Ask Me Help Desk - J1 visa India tax exemption

Hi,
I am a student and hold an Indian passport. I have a question regarding tax for J1 interns. I visited the US for completing my degree project in a research lab at Brigham and Women’s Hospital, Harvard Medical School for a period of one year. I went there as an intern and got my DS2019 form sponsored from CIEE. I was paid a total stipend of $15,000 for the period that I worked there, which was given to me in two installments of $7500 each. I have returned back to my country and I received a tax document 1099 MISC which states that I was provided with $15,000 as non employee compensation and no state or federal taxes were withheld from my paycheck. Am I eligible for Indian tax treaty exemption? Which form do I need to fill, 1040NR or 1040NR-EZ? I am entitled to get standard deduction or itemized deduction? How much amount will I need to pay as tax?
Any help will be greatly appreciated since I have never had to deal with tax issues earlier. Thank you.

Hrishikesh

On J-1 you are exempt from residency for 2-years. You must file non-resident tax return Form 1040NR or 1040NR-EZ and Form 8843. Your income is not subject to FICA taxes but you must pay federal and state income taxes.
On your J-1 income you will get deduction based on tax treaty between the U.S. and your country. If intern means you were in the U.S. to study or acquire technical experience (Falls under Students or Apprentices), you can claim standard deduction instead of itemized deduction.
If you were here for research (Falls under Professors, Teachers or Researchers), you do not pay federal income tax. So check your visa stamp.
Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents

1099-misc (nonemployee compensation) income: You must file your tax return if yourself employed income is $400 or more. You will report your income and business related expenses on schedule C or C-EZ (Form 1040). Then you put net income (or loss) on line 12 of Form 1040. This income is not subject to SE tax at 15.3% as you are an exempt individual.

Hi,
Thank you very much for your reply.
I am basically a student who came to USA to work in research lab. However my J1 visa states that I am an intern and not a research scholar, which may not allow me to apply for US- India tax treaty for total exemption from paying the tax.

Although I recevied 1099MISC tax form with the compensation/stipend that I received considered as Non employee compensation, I am not a business man nor I came here to do any business work, hence I cannot show any profit/loss.

Since I am an Indian resident do I have to fill 1040C/C-EZ form or 1040NR?

Hrishi

Quote:

Originally Posted by MukatA

On J-1 you are exempt from residency for 2-years. You must file non-resident tax return Form 1040NR or 1040NR-EZ and Form 8843. Your income is not subject to FICA taxes but you must pay federal and state income taxes.
On your J-1 income you will get deduction based on tax treaty between the U.S. and your country. If intern means you were in the U.S. to study or acquire technical experience (Falls under Students or Apprentices), you can claim standard deduction instead of itemized deduction.
If you were here for research (Falls under Professors, Teachers or Researchers), you do not pay federal income tax. So check your visa stamp.
Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents

1099-misc (nonemployee compensation) income: You must file your tax return if your self employed income is $400 or more. You will report your income and business related expenses on schedule C or C-EZ (Form 1040). Then you put net income (or loss) on line 12 of Form 1040. This income is not subject to SE tax at 15.3% as you are an exempt individual.

Hi,
I read online that I may be able to apply for standard deduction for $5700 for the 2009 year. Is this amount correct? Since my stipend for the entire year was $15,000, a standard deduction of $5700 will get that amount to $9300. On the same website I read that the Filing Requirement Threshold was $9,350 for single person. Does this mean that I am exempted from filing the tax?
Thank you in advance.

Hrishi

Quote:

Originally Posted by MukatA

On J-1 you are exempt from residency for 2-years. You must file non-resident tax return Form 1040NR or 1040NR-EZ and Form 8843. Your income is not subject to FICA taxes but you must pay federal and state income taxes.
On your J-1 income you will get deduction based on tax treaty between the U.S. and your country. If intern means you were in the U.S. to study or acquire technical experience (Falls under Students or Apprentices), you can claim standard deduction instead of itemized deduction.
If you were here for research (Falls under Professors, Teachers or Researchers), you do not pay federal income tax. So check your visa stamp.
Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents

1099-misc (nonemployee compensation) income: You must file your tax return if your self employed income is $400 or more. You will report your income and business related expenses on schedule C or C-EZ (Form 1040). Then you put net income (or loss) on line 12 of Form 1040. This income is not subject to SE tax at 15.3% as you are an exempt individual.

You must file tax return if 1099-misc income is $400 or more.
You will get personal exemption of $3,650 and standard deduction of $5,700 (as itemized deduction).
With Form 1040NR and 8843 you will attach schedule C or C-EZ. On this schedule you can deduct any job related expenses incurred by you. Commuting miles are not deductible.

If you do not have any expense, then report 1099-misc income on line 13 of 1040NR. No need to do 1099-misc.

Hi,
Thanks you're your reply. Since I am an Indian citizen, am I eligible for personal exemption? So taking into consideration the personal exemption and standard deduction, I will have to pay tax only on $5650, since no tax was withheld from my paycheck. What is the amount that I will have to pay as tax on $5650. What is the rate of tax that will be applicable to me?

Hrishi

Quote:

Originally Posted by MukatA

You must file tax return if 1099-misc income is $400 or more.
You will get personal exemption of $3,650 and standard deduction of $5,700 (as itemized deduction).
With Form 1040NR and 8843 you will attach schedule C or C-EZ. On this schedule you can deduct any job related expenses incurred by you. Commuting miles are not deductible.

If you do not have any expense, then report 1099-misc income on line 13 of 1040NR. No need to do 1099-misc.

I am a student of India and I did my internship in a US company during May-July 2010. I came on a J-1 visa and my DS2019 says Intern as the Category. I got $8000 as compensation from the company. Am I eligible for claiming standard deduction and personal exemption?

Do I need to pay social security and Medicare taxes?