Read someplace that L1 visa holders are considered to have been paid a living allowance and can, therefore, claim Federal tax exemption? Is this true? If yes, what tax forms do I submit and how do I claim this exemption?

TIA

TIa:

It depends on how long you have been in the U.S. in 2007, from which country you originate, and your intent for 2008.

Read someplace that L1 visa holders are considered to have been paid a living allowance and can, therefore, claim Federal tax exemption? Is this true? If yes, what tax forms do i submit and how do i claim this exemption?

TIA
From India; was here in June and expect to be here for entire 2008 at least

You CANNOT claim a tax exemption, as you have been in the U.S. for over 183 days in 2007.

If you are married, you can file jointly with your spouse and choose to be treated as resident aliens for all of 2007, but that will require that you declare ALL of your world-wide 2007 income on your U.S. tax return. You can claim a tax credit for the income taxes paid to India on your India-sourced income, and the extra exemption and DOUBLE standard deduction may be worth it.

If you are single, you must file a dual-status tax return, in which you will pay taxes only on income earned while in the U.S.

In 2008, you will file as a resident alien. Further, you are liable for FICA (Social Security and Medicare) taxs. Make sure you notify your employer of this requirement.