Taxes for H1-B Visa Holders

[smani]

I am on H1B since 2001 and been living in Wisconsin. I am married filing jointly. For Federal, I am pretty sure I have to file as a Resident. Do I file as resident or non resident(NPR) for Wisconsin?

Thanks,
Srinivas.

[abhishekaggrawal]

Hi

I am on H1B in Texas from March 22 07 on my first ever visit to US. I am schedule to go back to india sometime in Sep.

Can u pls let me know what month/date should I try to be back .. so that I have minimum tax effect (atleast should have no Indian 33% tax).

I really in doubt ..giving (20 % US + 33 % indian ) tax.. would make me save anything .

Please suggest the best date.

Thanks in advance.

[taxes]

I started working on OPT in June 2006, received my H1b approval w.e.f. Nov 11, 2006.
I decided to use FIRST YEAR CHOICE and to meet the Substantial Presence Test for 2007 I filed for extension before April 15, 2007

BUT, I assumed that my employer would automatically start deducting my social security and medicare taxes as they would be informed by our Attorney of my H1B approval. Unfortunately, my social security and medicare taxes were not deducted in 2006. They started the deduction from Feb-07 only after I submitted a copy of my H1B approval.

Thus, in my W-2, there is no deduction for social security and medicare. CAN THIS CAUSE A PROBLEM IF I FILE 1040 and claim standard deduction for my spouse. Can the IRS penalize me or ask me to pay the social security and medicare taxes for that period. Would you advise me to file 1040 or 1040NR in this situation.

Thanks in advance for your help and guidance.

Best Regards,

[aifranc]

Hi,
We just entered the US this August as teachers..taxes were withheld from our paycheck last month..however, a teacher from NY told us that we can request not to have our taxes withheld because of the tax treaty that the US has with our home country, which includes a section specifically for teachers.

Is there any basis for this statement? He also mentioned that under the law our income should be tax-free for a maximum of two years. If our income is indeed "tax-free" what forms should we fill out and where should we submit it?

I hope you can shed light on this matter. Thanks in advance.

[Atlanta Tax Guru]

My apologies for not answering sooner: for some reason, your posting did not show up in the forum.

AIFranc:

Teachers under a J-1 visa are often exempt from taxation for two years if they do not extend their visit past the two-year mark. I would have to examine your visa to see if there are any waivers in place to be certain, however.

Taxes:

The failure in question rests woth your employer. You will NOT be hedl accountable for this issue by the IRS.

abhishekaggrawal:

You will owe taxes to the U.S. for the income earned while in the U.S. If India taxes the income as well, you should claim the Foreign Tax Credit (Form 1116) to offset any double taxation.

Srinivas:

You file as a resident of Wisconsin.

[sreekara]

Hi Atlanta Tax Guru,

I am currently working in US on H1B visa, came in 11th Jan 2007 and planning to stay till 31st Jan 08.
My wife and daughter are also came with me, they are on H4 Visa, and they will stay with me till 30th Dec 07.
I got my Social Security Number. I tried applying for ITIN for my wife and daughter but IRS personal said that I need to apply while filing my returns in Jan 08.
While applying for ITIN the local IRS office needs original passports of my wife & daughter for verification else they said I need to get the notarized or certified copies of the passport and I need to send those with my tax return form to Austin office and it would take 12 weeks to complete the process.
The local office can accept 1040 & W7 forms only if I have original documents.
As my wife & daughter are leaving in December I can’t have there passports with me.
I have asked following questions to IRS personal but I didn’t get promising answers from them.
1. Can I get back my wife and daughter’s original passport (by mail) and I could present them while filing the tax return and I can apply for ITIN. But I will not be having there original I-94 with me.
Local IRS office: It might work you can give it a try.
2. How can I get certified or notarized copies of the passports? And whom should I contact.
Local IRS office: I should get certified copies from Indian passport office or US Embassy in India
3. I told them that as my wife & daughter will be there till end of the year, is it possible to get certified or notarized copies in US itself?
IRS: we don’t know call IRS phone support.
IRS phone support: Please contact local IRS they could help you.
Could you please help me out on these issues?
Thanks, Subbanna

[Atlanta Tax Guru]

Please see detailed answer to your other posting.

[PV1]

Dear Tax Guru,

My FICA and Medicare taxes went up almost four fold, resulting in a nett increase of my taxes from 23% to 49% of my gross pay, ever since I changed from OPT to H1 status on October 1st.

I noticed that you have mentioned in your thread above that we (H1 holders) should expect to pay the same amount of Federal Taxes as a US citizen. I compared my figures with a colleague of mine (who is a US citizen) who pays exactly the same percentage of FICA, Medicare, Federal and State taxes as I used to before my H1 status came into effect. Additionally, both of us have the exact same exepmtions.

I have been in touch with the payroll dept at my office, but they still have no answer for me. I was wondering if you could help me out with the following questions:

1. Why did my taxes go up by such an exorbitant rate?
2. Are these normal numbers that you have seen before? Or is the system just playing some sort of catch up since this is my first month on H1 status?
3. Should I expect to pay close to 50% of my salary to taxes henceforth?


I would really appreciate any help/comments you can give me.

Thank you, in advance
PV1

[Atlanta Tax Guru]

1) They should NOT have gone up that much. FICA taxs are flat taxes at a 7.65% rate.

2) There should be NOT catch-up, as FICA taxes are NOT normally paid by students on OPT.

3) Probably NOT. But I would need to know what your monthly income is, WHERE you live, and what your marital status is to be sure.

[don012001]

Hi

I'm on H1B. My wife was on h4B till sep 30th 2007. From Oct 1st 2007 onwards she is on H1B.

How can we file taxes for the financial yr 2007? If we file married and filing jointly don't I miss the benifits of she baing dependent on me?

Pls give your valuabl inputs.

Thnaks,
-Don.