Thank you very much for your feedback for the question on social security and medicare taxes not withheld. I have another tax related question I was hoping you could answer too. As I mentioned in the previous question, I am on H1-B (resident for tax purposes), while my wife is on F-1 visa as a student, and is non resident for tax purposes:

1. Can I file under “married filing jointly”, in which case, my wife, being a nonresident for tax purpose, will be taxed as a resident? Is she allowed to do that? I will receive a substantially more refund when I file under “married filing jointly” vs. us filing as “married filing separate”
2. If allowed to file married filing jointly, then what about social security and medicare taxes for my wife’s portion of the income? (as she will now be resident for tax purposes under my filing) (These taxes are not being withheld from her income currently as she is a non resident for tax purposes under her visa rules)

This is very complicated and I would appreciate your expert analysis on this issue

AtlantaTaxExpert

1) Yers, She will file as the non-resident alien spouse of a resident alien (you).

2) She's okay for 2006, but for 2007, she will have to tell her employer of her changed status and pay those taxes starting from 1 Jan 07.

taxsearcher

Actually more information is needed here. If your wife is deriving her income from working on campus and she is a full time student, then likely she is still exempt (under another part of the law) from social security tax.

If she is not covered by the other part of the law, then if she wants to be resident (by election) in 2006 then she would forfeit her rights to claim exclusion from social security tax. Technically she should have notified her employer that she would be a resident and thus not entitled to the exemption.

But in all likelihood she qualifies under the student-campus employment rule.

AtlantaTaxExpert

Good point, TaxSearcher!

akane

i can give you more information if you need it.

she is working on campus and is on F-1 for less than 5 yrs and hence exempt from the substancial presence test. my issue was,

1. i would ideally want to file married filing jointly as my return is maximized that way. therefore she would be taxed as a resident (since i am being taxed as a resident....correct?)

2. now if she is taxed as a resident, would she need to pay SS and medicare taxes on her income? (none were withheld because of here non resident status in 2006). as far as letting ler employer know that she would elect to be taxed as a resident in 2006, I didnt know until 2007, that filing married jointly is more profitable to me.

i dont know if i am making sense here, or that this is what you meant by more information. can you tell me what you need to know so that i can provide it to you?

Thanks in advance
akane

AtlantaTaxExpert

1) That is correct.

2) The fact that she works on campus will probably EXEMPT her from Social Security and Medicare taxes even if she files as a resident alien. That exemption is available to ALL students who work for the university at on-campus jobs. Check with the employer on this issue.