I completed a degree in the summer of 2007 in the United States and was issued an OPT employment card commencing 1 July 2007 expiring 30 June 2008. I started work in September 2007 in New York and live in Manhattan.

It is possible that I am eligible to work under the 'L' visa in the alternative to the OPT status. I understand that for income tax purposes the 'L' is equivalent to an H1B (ie. Resident alien subject to federal tax on a graduated basis). My queries are:

1. Would I pay less income tax by remaining on the OPT (under which I understand I am subject to a 30% federal tax rate plus NY state and city tax) as opposed to an L (under which I understand that I would be subject to graduated federal income tax, medicaid, social security, NY State and city tax)?

2. Is there a free calculator into which I can enter my gross income for the remainder of 2007 and for all of 2008 and be told my net income under OPT and under L/H1B?

3. Is is possible to claim back any living (e.g. rent) or business (e.g. work clothing) expenses whilst working on OPT that would not be available if working under an L/H1B visa?

1) Your tax as a F-1 visaholder on the FEDERAL level will be about the same, because you can claim the standard deduction as a student from India, just like a resident alien can. BTW, you should NOT be paying NY CITY taxes, because, as a student (OPT workers ARE considered to be students), you are, by deifnition, a NON-resident of NYC.

2) There is a tax calculator in the forum at Visa Taxes - File H1B Tax,File Form 1040nrez online,F1 Tax, OPT Tax to H1 Visa Tax, J1 Tax, H4 Tax, H4 Tax W7 ITIN, Form 8843,Form 843,H4 Visa Tax ID ITIN W7 , Non Resident Alient Tax, International Student Taxes,.

3) No. Deducting living expenses apply only on temporary work assignments. The IRS considers OPT work assignment to be a new job out of school, NOT a temporary work assignment.

Atlanta Tax Expert,

Many thanks for your reply which is most helpful. Some follow up queries:

1. I'm not an Indian student, I'm English. In view of which, is the federal tax liability still approximately the same whether I'm on OPT or an L (equivalent to an H1B)

2. Can you direct me to the federal tax rates on an L / H1 so I can quickly calculate an estimated tax liability for next year.

3. I used the tax calculator that you directed me to. It suggested that I'm a dual status alien which, based on my diligence to date, I'm confident I'm not. Through that service/website is there a means of having someone estimate my tax liability on OPT v L/H1B and indicate which forms I will have to complete for my federal and state tax return?

4. Can you direct me somewhere that I can verify that I'm not required to pay NY state or NY city tax so that I can provide that to my employer (who is presently withholding both)?

5. Subject to 4 above, how would I go about (a) stopping paying NY state and NY city tax and (b) how do I claim back the NY state and NY city tax I have already paid to date (for September and October)?

Many thanks in advance

A lot of the answers are conditioned on how long you have been in the US. For example, if you've been here for more than 5 years then most of this discussion is irrelevant.

Texas Tax Expert (or anyone else)
In what way are the answers conditioned on the duration of my stay in the US. My diligence suggests that neither the federal nor local tax rates are contingent on the duration of my stay in the US, but on the nature of my visa.

I have been in the US since the fall of 2006 - as an F-1 student I was, and as an OPT worker, I am, a non-resident alien. On transferring to an L, I would remain a non-resident alien until I had accumulated 183 days in the US (as to which my time on the F-1/OPT would not count).

In view of the above, if anyone could provide some pointers on my earlier queries (1 through 5) that would be great.

No your due diligence has failed you. It is partially conditioned on your visa status but only for a period of years. You will not count your days of US presence for 5 years while on F1. So you will not count your 2006 or 2007 days. When you get a work visa, those days will count.

So assuming you do not meet the 183 days in 2008, you are a NR for that year too. Assuming you are single, there are not even elections for you to make to get around it.

You are exempt from NY CITY taxes, but you MUST pay NY state taxes on income earned inside of NY state.

You will file as a non-resident alien, filing Form 1040NR or 1040NR-EZ.

@AtlantaTaxExpert

Where can I find any proof saying that OPTs are exempt from NY city tax because I want to go to my employer with proof that NRA student are exempt from this Ny city tax.

What can be done if employer has already withheald this tax.

I have been working on OPT.I am in Usa since Aug 06 and graduated last year.

Any respone will be appreciated.

Thanks!

A call to the NY state tax department will get you the reference you need for your employer.

If the taxes are already withheld, file as a non-resident and attach a copy of your F-1 visa to the NY state return.