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    krish96's Avatar
    krish96 Posts: 3, Reputation: 1
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    #1

    Mar 31, 2008, 03:56 PM
    OPT independent contractor and taxes
    What are the taxes that a foreign student on OPT who is working as an independent contractor is subjected to.
    What if the student is a "resident alien" for tax purpose.
    (IRS classifies foreign students as "resident aliens" for tax purpose if the period of stay in US is roughly 3yrs or more).
    Advise. Thank you
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
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    #2

    Apr 1, 2008, 05:49 AM
    On OPT you are exempt from residency unless you have already completed 5 years on F1/OPT.

    Income as independent contractor is reported on schedule C (Form 1040). It is subject to 15.3% SE tax (for residents). On OPT, you don't pay SE tax.
    How you will treat the 1099-Misc income, read: Your U.S. Tax Return: W2 or 1099: Employee or Independent Contractor.
    krish96's Avatar
    krish96 Posts: 3, Reputation: 1
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    #3

    Apr 1, 2008, 10:52 AM
    Quote Originally Posted by MukatA
    On OPT you are exempt from residency unless you have already completed 5 years on F1/OPT.

    Income as independent contractor is reported on schedule C (Form 1040). It is subject to 15.3% SE tax (for residents). On OPT, you don't pay SE tax.
    How you will treat the 1099-Misc income, read: Your U.S. Tax Return: W2 or 1099: Employee or Independent Contractor.
    I am currently in my 5th year as F1student (since OPT is also an F1 status). My wife is on H1. Can we file taxes together. It is her 5th year in US.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #4

    Apr 2, 2008, 08:23 AM
    On H1-B she is resident if she has completed Significant Presence Test.
    You can file resident return as Married Filing Jointly. You will pay SE taxes and your income (even on OPT) is subject to FICA taxes.

    It may be better that in your 5th year on F1/OPT you will nonresident return and your wife files resident return as Married Filing Separately.
    krish96's Avatar
    krish96 Posts: 3, Reputation: 1
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    #5

    Apr 2, 2008, 09:43 AM
    Quote Originally Posted by MukatA
    On H1-B she is resident if she has completed Significant Presence Test.
    You can file resident return as Married Filing Jointly. You will pay SE taxes and your income (even on OPT) is subject to FICA taxes.

    It may be better that in your 5th year on F1/OPT you will nonresident return and your wife files resident return as Married Filing Separately.
    Thank you for your advice. For tax purpose for foreign nationals this is the best website to be at.
    Thank you once again.
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