), print off pages 50-51, and show it to your payroll office, then request that they refund the improperly-withheld FICA taxes.

If they refuse, get the refusal in writing, then email me at the address below for the procedures involved with filing Form 843 to get a refund from the IRS.

I have a similar situation, but just that I am working on CPT (Sep'09-Jan'10) and am currently enrolled as a full time student in Virginia. So, my question is regarding the state NY taxes. I came across this form titled " Certificate of exemption from withholding : IT-2104-E" (http://www.tax.state.ny.us/pdf/2009/fillin/wt/it2104e_2009_fill_in.pdf). I believe that I satisfy all the three conditions listed there to claim the exemption :

• you must be under age 18, or over age 65, or a full‑time student under age 25; and
• you did not have a New York income tax liability for 2008; and
• you do not expect to have a New York income tax liability for 2009.

However, I was not really sure. As, that would mean I need not pay any state taxes to NY during my period of work from Sep'09 - Jan'10. Am I correct, can some one throw some light on this?

Also, after my graduation in January '10, I would be working full time for the same company on OPT. Will that in any way change my situation for filing the NY state tax exemption for 2009, if I am eligible at the first hand for the same!

Thanks!
Kavya

Kavya:

Your "student" status will make you exempt from NY City income taxes, but, if you earned income in the state of New York while on OPT, you ARE liable for NY state income taxes, regardless of your student status.

Dear Sir/Ma'am
Thank you for your response! I will start working for the same firm in NYC on OPT only from the last week of January '10.
So, I am still confused whether I would be liable to NY state tax during my current period of work under CPT, as a full time student as per the form IT-2104-E mentioned above.

I really appreciate your time in helping me answer my specific question!

The rules that exist for OPT also apply for CPT: you are liable for federal and state income taxes, but exempt from NY City income taxes (due to your international student status) and FICA (Social Security and Medicare) taxes because you are under a F-1 visa.