[kyalega]

HI Atlanta Tax Expert!

I am a student (Indian nationality) on F1( less the 2 years) and I am going to wrk on CPT in San Diego from July till Dec and thereafter either on h1 or on OPT. I was wondering what will be the tax rate applicable to my relocation allowance?

Also, what net tax rate would be applicable to my monthly salary? A friend of mine told me it to be around 20%. Do I have to show some proof to Payroll?

Thanks a lot for the help!

[AtlantaTaxExpert]

Kyalega:

As a student on a F-1 visa, you will be liable for income taxes (both to the U.S. government and to the state of California), but should be exempt from Social Security and Medicare taxes.

However, the day you are approved for the H-1B visa, that day your employer should begin withholding Social Security and Medicare taxes.

As a F-1 visa holder, you should file as a non-resident alien and file Form 1040NR or Form 1040NR-EZ. You will probably file the regular California tax forms, as most states do not differentiate between resident and non-resident alien.

Your tax rate depends on the level of income earned. 20% sounds about right as a combined rate for both the IRS and the state of California.

You need to keep your employer informed as to your visa status and have the correct amount of money withheld for both the IRS and the state of California.