Ask Me Help Desk - H1-B short term no idea of tax, company deducting all 3 taxes

Hi,

I am sure everyone on this forum is busy, however if some one can guide me of would be great help.

I am on H1-B but for a short term and on salary.

My US stays is 14Dec 2008 till 28Feb 2009.

My employer has been deducting federal tax, social security tax and medicare tax for the month of Dec, Jan and would do the same for Feb in the ratio of abouot 20% of the gross salary.

However I am not getting any info about what I really need to pay, are they deducting tax in excess and also they are not giving a proper resposne to my queries.

I browsed myself on the web and got more confused with Non resident alien, substantial presensce test, sailing permit.

Can you experts guide me what I need to do, what all taxes I need to pay or need not pay.

Thanks in Advance

Siddharth

Where are you from Siddharth?
I am assuming India but that could be incorrect.

I am assuming that you are an employee of an American company. If so, you fall under the dependent personal services article of the US/India treaty

You are operating in two separate tax years. You will fill out a 1040NREZ for 2008 if you have no dependants. See http://www.irs.gov/pub/irs-pdf/f1040nre.pdf. Be sure to carefully read the instructions; see http://www.irs.gov/pub/irs-pdf/i1040nre.pdf
Your salary will be posted on line 3 and you will be taxed at graduated rates. You may be entitled to a refund.

Quote:

Originally Posted by Five Rings

Where are you from Siddharth?
I am assuming India but that could be incorrect.

I am assuming that you are an employee of an American company. If so, you fall under the dependent personal services article of the US/India treaty

You are operating in two seperate tax years. You will fill out a 1040NREZ for 2008 if you have no dependants. See http://www.irs.gov/pub/irs-pdf/f1040nre.pdf. Be sure to carefully read the instructions; see http://www.irs.gov/pub/irs-pdf/i1040nre.pdf
Your salary will be posted on line 3 and you will be taxed at graduated rates. You may be entitled to a refund.

Yes, I am from India. My employer iin India is an Indian company, and now in US I am deputed to the American registered arm of my Indian company and I am an employee of that after that.
In short yes, I am an employee of an American company.
Over the past 2 months company is withholding all 3 taxes from my pay. However I feel I should fall in some other caegory and no resident alien taxation.

Thanks,
Siddharth

Quote:

Originally Posted by Five Rings

Where are you from Siddharth?
I am assuming India but that could be incorrect.

I am assuming that you are an employee of an American company. If so, you fall under the dependent personal services article of the US/India treaty

You are operating in two seperate tax years. You will fill out a 1040NREZ for 2008 if you have no dependants. See http://www.irs.gov/pub/irs-pdf/f1040nre.pdf. Be sure to carefully read the instructions; see http://www.irs.gov/pub/irs-pdf/i1040nre.pdf
Your salary will be posted on line 3 and you will be taxed at graduated rates. You may be entitled to a refund.

To add my wife is a dependent, but not present in US.

1. Did you get W2 for 2008? It will depend upon when you got your first pay check. If it is in 2009, then you do not have any income in 2008.

2. If you had income in 2008, then for 2008 you will file nonresident tax return Form 1040NR or 1040NR-EZ. You will get exemption of $3,500 and itemize deductions. For temporary stay you can deduct per diem expenses, which will make your taxable income nil. So you will get refund of federal income tax withheld.

3. You may have to file state tax return also. But it appears that in 2008, you income will be less than the state's filing requirement. So it may be your choice.

4. For your tax return with W2 income, your citizenship does not matter.

Quote:

Originally Posted by MukatA

1. Did you get W2 for 2008? It will depend upon when you got your first pay check. If it is in 2009, then you do not have any income in 2008.

2. If you had income in 2008, then for 2008 you will file nonresident tax return Form 1040NR or 1040NR-EZ. You will get exemption of $3,500 and itemize deductions. For temporary stay you can deduct per diem expenses, which will make your taxable income nil. So you will get refund of federal income tax withheld.

3. You may have to file state tax return also. But it appears that in 2008, you income will be less than the state's filing requirement. So it may be your choice.

4. For your tax return with W2 income, your citizenship does not matter.

MukatA,

Thanks for the detailed explanation.

Till now I have not received any W-2 form from my employer for 2008.
At start of my vist my employer took W-4 form from and SSN no.

My stay

Dec14 2008 -31Dec2008 - 17 days Around $3700
Jan01 2009 Feb28 2009 -59 days

I was asked by employer to apply for SSN and then only can get salary credit, which I received in jan 1st week. Therefore my Dec14 2008 -31Dec2008 salary was paid along with complete Jan 2009 salary at jan end.

In both Dec and Jan salary slip, they have deducted taxes(20-22)% under following categories:
Federal Income tax
Social Security tax
Medicare tax.

The federal tax to be refunded would be through IRS/company
Is Social Security tax applicable as I am a Non resident alien.
Nonresident Alien - Tax Withholding

Thanks in Advance.

Siddharth

Income received in 2009 is income for 2009 even if you worked in 2008. So you do not file any tax return in 2008.

You will file 2009 tax return in 2010. You will not get SS tax and Medicare tax back as H1-B is work visa and it allows you to apply for green card.