[rahul raj]

Hi all

I cam in jan-07 on h1b visa.. I would like to know according to IRS standard what is the amount in percentage I am liable to pay as taxes say on monthly income of 5k... also I have worked around 7 months for 2007 year my epmloyee has been deducting around 1450 monthly on 5 k salary but in between for 2 months he only deducted around 650/monthly.. can anyone tell me by paying less tax like this will I need to pay when I would be filing for tax return.. like is there any fixed percentage we need to pay.. I have heard usually h1b visa holders need to pay 33% taxes?

Thanks
Rahul

[AtlantaTaxExpert]

Rahul:

33% seems to be about right.

Much depends on your marital status, where you are living (for STATE income taxes), and how your pay is segmented.

You may also be contributing to a 401K plan using pre-tax dollars.

Every dollar you earned as salary is subject to a 6.2% tax for Social Security and a 1.45% tax for Medicare. These are flat-rate taxes.

Income tax for the state depends on the state in which you live.

As for federal income tax, you will probably file as a dual-status alien unless you are married (see below). If dual-status applies, you get a $3,400 personal exemption plus an itemized deduction for charitable donations and whatever was withheld for state and local income taxes. After the exemptions apply, you are taxed as noted below (please remember that these are estimates):

- The first $8,000 is taxed at 10%.
- The next $24,000 is taxed at 15%.
- The rest of your salary is taxed at 25%.

If you are married, in which case you can file jointly with your wife and you both CHOOSE to be treated as resident aliens). This allows you to claim your wife's personal exemption as well as you own, PLUS claim a DOUBLE standard deduction of $15,600. This will have the effect of making the first $22,400 of your salary tax-exempt. The only downside is that your wife's salary (if any) becomes subject to U.S. taxes. If she has NO salary, you still get the $22,400 in tax exemptions. Further, the tax rates for Married Filing Jointly are much more beneficial for you.

Note that your wife's physical location is irrelevent in determining whether you can file jointly!

[MukatA]

It appears that you will file as resident alien Form 1040EZ/1040A/1040. You employer withholds social security at 6.2%, medicare at 1.45%, may be state unemployment/disability and state income tax and federal income tax. Your withholdings for federal and state income taxes are not same as paying the taxes. The withholdings may be more or may be less than the actual taxes.
If you are Single and make say $35,000 in 2007, then your taxes are social security $2170, medicare $507.5, federal income tax $3546 plus state taxes.
If you are married (with no dependents) and file as Married Filing Jointly and your combined income is say $35,000 in 2007, then your taxes are social security $2170, medicare $507.5, federal income tax $1843 plus state taxes.

[AtlantaTaxExpert]

MukatA does address the state unemployment/disability taxes which I omitted.

However, his points about withholding not being the same as paying taxes are ambiguous. You in fact ARE paying taxes every time you get paid. The withholding should be considered a "down payment" of the taxes, with the annual tax return being the final reconciliation of your ultimate tax liability.