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    moumita chaki's Avatar
    moumita chaki Posts: 3, Reputation: 2
    New Member
    		  
    #1

    Sep 24, 2008, 09:54 AM
    Regarding changing of the tax exempt status of H1B
    Hi Experts,

    I am on H1B visa, working as a research fellow in Michigan (from April 2008). I've few questions regarding the tax issue.

    According to the rule here, being an Indian citizen, I'm exempt from tax for 2 years and that what I have opted for in the beginning. However, recently, I've come to know that in that case I've to pay for a huge late-fee (about which I had no idea previously). Since, now I plan to stay here for more than 2 years, in that case I definitely want to pay the tax each month, as I believe that it'd be difficult for me to pay a huge amount at the end and also, I want to avoid the late-fee.

    1. Can you please let me know whether it is possible to change that status from the next month itself?
    2. In the worst case, if it's not possible, what'll be the amount of the late fee that I have to pay?

    I am really confused at this point.. your help will be greatly appreciated.

    Thanks, Moumita
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Sep 24, 2008, 10:52 PM

    H1-B visa is work visa. It does not matter if you are a research fellow or not; your income is taxable. You are not exempt for two years.

    Your income on H1-B is subject to FICA taxes, federal income tax and state income tax.

    Only if you have J1 visa, then as a researcher you are exempt from federal income tax for two years.
    Read about H1-B tax filing: Your U.S. Tax Return: The U.S. Visas
    moumita chaki's Avatar
    moumita chaki Posts: 3, Reputation: 2
    New Member
    		  
    #3

    Sep 25, 2008, 05:51 AM
    Thanks a lot for your reply.. I'll do the needful.

    Regards.. Moumita
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Sep 26, 2008, 08:27 AM
    MukatA is correct; under the H-1B work visa, your salary is subject to federal and state income taxes.

    As noted in my email to you, you can and should request the IRS waive the late-filing/late-payment penalty, which the IRS likely WILL WAIVE if you are coming forward to pay these taxes voluntarily.
    moumita chaki's Avatar
    moumita chaki Posts: 3, Reputation: 2
    New Member
    		  
    #5

    Sep 27, 2008, 06:34 AM
    Hi Atlanta Tax Expert!

    Thanks for your suggestion. However, please also let me know that how can I request IRS to waive the late-payment penulty. Is there any particular form for that or I have to just write a letter to them during my tax filing.

    Thanks and regards,
    Moumita
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #6

    Sep 29, 2008, 08:38 AM
    Mourmita:

    When you file your tax returns for 2006 and 2007, you will request the waiver of the penalties in a cover letter to the IRS.
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