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H1 Tax FAQs

 

KM Tax Services specializes in H1b Taxes, L1 Taxes and OPT Taxes. Over the past several years, we have helped hundreds of IT Consultants and other temporary foreign workers in the US file for their Federal and State Taxes.

 

The list of these FAQs is only representative of what potential questions you may have. In case your particular question is not answered here, please do not hesitate to write to us directly and we will post your question along with the answer for the benefit of others.

 

Ask KM Tax Services your H1b and other immigration tax questions: contact@h1bvisataxes.com

 

Frequently Asked Questions:

 Does H1b Tax situation need special consideration?

†††††††† Not every 1040 Tax Return is the same. H1b status is a unique work status granted to temporary foreign workers in the US. Especially an H1b† job may qualify for additional tax deductions based on the sponsoring company location, client location, H1 b tax dependents, alien resident status etc.

 

 What Federal Tax Form should be used for filing H1b workerís Tax Return?

†††††††† 1040 Form will suffice for H1B Tax return. However, in some cases there may be exceptions depending on additional qualifications.

 

 Can KM Tax Service provide me with a free estimate of my tax refund?

†††††††† Yes, we can provide you with an estimate of your refund. Although you must recognize that in order to understand your specific situation, analyze your case and find all deductions, we need to invest almost 80% of the time that it takes to file your actual return. As an IT Consultant earning by the hour you would agree that Time is Money!

†††††††† We occasionally give special offers on our site to new clients. Check our Special Offer section for Free Deals.

 

 I am on H1b status. Can I file my tax return online?

†††††††† In most cases you will be able to file your tax return online. The IRS provides a list of qualified E-file providers. In case you want to claim your H4 dependents on your tax return, you may have to file a paper return for the first year.

 

 Can I self file my return using online software program such as Turbo Tax?

†††††††† Yes. In most cases you can a 1040 online using Turbo Tax and other such online products. There are several online products that allow you to file Federal return for free.

 

 What online software program do you recommend for filing H1b worker taxes?

†††††††† In general most commonly available products such as Turbo Tax, HR Block and others will do an equally good job. However a word of caution, most programs are written for the majority of US Tax payers that are US Citizens. These programs may not give due consideration to your special H1b status of foreign temporary worker.

 

 Do you send our Tax information to remote offshore locations outside the US?

†††††††† KM Tax Service will never send your confidential information without your prior consent. All work on your tax return is done here within in the US.

 

 Why does KM Tax Service not use offshore processing outside the US?

†††††††† We do not believe that Tax preparation work can be sent to offshore locations. It involves very in-depth analysis, knowledge of IRS tax codes, confidential client information and above all a responsibility and accountability to our tax clients. All of our tax consultants are located within the US to provide our clients with top of the line advice and service.

†††††††† Although we understand and support the offshore model for other more generic services, we value the knowledge and advice that our tax clients get more than the cost advantages from labor arbitrage.

†††††††† You may get your tax return processed for very cheap from offshore, but when the IRS knocks on the door with an audit, it may turn out a bit tricky to handle that from offshore!

 

 Is standard deduction better than itemized deductions for H1b Tax payer?

†††††††† The type of deduction you take depends entirely on your specific situation. In some cases it may be more advantageous to consider itemized deductions for a larger refund from the IRS.

 

 What itemized deductions can H1b tax payer take on the 1040 return?

†††††††† There are several items you may consider including interest paid on home mortgage, relocation expenses, business related travel and lodging expenses etc. In case of certain H1b tax payers, you may possibly apply certain IRS codes that allow for special concessions for foreign temporary workers.

 

 I am on H1b visa for past 6 months. My wife and son arrived in the US 3 months after me. Can I consider them as my dependents on my Tax Return?

†††††††† Your wife and son are your dependents assuming on H4 visa status, yes you can claim them as dependents on your 1040 if you have provided for them for more than 6 months in the US. There are certain exceptions to this, please call us to discuss specific dates of their stay in the US.

 

 I do not want to pay Social Security Taxes since I will be going back to my home country at the end of my 6 years of H1. How can I claim that back as refund?

†††††††† You have to pay social security taxes.

 

 I am on H1 b visa, do I have to pay US taxes on my income in India?

†††††††† If you pass the substantial presence test and are considered as US resident alien for purposes of taxes, you need to report your global income. You may be eligible for tax credit on taxes you may have paid on your income in India.

 

 Can I claim the legal fees for Green card on my tax return as expenses?

†††††††† In case you file with itemized deductions, you may be able to claim the legal expenses under unreimbursed employee business expense on form 1040 schedule A.

 

 Can a H1b visa holder start a company in the US?

†††††††† Yes there are certain types of corporation that an H1 B visa holder may be able to start or participate as a minority shareholder. A word of caution in case you have or intend to file for green card. Check with your immigration attorney.

 

 Can I start a company in India while on H1 in US?

†††††††† Yes, you can do that. Although you may have to report your global income if you qualify as an alien resident in the US.

 

 Why should I get my tax return prepared with a specialized H1 tax preparer such as KM tax service. Canít any other CPA or tax consultant do the same for me?

†††††††† Just as lawyers and doctors specialize in their field, so do Tax Consultants and CPAs. Now, you would not go to a criminal lawyer to file for your green card, would you?

†††††††† KM Tax Service has specialized over the past years in preparing, filing H1 B consultant tax returns. We have invested in specific research and knowledge of IRS tax code pertaining to foreign workers in the US. Certainly any other Tax Consultant or CPA can help you.

 

 Does the INS ask for Tax Returns during Green Card process?

†††††††† Yes, the INS may ask for your tax returns during the several stages of your application for Green Card as well as Naturalization and Citizenship. Folks with pending IRS litigations or penalties may face challenges in the final approval of their cases with the INS. Several Green Card aspirants make the blunder of not taking the Tax filing seriously and may end up in challenges with the approval process.

 

 Why are KM Tax Service fees higher than online tax software such as Turbo Tax?

†††††††† We have qualified tax accountants preparing your return in the US and therefore our prices are higher as compared to automated tax software. You can certainly choose to do your own taxes using an online software and save some money. Or you can use the services of a tax accountant based in the US to help you with your taxes. Its an individual choice.

 

 Can I claim per Diem expenses for my Meals and Lodging while in the US on H1 Visa under the Employee Business Expenses?

†††††††† Once your tax status is established as US resident alien for tax purposes (you can find out your status by performing the substantial presence test), your tax home is considered as the place where you work. Unless you are travelling for short periods on project work, you may not be able to claim this expenses as a general rule.

 

†††††††† We have come across several cases wherein an India based Tax preparer has claimed 12 months worth of employee business expenses at the rate of IRS allowed Per Diem for meals, laundry and stay.† This is just wrong and IRS audit† is likely to soon investigate all returns filed by the company. You can check more details on H1 Employee Business Expense IRS Tax Fraud.

 

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Recent Audit Alerts

 

March 8, 2011

Employee Business Expenses (IRS Form 2106, IRS Pub 1542): Lodging and Meals per Diem expenses for away from home business employee expenses cannot be claimed if you are a US Resident Alien for tax purposes.

IRS Instruction Form 2106 >

 

 

Feb 28, 2011

Tax Home (IRS Form 2106, IRS Pub 1542): US Resident Aliens for Tax purposes cannot claim their home country as a Tax Home if they have lived in the US for more than one year and pass the substantial presence test.

Substantial Presence Test >

 

 

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