I am a Resident Physician from India currently training on a J-1 visa. I am in the final year of my training and will be completing the same in March next year. I have signed up for a job which will start in the spring of 2009. For this job I have been paid a certain amount as sign-on bonus. I have noted that this amount already had the appropriate taxes deducted from it, including the social security and medicare taxes. My question is that will the exemption from paying social security and medicare taxes, that I currently enjoy, not apply for the sign-on bonus amount? As mentioned earlier, I am still on a J-1 visa, and am still in training. Please advise me, thanks!

When did you enter the U.S. on J1? Did you enter as a trainee?
If you entered as a trainee, then you are exempt from residency for 5-years that is your income is not subject to Social security and Medicare taxes. You will pay income taxes.
Read Your U.S. Tax Return: U.S. Tax Treaties for Students and Apprentices

Also, what will be your visa when you are doing the job?

Sorry, I disagree with MukatA.

A J-1 visa holder who is considered a trainee is NOT a student and therefore is NOT exempt from Social Security and Medicare taxes for FIVE years.

The exemption, in my opinion, is good for only TWO years.

Now, if you attended medical school in the U.S. then began your internship, all under the J-1 visa, then (and only then) would the exemption be good for five years.