Hi,
I will be reaching US in Jan 2009 and will be working on L1 in kokomo, Indiana. My spouse and 1 yr kid will accompany me. I want to know all the taxes which I have to pay and how much? For how much standard deduction and personal exemption, I'll be eligible for. Do I need to pay for FICA tax? And about Medical Insurance also?

Thanks
Misra

Misra:

You will pay federal and state income taxes. The exact percentage will be determined by your income level. It ranges from 10 - 35%. More than likely, the bulk of your income will be taxed at 15%, with a little at 25%.

You WILL pay FICA taxes, with Social Security at 6.2% and Medicare at 1.45%. These taxes are NOT refundable (even though you will not qualify for benefits in the U.S.), but your country MAY have a totalization agreement with the U.S. which will allow you to transfer the payments to your country's equivalent program.

Medical insurance may or may not be provided through your employer. You need to ask!

If not, you can buy your own policy to cover yourself and your family but it will NOT be cheap!

Thanks for clarifying. I have left with one doubt that what will be the standard deduction and personal exemption in my case. Can I apply personal exemption and standard deduction for my spouse and daughter as well?

TIA

You will be filing jointly, so the joint standard deduction for 2008 will be $10,900.

Your personal exemption will be $3,500 each for yourself, your spouse and your child, for a total of $10,500.

Thanks for clarifying , but I had heard somewhere that when you are on L1 then you do not get these benefits like
1. You cannot file return jointly even if you are married and your wife does not have any income.
2. You do not get benefit of Standard deduction, but you will get Itemized deduction benefit only.
3. Personal exemption will be applicable only for you and not for wife and daughter.

These will be the cases when you are on L1. Can you please advise?

Regards

1. Not correct. You can file joint return as residents.
2. On resident tax return, you get standard deduction.
3. Not correct. You will get 3 exemptions.

Thanks for clarifying my doubts :)

Glad to help!