[optcontractor]

Hi,

Before I proceeed to my questions, here is a brief description of my situation:
I came to the US to do an MBA on July 26, 2007. I graduated from my MBA program on May 10th, 2009 and began my OPT on July 10th, 2009. From July 10th, 2009 to November, 30th 2009, I worked as an independent contractor,where my client did not withhold any taxes and paid me my gross salary.

Onto my questions:
1. Does being on OPT also count as being on F-1 and hence do these days count as being an exempt individual ? I ask because some websites say that being OPT is the same as being a F-1 student, however, some other sources say that you need to be a "full-time" student in order for you to count toward the exempt days.

2. Will I be considered a resident or non-resident alien for tax purposes ?

3. Is it legal to work as an independent contractor during the OPT period
And not have taxes withheld ? I thought that it is legal ( as per immigration and tax law) to work as an independent contractor while on OPT, however a CPA I spoke with (very briefly) said that people on OPT are not permitted to work as independent contractors. Additionally, I also saw a posting on this forum saying that if you consult/contract for a company other than your sponsor ( in my case, my University),
Then it is violating the law. However, I see that many universities list on their website that working as an independent contractor during OPT is perfectly OK. Example here: Types of OPT Employment
What is the opinion of the other forum members on this topic ?

3. When should I pay my taxes ? i.e. can I pay by April 15th or should I pay on a quarterly basis as-if I am self-employed ?
I ask this question because, as I mentioned, my client did not withhold taxes during the 5 month consulting engagement.

4. Will I be exempt from Social Security and Medicare taxes ?

I look forward to hearing from you.

[AtlantaTaxExpert]

1) While on OPT, you are considered to be a student under your original F-1 visa and are exempt from the Substantial Presence Test.

2) If you are single, you will be considered a non-resident alien for 2009, filing Form 1040NR or 1040NR-EZ plus Form 8843 one last time. Let me know if you are married, because then you have another option.

3) Technically, it IS a violation of your F-1 visa to work an independent contractor, but it is NOT your violation, it is a violation on the part of the employer and, by extension, the university. The USCIS and IRS are aware of these violations, but there is little enforcement because, as a non-resident alien, you are exempt from FICA (Social Security and Medicare) taxes and the parallel self-employment tax that independent contractors pay. Hence, the net result is that, whether you are an employee or an independent contractor, you will eventually pay the same amount of tax!

3a) For 2009, pay the tax by 15 April 2010 when you file Form 1040 with a Schedule C. If you are still an independent contractor in 2010, you need to make quarterly estimated tax payments.

4) Yes, while on F-1 visa status, you ARE exempt from FICA (Social Security and Medicare) taxes.