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mark4jon · Mar 27, 2006, 10:03 PM

Hi ,

I was on F1/OPT till may 12 and then my H1b got approved. As such I have been on H1b for more than 183 days, and will require to fill out the regular 1040.

However I was working during my OPT and was compensated for it too. But they did not withhold any taxes, Social Security or Medicare.

My company has sent me a w2 for the duration they hired me from April onwards; and have sent me a 1099-Misc BOX 7 - Non employee compensation for wages earned from Jan to APril.

My question is :
Since I am filling out the regular 1040, what deductions / exemptions can I avail of?
I can use the $ 5000 standard for a regular 1040 + $3200 for single exemption.
Can I also avail of the $5000 US-India treaty for the wages I earned on OPT (> than $5000) ?

From all the information I have come across , I think that I have to pay federal taxes on all income earned (OPT + H1B). Please correct me if I am wrong...

Any info / help is greatly appreciated.
Viks

AtlantaTaxExpert · Mar 27, 2006, 10:27 PM

You can claim the $5,000 standard deduction and a $3,200 personal exemption on Form 1040.

You cannot claim the $5,000 treaty exemption.

Prepare a Schedule C or C-EZ for the Form 1099-MISC income, but do not prepare Schedule SE. Attach a copy of your F-1 visa and a statement to the return explaining that you are not liable for self-employment taxes while on F-1 visa status.

mark4jon · Mar 28, 2006, 08:19 AM

Thank you for the information. That helps a lot.

In effect I will have to pay only federal taxes on the wages earned (>5000) during my OPT.

Muchos Gracias
Viks

AtlantaTaxExpert · Mar 28, 2006, 10:16 AM

Viks:

That is the intent of the regulation, and the procedure I outlined should work.

However, the IRS may not see it that way. They expect to see a Schedule SE when a Schedule C is filed, so be sure that the statement I specified is attached to the return.

mark4jon · Mar 28, 2006, 11:51 AM

I agree with you completely.

Before I got into my taxes, I always thought that any income earned during F1/OPT was non taxable.

However for the benefit of all those reading this thread, I would say that anything we earned during F1/OPT is actually taxable. The amount of tax you end up paying depends on your income and the deductions/exemptions that we can avail; which for most people is a very small amount.
I say this because I have heard many students falsely claiming that Indian students do not have to pay taxes, which is incorrect.

Thanks for your guidance, ATE

AtlantaTaxExpert · Mar 29, 2006, 10:10 AM

Glad to help!