The Curse of the Withholding Tax

The income tax allows the government to confiscate the wealth of its citizens. The curseof the withholding tax is that it allows the government to commit this crime systematically, effortlessly, painlessly, and benevolently.

Surprisingly, it was a free market economist who helped the federal government implement the withholding tax in the first place. As was pointed out by the Austrian economist, Murray Rothbard (1926–1995), in his 1971 article "Milton Friedman unraveled":

One of Friedman's most disastrous deeds was the important role he proudly played, during World War II in the Treasury Department, in foisting upon the suffering American public the system of the withholding tax. Before World War II, when income tax rates were far lower than now, there was no withholdingsystem; everyone paid his annual bill in one lump sum, on March 15. It is obvious that under this system, the Internal Revenue Service could never hope to extract the entire annual sum, at current confiscatory rates, from the massof the working population. The whole ghastly system would have happily broken down long before this. Only the Friedmanite withholding tax has permitted the government to use every employer as an unpaid tax collector, extracting thetax quietly and silently from each paycheck. In many ways, we have Milton Friedman to thank for the present monster Leviathan State in America.

college towns

University jobs ain't safe either. Better to stick with industry.

I think that college towns are going to get hammered during this economic disaster. First, this from an earlier post:

Dartmouth College employs roughly 4500 people, 3500 of whom are non-faculty employees. Dartmouth has an endowment that hovers somewhere between three and four billion dollars. It is reported that about 25% of the school’s operating budget comes directly from the interest generated through the endowment’s investments. The balance, of course, comes from student tuition and alumni giving. The most updated report to the Dartmouth community---sent to us last Thursday---reports that the endowment has lost approximately 18% of its value over the past 12 months.

So why, in my opinion, will college towns get hit particularly hard over the next 2-3 years? Well, it's because of a combination of factors, some of which I touched upon above. Tuitions will drop, federal financial aid will dry up, endowments will shrink, businesses that once catered to a reliable student clientele with have to cut back on staffing, the college itself with have to cut back on staffing, energy consumption costs will rise in relationship to what the college has to spend, etc. And these are all dynamics that feed upon one-another. The local coffeeshop closes and 10 people from the community lose their jobs. 3 out of those 10 individuals cannot afford to pay the mortgage because they have no income. The local bakery---which used to make 30% of its daily profits from selling to the coffeeshop---has to let go of 2 employees. 

College towns are vulnerable in that, like old mill towns of the 19th century, they usually have but one major employer. If that employer takes a big financial hit, the entire town suffers from the shock waves that result. And in an economic Depression, college itslef becomes a leisure activity rather than a necessity for survival. I predict very dark times ahead for higher education, and in particular for the tens of thousands of behind-the-scenes workers who, up until now, kept these institutions running smoothly.

working in US

For $48000 pay, $4000/month

• Employer taxes 12.5% ==> 500

• Withholdings from your paycheck - Total: $951
• Federal Withholding - $506.17
• Social Security - $248.00
• Medicare - $58.00
• New Jersey - $106.92
• SUI/SDI - $37.00

• Total money stolen by Govt per paycheck = $1441

Form W-8BEN given at time of opening a bank account

If you are on H-1B, you are a resident alien for tax purposes. Fill form W-9 instead. I think this is for interest income, which needs to be reported. And taxed! I think they will send a 1099-MISC at the end of the year.

W-8BEN

W-8BEN is to declare you are exempt from US taxes.

can I transfer H-1 with just receipt number?

Lawyer says NO!

We need a copy of approval notice (I-797). If you hear otherwise from some other lawyer, let me know.

H-1B FAQ - Dependents

Special documentation instructions for those on a dependent visa (H-4, L-2, etc) for initial H-1 application

One of the requirements if to show that you have been maintaining valid status. However, your status is contingent on the primary visa holder. So, we need documents to prove the primary visa holder is maintaining status. This requires the following documents of primary visa holder:

• 4 - 6 most recent paystubs
• H-1 approval - I-797
• I-94
• If the primary visa holder just arrived and doesn't have any paystubs, we need copy of visa/passport.

Travel restrictions for H-1 processing
Once you apply for H-1, with change of status, don't go out of the country until H-1 is approved. If you go out of the country, your I-94 would change and the old one with which we applied would no longer be valid. Your change of status would be denied. Sometimes, approval doesn't come through until November/December and travel plans would have to be postponed.

However, you can still come back on the old visa (H-4, etc) and apply for change of status once you are here. A better option is to opt for consular processing.


