Hi,
Here are the details that would be helpful to answer my queries
1) F1 Status until Oct 12 2005
(got W2 for this period without FICA (Social and Medical Taxes) witheld)
2) H1B Status from Oct 13 2005
(got W2 for this period with Federal and FICA witheld)
3) Citizenship: INDIA
4) Tax Forms: 1040NR, 8843, Schedule C, Schedule SE
5) 1 1099-MISC (worked briefly as consultant during my OPT period for which no taxes were withheld.)

Questions

1) The 1099 I got for my work during the OPT period is of $2444 amount for which no tax was withheld. I know I have to pay Federal taxes for that amount which I have to report of Schedule C but my question is where do I report that on 1040 NR. I am using Line 13 of Form 1040NR, is that correct ?

2) Although the 1099 period was just for 20 days, can I deduct expenses from it on Schedule C? If Yes then how much expenses can I deduct without having to show any proof. My total cost was around $600 for travelling and moving expenses.

3) Where do I show the Schedule SE amount ( tax liability ) on the 1040 NR form ? Line 53 of form 1040NR, is that correct?

4) I had student loan from a non-profit U.S organization which I paid in Feb 2006. Can I claim student loan interest in my deductions for next year or this year?

Thanks a lot.

Answers to questions:

1) Line 13 is good.

2) You aleways need proofs for no matter how small/big amounts. You can deduct only expenses that are *directly* related to that $2444 you earned.

3) Nowhere. Non-residents don't have to pay social security & medicare taxes.

4) Next year, when you'll be filling 2006 taxes.

Vaya

Vaya, thanks for the reply.

For Question 3 may be I wasn't clear enough. I want to know where should I put the federal taxes (not FICA) that I owe on $2444 that is reported on 1099-MISC.

They are not federal income taxes. Self-employment taxes are ss and medicare taxes. Your employer is supposed to withhold them from your paycheck. Since you are your own employer, you did not withhold anything, did you? :) So now, at the end of the year, they say: we will make you pay ss and medicare taxes together with your income tax (notice them being in "other taxes" section on 1040). But since you are non-resident, you don't need to pay them.

Vaya

Quote:

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Originally Posted by vaya

They are not federal income taxes. Self-employment taxes are ss and medicare taxes. Your employer is supposed to withhold them from your paycheck. Since you are your own employer, you did not withold anything, did you? :) So now, at the end of the year, they say: we will make you pay ss and medicare taxes together with your income tax (notice them being in "other taxes" section on 1040). But since you are non-resident, you don't need to pay them.

Vaya

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Thank you for clarifying that Schedule SE is for Social Security and Medical taxes but where do I add the federal income tax that I owe on 1099-MISC ?

NOTE: On my 1099-MISC I did not deduct any federal taxes upfront

Since your 1099-MISC income is lumped with all other income you need to do nothing special about it. You put it on line 13 and that's it. Then you work it through to line 40 (taxable income) and then calculate your tax using tax tables. Since 1099 income is already included in line 40, you don't need to include it again. You lump it with everything else.

Vaya

Vaya's guidance is for the most part accurate.

However, let me clarify about the use of Schedule C. You report the Form 1099 income on Schedule C, then list your pertinent expenses. You deduct these expenses from the gross Form 1099 income, then put the net income (what's left after you deduct the expenses) on Line 13 of Form 1040NR.