Here is my situation,

I was on Student visa from Jan 2007 to Oct 2007 and H1B from 1st Nov 2007 to Dec 2007. I forgot to inform my employer about my status change from F1 to H1B and hence they did not cut my Social Security and Medicare for Nov - Dec 2007.

2006 filling status: Files Married jointly (my husband is on H1B for whole period)

1. How much I will be liable for and what I can do to correct this situation ?
2. Still can I claim standard deduction for the year 2007 as I was on OPT till Oct 2007 ?

I have earned $41K - F1 status (OPT)
$8K - H1B

I would really appriciate if any one can clarify this. I would like to provide more info if anyone needs.

Thanks a lot in advance.

TaxAdviseSeeker:

You will NOT like what I am about to tell you!

You are liable for Social Security and Medicare taxes for ALL of 2007.

When you filed jointly with your spouse in 2006, you consciously and voluntarily chose to be treated as a resident alien for 2006. That resident alien status carried over to 2007, and resident aliens PAY Social Security and Medicare taxes.

You have the legal obligation to inform your employer of this fact. I suggest that you do so immediately, in writing, and keep a copy of the written notification for your records.

Now the good news: Your employer may not do anything about it.

Here's why: The IRS holds the EMPLOYER responsible for determining their employee's tax status and whether they have chosen to treated as resident aliens. This is because the IRS does NOT task the taxpayer for these taxes; the EMPLOYER must collect them from each paycheck and pay them at least monthly and, for larger companies, bi-weekly.

If the employer fails to do so, he faces a sizeable fine (as much as 100% of the back taxes owed). When he discovers that fine, he may simply ignore the problem and hope the IRS never notices, which it often does not.

The fact that you failed to tell your employer about how you filed your return for 2006 is irrelevant. The IRS expects the employer to ASK the necessary questions to determine whether you should pay Social Security and Medicare taxes.

The ONLY time you will be held accountable is if you actively concealed your changed status from your employer. In other words, your employer would have had to ask you and you would have had to LIE, and the employer would have to PROVE this fact!

Assuming that you did not lie, you need only notify your employer about the mistake and let them take it from there.

Recognize that the employer MAY set you up on a payment plan to pay these uncollected 2007 Social Security and Medicare taxes. That IS his right. However, he has until 31 January 2008 to make this happen. After that date, he has NO LEGAL STANDING to collect the 2007 taxes.

AtlantaTaxExpert,

Thank you so much for very prompt reply. It is all clear and I have notified to my employer in writing (Email) about my status change from Oct 2007.

Thanks a million once again.

Glad to help!

Taxadviseseeker case about FICA taxes is very common. And the employer is responsible for collecting and depositing FICA taxes even during the period of OPT even when they did not have any idea of Taxadviseseeker's change of status. This does not seem fair.

MukatA:

You should know better. Never has anyone EVER said that the U.S. tax system is FAIR.

But it IS the law, so we have to abide by it.

I am not answering this question:

I am in the same F-1 OPT boat. I was on f-1 for the entire duration of my OPT in 2007. Am I liable for FICA?

Not normally.

The only time a student under a F-1 visa is subject to FICA taxes is if that student was on the F-1 visa for MORE than five years.

If you arrived in the U.S. on or after 2003, you are exempt from the FICA tax.

Not normally.

The only time a student under a F-1 visa is subject to FICA taxes is if that student was on the F-1 visa for MORE than five years.

If you arrived in the U.S. on or after 2003, you are exempt from the FICA tax.
Thanks for your reply. I have been in US on F1 for more than 5yrs... and at some point I did also read that so long as one is on f-1 and does not use any of the days for "substantial presence test" individual is considered exempt i.e. non-resident alien... is that only for tax purposes? Further I got a new f-1 visa after 5 yrs.. does that make a difference? So I continue to be a non-resident alien... is FICA applicable?

The new F-1 makes no difference. The maximum anount of time you can claim the F-1 exemption is FIVE years.

The new F-1 makes no difference. The maximum anount of time you can claim the F-1 exemption is FIVE years.
Thanks again. I was a bit confused, did some searching and came across two links below

I was on F-1 OPT not shifted to H1 yet in 2007.

https://www.askmehelpdesk.com/taxes/f1-student-7-years-now-opt-should-pay-social-security-medicare-tax-am-8553.html


Also the link below does not say anything about 5 years

https://www.askmehelpdesk.com/taxes/f1-h1-social-security-medicare-31633.html

I normally do not bring up the 5-year rule, because it does not come into play that often.

But the rule DOES exist. You can contact the IRS via the International Tax Hotline if you want to verify. You can get the number from Internal Revenue Service (http://www.irs.gov).

I normally do not bring up the 5-year rule, because it does not come into play that often.

But the rule DOES exist. You can contact the IRS via the International Tax Hotline if you want to verify. You can get the number from Internal Revenue Service (http://www.irs.gov).
Thanks again, AtlantaTaxExpert

Glad to help!

Reply if you need the IRS International Hotline phone number.

Glad to help!

Reply if you need the IRS International Hotline phone number.
Thanks again. AtlantaTaxExpert.. Would really appreciate the international hotline number...

IRS International Tax Hotline:

215-516-2000

They are open from 8:00 A.M. until 10:00 P.M. EST during tax season, which will probably start this coming Monday.

Thanks Much,AtlantaTaxExpert!

Glad to help!