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    yudii93's Avatar
    yudii93 Posts: 3, Reputation: 1
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    #1

    Oct 1, 2008, 07:13 PM
    OPT Tax Issue & India tax treaty
    I came to the US as a student and have been here since Dec 2006. I graduated in June 2008 and have filed taxes for my 2007 income that I earned working at the University in NY. In 2008, I worked at the University in NY while studying and continued on OPT after graduating. Since September 2008, I am working as an Independent Contractor with a company in CA. My total income for 2008 will be approx. 60-70K. How much tax should I expect to pay (Fed + State)? Am I eligible for the India Tax Treaty?
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Oct 1, 2008, 07:23 PM

    1. On F1/OPT you are exempt from residency and FICA taxes for 5 years. You must file non-resident tax return.

    2. You will get benefit as per tax treaty the U.S. and India tax treaty. You can claim standard deduction instead of itemized deductions.

    3. You are independent contractor. You will report your income and expenses on schedule C or C-EZ (Form 1040). This income is not subject to SE tax at 15.3%.
    Read: Your U.S. Tax Return: Tax Filing by Self Employed Sole Proprietor or Independent Contractor
    yudii93's Avatar
    yudii93 Posts: 3, Reputation: 1
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    #3

    Oct 2, 2008, 12:07 PM

    Thank you MukatA. One more clarification, as an independent contractor, do I need to make estimated payments or file taxes quarterly?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Oct 2, 2008, 12:27 PM
    If this is your FIRST year as an independent contractor, you get a freebie for this year and can pay the tax come 15 April 2009 with NO penalties incurred. You should put about 20% of each check in a separate bank account so you have the money come tax time.

    Starting on 15 April 2009, you will have to make quarterly estimated tax payments for 2009 using Form 1040-ES.

    Payment due dates are 15 April 2009, 15 June 2009, 15 September 2009 and 15 January 2010.
    yudii93's Avatar
    yudii93 Posts: 3, Reputation: 1
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    #5

    Oct 3, 2008, 02:59 PM
    Thanks AtlantaTaxExpert. I thought the India Tax Treaty and the F-1 combination would get my tax down to lower than 20%. Will my tax be lower than 20% or should I expect to pay that much?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #6

    Oct 6, 2008, 11:52 AM
    The 20% figure is the standard percentage I give to all my clients who are F-1 students, because I have no idea how much they make and cannot accurately estimate their actual tax liability.

    If you were a U.S. citizen or resident alien, the percentage would be 35%.
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