I am employed by a VA based staffing company and at present I am working as a contractor at CA. I hold H1B visa and my legal status in the U.S. is non resident alien. Due to nature of my job, I am required to relocate at least twice a year. My question is that if I am working on an assignment which is for less than a year, am I eligible for per diem rate? If yes, what rate is applicable for CA? Please note that every time I get a new project, I completely relocate and don't have a permanent residence.

Knowledge Seeker:

You ARE eligible to claim the per diem rates as specified by the IRS. You can download the latest set of per diem rates from Internal Revenue Service.

As for your residency status, you may or may not be a non-resident alien. It depends on when you entered the country.

If you entered the U.S. anytime before 1 January 2006 on that H-1B visa, then you are a resident alien and must file Form 104o with Schedules C and SE. You are liable for the self-employment tax which is calculated on Schedule SE.

If you entered the U.S. anytime on or after 1 January 2006 but before 2 July 2006, you are a dual-status alien and must file Form 1040 with Schedule C and SE AND Form 1040NR as an attachment to document the income earned before you entered the United States. This is a complex tax return and I strongly recommend you get professional help to file it.

If you entered the United States on or after 2 July 2006, then you are correct, you are a non-resident alien and should file Form 1040NR with a Schedule C. In this case, you are NOT liable for the self-employment tax.

If you wish to use my professional tax service, contact me at [email protected].