Consular processing is strongly recommended for dependent visa holders

• Don't have to worry about travel issues. Quite a large number of depends travel back to home country before their H-1 starts and consular processing wouldn't interfere with that.
• Often, it turns out by the time the H-1 approval comes through, dependents are in an expectant state, and can't join the workforce for about 6 months to 1 year. The best option is to be in H-4 (or related dependent) status at that time. Our lawyer has noticed a very high volume of such pregnancy cases recently, where people switched back to H-4 as soon as it is approved.
  
• By the time approval comes through, the market may not be in terrific shape, there is almost no hiring in Nov/Dec and sometimes skills need upgrading. Besides, no one can predict the vagaries of a particular skillset or a market or demand for a skillset in a particular location (dependents would have strict geographic restrictions). Again, the best option is consular processing, which would give flexibility until things are favorable.

Consular processing - change of status

• We can file for change of status being in US. This is done using form I-539. USCIS fee for this is $320. It should be fairly easy to do the documentation ourselves. Attorney said his fee would be same for filing I-539, which would be $830, but I think we can probably persuade him to go with $500 or so or maybe even lesser. Most of the work for filing is done already anyways!
• Get it stamped in Mexico, Canada or India

For $48000 pay, $4000/month

• Employer taxes 12.5% ==> 500

• Withholdings from your paycheck - Total: $951
• Federal Withholding - $506.17
• Social Security - $248.00
• Medicare - $58.00
• New Jersey - $106.92
• SUI/SDI - $37.00

• Total money stolen by Govt per paycheck = $1441

Passport renewal in NY

From Srikanth.

When you go to the Indian Consulate in NY, you will not get the passport on the same day. If you pay for Tatkal service, you might.

If you are planning on going there, try to reach there by 9:15 am and get a token as soon as you get there. The crowd increases enormously as the day passes.

With normal processing, you will receive the passport in 5-6 days.

They will retain your old passport and return it along with the new one.

For me, I reached there at 11:00 AM and my turn came at 2:00 PM. There is a 45-minute lunch break for the consulate from 1:00 pm to 1:45 pm.

Indian Consulate Home Page: http://www.indiacgny.org

For passport services and details use the "consular" link on the left.

Also, it seems you can take a token, roam around and come back. This, if true, would be good. Roam around NYC, take a look at the lady with sambhar bucket and come back, just in time for your turn.

H-1B documentation

If you have any questions after reading this, please join H1Bfaqs group. And go through the archives.


Deadline for first time H-1s

• Masters degree holders in US (or any other US degree) - Feb 29th, 2008
• Foreign degree holders - Feb 22, 2008. We need 2 weeks for educational evaluation

Comprehensive list of documents for those in India and in US, both for initial and transfers. If you don't understand a document requirement below, it means you don't need it. For example, if you've never been to US, you won't have an I-94 and don't have to worry about sending it.

DO NOT Submit Originals - submit photocopies
Clear copies of the documents only in A4/Letter size (Not legal size)

• Degree and Certificates in related field with marksheets or transcript
• All prior work experience letters from previous employers on their company letterhead
• ALL PAGES of Passport
• I-94 copy
• H-1B Approval Notice, VISA and I-94 (with clear dates of arrival) if already in USA on H-1B
• H4, B1/B2 or SEVIS (I-20), F-1 VISA with I-94 if applicable (for you or your spouse)
• ALL I-20s, OPT card
  
• Current 5-6 pay stubs if already on H-1B, L1, L2
• Educational evaluation report if any
• US Employment Authorization Document if applicable
• All prior Non-Immigration H/L visa Approval( I797) if applicable
• On a separate sheet - exact dates of any prior stays in the U.S. in H visa status
• On a separate sheet - your address in USA and foreign country (Eg.India), give the date of last Arrival
• Copy of Social Security card (If available)
• Marriage Certificate (For Candidates currently in H4 visa status only)
• Resume
  

Scanning Instructions:

• Faxing is not acceptable. Copies need to be high resolution.

• Scan using a high resolution scanner. The formats and resolutions would be different, eg., bmp, jpg, png, tiff, 1640 * 1800, etc.
  
• We need copies in easily printable format. Convert everything to Adobe PDF. Use CutePDF to print to PDF if you don't have Adobe Acrobat.
  
• Merge the PDFs to create a few files. One pdf for passport, one for certificates, etc.
  
• Use gmail, which allows attachments upto size 20 MB.
  
• If you are compressing the files, rename the file extension, like so: files.zip to files.zip.REMOVEME. Extension .zip extension not allowed in gmail.
  
