Hi,

Me and my wife were both on F1->OPT till sep 2006. Both of us started our H1B From Oct 1,2006. We got married in Dec 2006.
Now according to SPT both of us are non residents for tax purposes as days spent on F1->OPT are not counted towards SPT. But if we file jointly(which we should since we were married on Dec 31,2006), should we file as residents or non residents(is there something called filing as non residents married jointly).
1) If married non residents - then what do we lose from tax point of view as compared to residents?
2) If married residents - then do we have to pay for social security and medicare for upto Sep 2006(which was not deducted from our salaries as we were on F1->OPT then)?
I a really confused here. I would appreciate any guidance in this regards. Thank you so much in advance.

Regards,
Micky

AtlantaTaxExpert

Micky:

File jointly as resident aliens. You need to wait until early June before you can file (to meet SPT).

Do not worry about the uncollected Social Security and Medicare taxes. The IRS will not expect you to pay the uncollected taxes and the employer will not try to collect it retroactively.

mickyNY

If we want to file now i.e. not wait until june, under which category do we have to file? Can we still file as non resident married ???

taxsearcher

I disagree with Atlanta. I believe that there is a genuine risk that you will have to pay the social security tax. Your W2 is showing no social security taxes have been paid. Effectively, unless you told your employer otherwise, you misinformed the employer.

AtlantaTaxExpert

TasSearcher:

To say Micky misinformed his employer is to imply that he knew he was going to get married on 31 Dec 06 in order to take advantage of filing jointly at the time he was hired or on 1 Jan 06, whichever occurred later.

Just try proving that in a court of law! :-)

If the IRS were serious about collecting FICA taxes from those who made the "file jointly and choose to be resident aliens for all of the year", they would spell out that fact, just like they spell out the fact that ALL world-wide income becomes subject to U.S. income taxes.

Have you ever heard of a case of the IRS trying to collect back FICA taxes when someone opts to be treated as resident aliens? I have not, and I have asked the IRS on several occasions and the IRS agent on the other end of the phone could not cite any cases of it happening.

taxsearcher

In my view, there is absolutely no reason that the IRS would not collect these taxes. The exemption applies only to nonresidents. To date, I think people have gotten away with it because it has happened not too often and has fallen through the cracks. Is the IRS catching on and will the situation change -- stay tuned.

As for misinforming the employer, there's no question that this is the case. Was it intentional - no - but it is still the reality that the taxpayer indicated to the employer that he would be a non-resident and that turned out not to be the case. If I were the employer, I would ask for the money and I believe that would hold water in a court of law.

AtlantaTaxExpert

TasSearcher:

I believe this is a case where we must agree to disagree.

Next case!

mickyNY

First of all. In all common sense I would agree with AtlantaTaxExpert that IRS should not collect Social Security and Medicare for Entire year from me and holding me responsible for falling in love and getting married and not predicting the future in front of my employer.
Secondly, I think you guys have had a great discussion but my original issue still remains unanswered which was in response to taxexpert's first answer:
'If we want to file now i.e. not wait until june, under which category do we have to file? Can we still file as non resident married ???'

I think you guys know a lot and I was really hoping that you guys would be able to help me out here.

Thanks and Regards,
Micky

taxsearcher

There's really no debate. Look at publication 519. It is very clear that for an F1 student FICA is not withheld but if the person is resident, FICA withholding should occur. It's a choice - you don't have to file as a resident but if you do, there is a cost.

Good luck.

AtlantaTaxExpert

Micky:

IMHO, you should wait until June 2007, then file jointly with your wife as resident aliens.

If you need my professional tax help, contact me at .