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  • Aug 31, 2006, 08:57 AM
    1099 taxes for Indian F1 student
    Hi AtlantaTaxExpert

    Thank you in advance for your time. I truly appreciate you sharing your knowledge and helping everyone out.

    I am currently an undergraduate student, on an F-1 Visa. I am studying in MA and am a citizen of India. I arrived in the US on August 2003. Starting from my freshman year I had a paying on-campus job, which provided me with a W2 form for taxes. I have discontinued that job since May 2006. I have also been doing a number of paid internships over the last few semesters. All my internships have been done for academic credit, as is required, and with CPT approval from the international students office. The internship I did during the spring semester of 2006 was initially unpaid, they only reimbursed me for travel expenses. However, half way through the semester, the employer agreed to pay me, but said they would not provide me with a W2, and that instead I would need to file a 1099 form. I checked with my IS office and they confirmed that this was fine for an Indian student on a F-1 visa. Then, during this past summer (2006), I completed an internship with another company, and they too have paid me an hourly wage and requested that I file a 1099 myself. In the coming fall semester, I will be working at another company, where again I will be paid an hourly wage and need to file a 1099.

    My question is will it be all right to file the W2 (for wages from my on-campus job till May 2006) along with 3 different 1099s for this tax year? Also, will the filings of all these taxes need to be done in April 2007? I have also heard there is some quota ($7950?) that if exceeded by your earnings, then state taxes need to be paid as well? Is this particular to MA?

    Once again, thank you so much for your invaluable help. I look forward to your response.

  • Aug 31, 2006, 07:34 PM
    $7,950 seems to be about right for the cutoff (personal exemption and standard deduction) for MA state income taxes, so you may owe some taxes to MA. I will need to know the amount you earned to give you the exact tax liability.

    You will need to file Form 1040NR with a Schedule C to report the income on the Forms 1099-MISC. The W-2 income can also be reported on Form 1040NR. Again, I need to know the exact amount earned to determine what your tax liability will be.

    Due to your F-1 visa status, you will owe NO Social Security, Medicare or self-employment taxes.
  • Sep 4, 2006, 03:47 PM
    Hi AtlantaTaxExpert

    Thank you for the prompt and helpful reply. I am not sure as to what the total amount of my earnings will be this tax year (this tax year is the same as the calendar year of 2006, right?) as it depends on how many hours I work during this coming semester. However, it seems quite likely that my earnings will be below the $7950 cutoff. So in this situation, what would be my tax liability for the year 2006?

    Thank you so much for your help.

  • Sep 5, 2006, 03:20 PM
    Since you are from India and if your income will be below $8,000, it is likely you will owe zero taxes to either the IRS or the state of Massachusetts, since your personal exemption and the standard desuction combined exceed $8,000.
  • Sep 5, 2006, 09:22 PM
    Hi AtlantaTaxExpert

    Thank you again for the prompt reply. Its great to know I will owe $0 in taxes if my income is below $8000.

    I have a couple more questions for you, if you don't mind. Currently, my brother is also living in the United States, his status is H1-B. He has a good amount of stock in the company that is employing him. Would it be possible for him to transfer some or all of his stock to my name to lower his tax bracket? How would this affect my own tax bracket? Also, would he be able to transfer this stock before paying taxes on it, or only after having paid tax on it? Would the earnings from the stock, once it is in my name, count towards my annual income?

    From what I understood, this would qualify as a "gift", meaning it would be taxable only if the amount exceeds $11,000. Is this correct? Also, my brother currently helps me out with various living expenses, including paying rent, groceries, utilities, etc. Would he be able to declare me as a dependent (we used to live in the same house till last month, but no longer do)? What would be the tax implications be if I was declared his dependent?

    Once again, thank you so much for your help. It is really a wonder that such valuable help is free, and I truly appreciate it. I look forward to your response.

  • Sep 6, 2006, 03:25 PM
    Your assumption that your brother can transfer $11,000 without any gift tax is correct. However, he can transfer even more and just take a credit against his eventual estate tax exemption, which he will never have if he returns to India. That estate tax exemption is currently about $1 MILLION dollars.

    Once the stock is transferred, the dividends earned become your taxable income.

    In order for your brother to claim you as a dependent, you have to live with him the ENTIRE year. Since you have moved out, he cannot claim you.
  • Sep 13, 2006, 09:24 PM
    Hi Atlanta Tax Expert,

    Thank you for your reply. I have a question about taxes for this coming semester's internship. I am being paid an hourly wage. My employer has provided me with an I-9 and W-4 form. Firstly, I wanted to make sure this was OK to file in addition to the 2 1099s and the 1 W-2 I will be filing for this year. Secondly, what is the difference between a W-2 and a W-4? And finally, as a citizen of India with an F-1 visa earning under $8000 a year, what number should I fill out for "exemptions from withholding" in my W-4 form: 0, 1, 2, 3, 4, or 7? (From what I understand 1 would be appropriate for me, but I would like to confirm this with you)

    As always, thank you so much for your help.
  • Sep 15, 2006, 04:43 PM
    The W-4 is the form that the employer uses to determine how much tax to withhold. Since you do not think you will be liable for taxes, fill in that you are EXEMPT from withholding. You do not want a refund, as that is a INTEREST-FREE loan to the government.

    The W-2 is used to document your annual income and taxes withheld for the IRS. You get a copy to file with your tax return.

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