Hi Tax Expert,

I was a student on F1 visa for one year up to August 2008. Since October 1, I am working in a US firm on F1 OPT visa sponsored by the US university I attended. My question is: Am I exempt from Medicare, Social Security, Federal and State taxes? I am a citizen of Ireland. I know that there is a tax treaty in place, I am not sure if it provides me with full exemption.

Thank you.

For 5-years you are exempt from residency. You do not pay Social Security and Medicare taxes. You do pay income taxes. You must file non-resident tax return and will not get standard deduction, and there is no special deduction as per tax treaty:

"A student, apprentice, or business trainee who is a resident of Ireland immediately before visiting the United States and is in the United States for the purpose of full-time education at a recognized educational institution or full-time training is exempt from U.S. income tax on amounts received from sources outside the United States for the individual's maintenance, education, or training.
Apprentices and business trainees are entitled to the benefit of this exemption for a maximum period of 1 year."

Read: Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents

Mukat A

Thank you very much for your answer. So I will have to pay tax aside from Medicare and Social Security. Are there any ways I can reduce the amount I pay. For example can I keep receipts from moving expenses and deduct? Thank you.

For 2008, your exemption is $3500 and you can also claim itemized deductions.
Yes, you can claim moving expenses, if you meet the requirements, for moving from the city you did your education to the city where you are employed.

What MukatA says is true.

However, do NOT fall for the line by some tax preparers that you can deduct your daily living expenses. You are NOT eligible for that deduction, and the IRS is looking for returns who try to claim the daily living expense deduction.

Many thanks, once again.
Just to be sure: how do I go about claiming the $3500 exemption? Is this an exemption from NY State or Federal Tax? Where do I find a list of deductable expenses and how do I go about having them deducted?

I moved from Ireland to New York and completed a Masters Degree in New York on F1 visa. I then went back to Ireland for 6 weeks and returned to New York where I am now working on F1-OPT.

With many thanks.

The $3,500 personal exemption is for the FEDERAL return; the NY personal exemption is sonewhat less, though I am not sure what it will be for 2008.

You can find a list of deductions in IRS pub 17, which can be downloaded from Internal Revenue Service.