[crazylooks4u]

Hi all,

I got my CPT authorization to work as a 1099 Contractor (currently on my F1 status, I belong to India)

I will be earning 4000$ per month and I am a Colorado resident. As, I am a contractor, no taxes will be with hold in my pay check. So here are my questions.

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How much amount do I need to keep a side to pay my taxes?

I heard contractors should send their tax money to IRS every quarter? What are the deadlines?

What is the percentage break-up of taxes (Federal and State), just wanted to send the right amount to each one of them

While sending the taxes every quarter, what forms do I need to fill? And how do I send the money, is it through a check or any other means?

Is it true that employees in W2 pay less tax when compared to the ones who work as 1099 Contractors during CPT?

What form will I be getting as 1099 Contractor ? Is it 1099 -MISC or Form 1099-B or 1099-INT?

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Thanks a lot in advance

[AtlantaTaxExpert]

Your "employer" will issue you a Form 1099-MISC. YOU are responsible for paying BOTH the federal and the Colorado state income taxes.

If this is your first year, you can wait to settle up on paying your federal income tax when you file your 2012 tax return early in 2013 under the "first year" safe harbor. That safe harbor should also apply for Colorado, but a phone call to the Colorado tax authorities is advised to make sure.

You will file Form 1040NR with a Schedule C. You actually have an advantage over others on CPT who are paid under a W-2, because you can more easily deduct some of your work expenses on the Schedule C.

If your income is $48,000 for 2012, your FEDERAL tax liability will be about $5,750. Figure your Colorado tax liability will be about $2,500, so be sure to have about $8,500 in the bank at the end of the year.

[crazylooks4u]

Thanks a lot AtlantaTaxExpert.

Actually, I have already filed my taxes for 2011 last month, I think I am not eligible for first year safe harbor for 2012 tax return, so I guess I need to file it every quarter. Please correct me if I am wrong, also what are the deadlines for quarterly payments?

Is income tax depended on Yearly income? I am not sure If I will be earning 48000$ for the whole year, because this is a summer Internship. Currently, I am getting around 1K for month through W2. This might go down by 200$ a month (As I am not leaving my job) due to the new contractor summer Internship. Also, my Income is not fixed as my jobs will be varying through out the year !

Is there any link where I can see the tax slabs for year 2012 for F1 Students?

Also what is the % of amount (Federal and State) that I need to keep aside monthly for this 4000$ (monthly) Income which I will earning from Mid May ?

Do I need to send this money by a check?

Thanks again.

[AtlantaTaxExpert]

The quarterly estimated tax payments should be mailed on April 15th. June 15th, September 15th and January 15th. The Form is Form 1040-ES. You mail a check with the voucher that comes with the form. If you use tax software, you may be able to file the estimated payments electronically.

The percentage depends on the total amount of income for the year. The first $9,500 is tax exempt due to your personal exemption and the standard deduction allowed under the U.S.-India Tax Treaty.

[crazylooks4u]

Hi AtlantaTaxExpert,

Your answers were very helpful.

I have joined the company. Now, the company says that they can't issue me 1099 MISC, they ask me to pay the taxes based on the paychecks and convincing me that 1099 MISC is not needed... but they say that they can get me the list of payments they've made to me.

My question here is will it cause a problem to me? Do I need to attach this form for the end of the year tax return?

What are your suggestions?

Please help. Thank You very much

[AtlantaTaxExpert]

Go back to the company and explain to them that they MUST document your salary either with a Form W-2 or with a Form 1099-MISC.

Issuing NEITHER form is NOT an option under U.S. tax law.