I am employed by a VA based staffing company and at present I am working as a contractor at CA. I hold H1B visa and my legal status in the U.S. is non resident alien. Due to nature of my job, I am required to relocate at least twice a year. My question is that if I am working on an assignment which is for less than a year, am I eligible for per diem rate? If yes, what rate is applicable for CA? Please note that every time I get a new project, I completely relocate and don't have a permanent residence.

Knowledge Seeker:

You ARE eligible to claim the per diem rates as specified by the IRS. You can download the latest set of per diem rates from Internal Revenue Service (http://www.irs.gov).

As for your residency status, you may or may not be a non-resident alien. It depends on when you entered the country.

If you entered the U.S. anytime before 1 January 2006 on that H-1B visa, then you are a resident alien and must file Form 104o with Schedules C and SE. You are liable for the self-employment tax which is calculated on Schedule SE.

If you entered the U.S. anytime on or after 1 January 2006 but before 2 July 2006, you are a dual-status alien and must file Form 1040 with Schedule C and SE AND Form 1040NR as an attachment to document the income earned before you entered the United States. This is a complex tax return and I strongly recommend you get professional help to file it.

If you entered the United States on or after 2 July 2006, then you are correct, you are a non-resident alien and should file Form 1040NR with a Schedule C. In this case, you are NOT liable for the self-employment tax.

If you wish to use my professional tax service, contact me at [email protected].