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sachin2907 · Aug 30, 2009, 08:03 PM

Hi

I am an International Graduate will be soon starting to work on 1099 on my OPT.
I am eligible for it or not is a separate question I have asked in the Immigration section of the forums but if anybody knows it can answer it here too.
My question specific to the tax section is what is the difference in the Tax for an International graduate starting his opt on 1099.
Will my tax bracket be different if it is not withhold and I have to pay more on 1099 for the same amount of money earned if I would have been on w-2.
Assuming for this year starting from 09/01/2009 I will be earning approximately 12000$ by the 12/31/2009 on 1009.(to be precise 20/hr for 40hrs/week)
Can anybody tell me how much tax I will have to pay for this amount and can show me the difference if any exist if the employer would give me a W-2.
Please advice as I need to talk to my employer in couple of days.

Thank you in advance,
Sachin kothari

KISS · Aug 30, 2009, 09:19 PM

In the US tax system, the amout due for taxe is due each quart of the year. Certain states have an income tax too. If you don't have 80% of what you owe or 100% of last years taxes, you will owe a penalty based on the amount per quarter that wasn't paid.

You can pay your taxes quarterly. It's called "Estimated tax payments"

If you get it all back, then it doesn't matter.

When your employed, you have to fill out a W4 form. You select "exemptions" for yourself, wife kids etc. So 0 more tax taken out than 4 exemptions. You can also have a certain extra amount withheld from your pay. So, this is a mechanism of adjusting your taxes withheld.

When you 1099-ed , you are acting as a sub-contractor and typically have no other benefits with the company such as medical or earned vacation.

I don't know the tax law for your situation. I think I explained 1099 and W2. The IRS website is Internal Revenue Service

MukatA · Aug 30, 2009, 11:39 PM

On F1/OPT you are exempt individual and do not pay any SS tax so it will not make any difference if you get W2 or 1099-misc. On 1099-misc you will not have any SE tax. Also in the first year of your job, you do not need to worry about estimated tax payments. Your U.S. Tax Return: W2 vs 1099-Misc: Employee vs Independent Contractor.

Your employer will like this as they do not have to needed paperwork to keep you as an employee.

sachin2907 · Aug 31, 2009, 06:02 AM

Hi ,

Thank you very much for the reply.
So then I think I can go ahaead with the 1099 option with my employer.
My badsic concern was not money but I did not wish to go out of my OPT status and also wanted to make sure that it counts as employment days.

AtlantaTaxExpert · Aug 31, 2009, 10:03 AM

Working your OPT under the Form 1099 method of payment is technically a violation of the F-1 visa laws, but it is the company's violation, NOT yours, so work under the Form 1099.

You will file Form 1040NR with a Schedule C to document the Form 1099 income and to deduct whatever work deductions you can legally claim. It will probably result in a somewhat lower level of taxation than if you worked as a W-2 employee.

Consider it due compensation for having to file the somewhat more complex Form 1040NR rather than the Form 1040NR-EZ.

sachin2907 · Aug 31, 2009, 11:31 AM

Hi,

Thank you very much for the reply. So I have finally taken up my contract and accepted it.
But now they have given me a W-9 instead of I-9. I don't know whether it is fine or not for me as an OPT student.
And I verified with my International student office from my university and they were fine with me working on 1099 on OPT.
But is W-9 also the process to work on the company.

Thank you,
Sachin kothari

AtlantaTaxExpert · Aug 31, 2009, 12:12 PM

Fill out the W-9. That document only verifies your name, address and SSN.

sachin2907 · Aug 31, 2009, 12:31 PM

Thank you very much AtlantaTaxExpert.. :)

Sachin

AtlantaTaxExpert · Aug 31, 2009, 01:59 PM

Glad to help!