Hi, I'm a recent law school graduate on OPT with a F-1 visa status. I'm currently working at a law firm and getting a 1099 instead of a W-2, and I was wondering if it is legal to work under 1099 for a non-resident in my situation because I read somewhere that it's illegal to get paid under 1099 if you are a non-resident. (tax is not my area of specialty)

Also, if it IS legal, how do I file taxes for 1099? And how much tax do I have to pay for 1099 as a non-resident, as in what's the general percentage/rate? I also read somewhere that non-residents don't have to pay self-employment taxes, but I don't really know what that means. So I would really appreciate it if someone could explain that to me as well.

Lastly, if I had an option to get paid under W-2 OR 1099, what would be the better option, as in under which form would I get taxed LESS?

Just in case you need this information to answer my questions, I've been on F-1 visa for the past 6 years or so in both undergrad and law school, and I've lived in the US since 1999. (I was on H-4 visa before I switched to F-1 after I turned 21)

Because you been in the US for more than 5 years, you are a resident for tax purposes. As such you will have to file Form 1040 and report 1099-MISC on Schedule C or Schedule C-EZ. You will have to pay self-employment taxes (15.3% of net earnings figured out on Schedule SE).

Having W-2 is better because half of self employment taxes will be paid by the firm.

Yes, you will file resident tax return and report 1099-misc income and expenses on schedule C or C-EZ (form 1040). This income is subject to SE tax at 15.3%.

Mchoi31:

How did you file your return for 2008, as a resident or non-resident alien?

Mchoi31:

How did you file your return for 2008, as a resident or non-resident alien??


Hello, I did not file a tax return in 2008 because I was a full-time student and did not work for pay at all. This is my first time filing a tax return. So should I get a W-2 or stay on 1099?

If it is your intent to convert to a H-1B, H-1 or L-1 visa after your OPT, then you should try to get employed under a W-2, because you WILL be liable for the 15.3% self-employment tax when you file your return for 2010.

If you intend to return to your home country right after the OPT period is over, you can retain your non-resident alien status by submitting Form 8843 and submit proof that you have maintained a "closer connection" to your home country. If the IRS accepts this proof, you will NOT be subject to the 15.3% self-employment tax and you can submit Form 1040NR with a Schedule C. The amount of income tax you pay will esentially be the same as if you were employed under Form W-2.

Application for ANY type of work visa while on OPT undercuts any argument to maintain the "closer connection" to the home country.