| “Now I need to fill the tax form and after searching the web it seems to me that it was violation of my F1 visa status to sell iphone apps.”--> Correct; as you can see, it is technically incorrect UNLESS you earn income on OPT/CPT. As an F1 visaholder, you are not allowed to take off campus employment anywhere or anytime you want. You are able to only take your employment under specific circumstances,i.e., OPT or CPT and there are also hardship provisions. In general,you, as an F1 student,cannot simply go out and find employment. This is illegal; it is a violation of your status. However, if you earn $600 or less in your transactions, then you might slip under the radar of the IRS but you need to understand that it is a risk and it might only be a problem if you are planning on applying for a Green card later on. If the amount is relatively small, then it would probably not be a problem.
“So, i don't know whether i should mention this income in my tax return documents and if i should, i don't know which form i should fill for it.”--->I guess as long as you earn income as an independent contractor on OPT/CPT, then you need to file Sch C and are exempt from self-employment tax on your income. However, your income is not from your OPT/CPT, you get 1099miscs as an independent cpontractor and rport theinoem on your 1099s on your 1040NR/1040NR-EZ Sch C line1. When you receive Form 1099 MISC, your taxes are not taken out, hence you will pay taxes around 13.3% for 2011 when you file Form 1040NR and Schedule C to report your Form 1099 MISC Income.
“PS may be this might be helpful -- in 2010 i lived in US for 7 month only...”---> If you receive your income on OPT/CPT, then as a F1visaholder, you are NOT subject to FICA Taxes for the first five years and you are not also subject to 183 resident test for the first five years as a F1 or J1 visa, as student, I guess. You mayhave to pay quarterly estimated taxes if you expect to owe tax of $1,000 or more when you file your return.
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