[shm911]

Hello,

I am a graduate student in WA state from India. I am currently on F-1 visa and I have been working in University since a year. I am currently working as independent contractor under my CPT earning $ 5000 per month and my employer have asked me to fill w8-ben form.

1. Which form do I fill while working as an independent contractor on CPT? They will not withheld any tax but they have asked me to pay 30% later while I file my tax.

2. How much tax do I have to pay at the end of the year? My federal tax through university is currently $1000 so far.

3. How much refund do I get for federal tax?

4. Do I get exemption if I am paying for my tuition through the money I receive from by contractor position?

Thanks

[MukatA]

On F-1 visa you can get Social Security number. So you will file Form W-9. F-1 students do not file form W8-BEN. Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents

[shm911]

But, W9 form clearly specifies that its only for US residents.

[AtlantaTaxExpert]

While it is unusual for F-1 students who are working as contractors to be expected to complete the form, the Form W-8BEN IS the correct form for you.

However, you will NOT pay the 30% rate, but rather be taxed at the progressive tax rates that U.S. citizens pay. This is required under the Non-Discrimination section of the U.S.-India Tax Treaty.

As a contractor, you will file Form1040NR with a Schedule C to report your contract income (which will be reported to the IRS on Form 1099-MISC) and to deduct the
Expenses associated with being a contractor.

Additionally, due to your F-1 visa status, you are EXEMPT from the 15.3% self-employment tax which, for contract personnel, substitutes for FICA (Social Security and Medicare) taxes.

You will NOT be able to deduct or claim any education credit for the tuition you have paid, because, as a non-resident alien, you are NOT eligible for such deductions or credit.

[shm911]

I do not know about the progressive tax rate. Ultimately how much tax will I have to pay for my contract income? ($5000 per month for 4 months contract). Will there be any refund I can claim later?

[AtlantaTaxExpert]

Whether you get a refund depends on how much is withheld.

On a $20,000 annual income, you get to claim a $3,700 personal and, due to the fact that you are a citizen of India, a $5,800 standard deduction, which means $9,500 of the $20,000 is tax-exempt.

That leaves $10,500 in taxable income, which yields a tax liability of about $1,178. Anything withheld in excess of that $1,178 will be refunded to you when you file your tax return (Form 1040NR with the Schedule C). This assumes you claim NO expenses on the Schedule C.

Note that you must also file Form 8843 with the Form 1040NR and Schedule C.