[ramrags]

I graduated in May 2008 with a Master's degree and have started working in the US (Indiana) since Jun 2008. I am currently single, on OPT and will revert to H1B in October.
My company's payroll is set up as a bi-weekly payment and since they could not process my paperwork on time, I have received an end-of the month cumulative paycheck for this month alone. This is how my salary statement reads:

Gross Pay 6,500.00
Federal 1,464.70 (@22.538%)
SS 403.00 (@6.20%)
Medicare 94.25 (@1.45%)
IN State Tax 221.00 (@3.40%)

Net Pay 4317.05 (@ 33.78% total tax withheld)

1. I have been told that I am not entitled to pay Social Security and Medicare while on OPT - is this true? What can I do to prevent SS and Medicare from being withheld?
2. Is the current Federal tax withheld the norm - or am I entitled to a tax cut on Federal as well because of my OPT status? As a follow up - my HR told me that this rate may be higher because of the accumulation of 2 bi-weekly paychecks... again is this true?
3. If true, what will be the federal tax withholding rate when I start receiving bi-monthly paychecks from July?
4. Are there any tax treaties with India that I can take advantage of so as to maximize my savings? If so, do I have to fill additional paperwork now or do I do it when I am filing my taxes?
5. Any other comments/tips that you may be offer will be much appreciated.

Please ask me if you need additional information - thanks in advance!

[AtlantaTaxExpert]

1) Yes. Go to your employer and tell him that your F-1 status under OPT exempts you from FICA (Social Security and Medicare) taxes. Once he confirms this (he can call the IRS International Tax Hotline at 1-215-516-2000), he should refund the taxes already withheld.

2 & 3) The amount of federal taxes withheld looks about right.

4) You should file Form 1040NR-EZ or 1040NR (if you paid for your moving expenses) and claim the standard deduction for 2008. In 2009, you will file as a resident alien.

[ramrags]

1) Yes. Go to your employer and tell him that your F-1 status under OPT exempts you from FICA (Social Security and Medicare) taxes. Once he confirms this (he can call the IRS International Tax Hotline at 1-215-516-2000), he should refund the taxes already withheld.

2 & 3) The amount of federal taxes withheld looks about right.

4) You should file Form 1040NR-EZ or 1040NR (if you paid for your moving expenses) and claim the standard deduction for 2008. In 2009, you will file as a resident alien.

Thanks!

[MukatA]

On 1040NR-EZ you can claim deduction as per tax treaty. In case of India, you can claim standard deduction, which will appear as Itemized deduction.