• Anything more than that, you need to reconsider your scanning options and scan to jpg, then convert to pdf and so on and so forth.

Filing Options

For those in the US on different status (L1, L2, H4, etc), you can choose one of the following:

• H-1 application with change of status (I-539 ?) - this is the standard way. This will automatically change your visa status from what you have to H-1 on October 1, 2008. What this means is that you can't work in US (L1) with your previous employer anymore. And for those in L2/H4, you are now in a work visa, which means you need to have regular paystubs from your employer, otherwise, you would go out of status. Your H-1 approval, I-797A, would come with new I-94.

• Another way of filing is to opt for consular processing which requires you to go out of the country to get the visa stamped on your passport when you want to switch. This gives you the flexibility needed, if you are on L1 and would like to decide when to switch.

Filing for H-4

• All H-4s, opt for consular processing. You would be disinclined to move from your current location, which creates some placement challenges. If you are on H-1 and not working, you would be out of status. Best course of action is to opt for consular processing, and when you are ready, get H-1 stamped. You would have the luxury of being in H-4 and not worry about maintaining status.
• As an aside, consider pursuing a Master's degree. Some states offer resident/in-state tuition for temporary work aliens too. One of them is California. There is one more, which I don't remember. Perhaps Massachusetts?
  

Filing Options for L-1/L-2

• If you are on L1 and your wife is working on EAD (L2), this creates interesting combination problems. Always opt for consular processing. You don't know who would be picked up in the lottery.
  
• If the L2/EAD spouse gets through the lottery, you are in good shape. You can use L1 and H1 combination.
• If the L1 holder gets through, consular processing would give you time to evaluate the situation and see what is the best course of action.
  

Filing address

• For Masters students is (was) different. Confirm with lawyer before mailing out.
• For non-quota H-1 is different. I guess everything goes to CA. (look at comments)
  

Stamping Issues

Stamping issues go here - don't print documents in India, print everything in US.

If you have any questions after reading this, please join H1Bfaqs group. And go through the archives.

H-4 documentation

All consultants on H-1B should understand that it is their responsibility to maintain the H-4 Status of their Spouse and Children as lawyer may not have knowledge whether they are married or single or we may not have documents of their Spouse and Children if they are in USA.

For extension of H-4 Status:

• Copy of Passport
• Copy of H-1B Approval Notice for main beneficiary
• Copy of H-4 Approval Notice (if any), Visa and I-94 if already in U.S. on H-4;
• Copy of Social security Card if applicable
• Current 4-5 pay stubs for Spouse on H-1B
• Marriage Certificate and Birth Certificate for Children
• Current Address in USA
• Foreign Address

Even though we say for extension the same set of documents can be used for initial filing as well. Google for I-539.

H-4

H-4 extension

If you are on H-1 and transferred, your spouse doesn't need to transfer H-4. As long as the visa/I-94 is valid, you are in good shape. However, when visa/I-94 expires, you need to file for I-539 - Application to Extend/Change non immigrant status.

Fee for this is $300, attorney fee would be $350. You can fill it yourself and send it to USCIS, no need of attorney.

Make sure that you file for this at least a few months before expiry.

H-1B FAQ

If you have any questions after reading this, please join H1Bfaqs group. And go through the archives.

Fees

Refundable fee if not selected in the lottery

• USCIS Filing Fee: $320
• USCIS Training Fee: $1500 ($750 if less than 25 employees)
• USCIS Fraud Prevention: $500

Non-refundable

• Attorney fee: $830
• Document checking: $100

Total: $2500 (without education evaluation)

Additional fee as necessary

• Educational Evaluation fee
• $75 - related foreign degree (CS, IT, Electronics and Computer Science, etc)
• $250 - $350 for evaluation based on experience. Unrelated degree, but has IT experience. $250 is the norm.
• Premium Processing - $1000
• Evaluation will take 2 weeks. Better send it in advance.

Experience letters must have sufficient detail of skills and job duties. Experience letter that certify you as hard working, honest, decent, diligent, dignified, good looking, nice hairstyle, good gait - are all useless. Must have specific job duties and skills used.

Check for a subsequent post on experience letters.

Multiple H-1B Applications
For multiple filing of H-1B, USCIS will adjudicate with company filing what ever application is selected. If any person is selected through two companies then he will get two H-1B approvals from two different companies and he can join any company.

Master's degree requirement
For Masters degree, one should have Master's degree before filing application otherwise USCIS may deny the application even after selection.


If you have any questions after reading this, please join H1Bfaqs group. And go through the archives.