I am utterly confused with this:
If I (F1, but resident-alien(> 5years)) choose to file jointly with my spouse (J1 - Exchange visitor, non-resident( less than 2years) ) -- Both from India... incase anyone knows of India-US tax treaty provision on this --

Then will my spouse have to pay back the FICA (social security and medicare) taxes which as yet have NOT been withheld?

We thought electing to file jointly will be beneficial, but not if she has to payback thousands in these taxes! Please help.

I searched the forum and found some varying responses. I will summarize them below:
1) May 2008: (last year)
https://www.askmehelpdesk.com/taxes/nonresident-spouse-resident-medicare-soc-sec-194742.html

AtlantaTaxExpert says: IRS made a change of policy and one does NOT have to pay these taxes.

My Q: Is this policy in effect in 2009.

Also will it be possible for me to find a mention of this policy on either IRS.gov/Personal communication from IRS/ IRS publications?

2) In 2007 in this post:
https://www.askmehelpdesk.com/taxes/joint-filing-non-resident-spouse-146369.html

AtlantaTaxExpert said: No, referring to -Aliens Employed in the U.S. – Social Security Taxes (http://www.irs.gov/businesses/small/international/article/0,,id=131635,00.html)

-and added: "Then look on the F/J/M/Q visa bullet and look at the LAST square bullet under "Limitations on exemptions".

Now, this link says the same even now (i.e. 2009).

So what should we do? Was there a change of policy (only for 2008 and none before and none after) OR am I missing something?


3) Response from IRS to another post:
https://www.askmehelpdesk.com/taxes/irs-response-fica-witheld-spouse-f1-last-year-filing-jointly-year-339111.html

In IRS's response, in the paragraph after point 3), IRS says:

"If your spouse is an exempt individual pertaining to the substantial presence test for 2009 or if your spouse does not have a green card at any time during 2009, your spouse may still be treated as a nonresident alien for the purpose of withholding social security and Medicare tax"

From this, can I treat my wife as an "exempt individual" (less than 2 years on J1) , file jointly as resident AND not have to pay FICA?

I am confused, for i did not know that once you claim to be a resident you can still consider yourself "exempt individual"

Curiously though, the above line from the IRS rep is nowhere to be found in either Publication 519 or 515.

Also, although the IRS response above talks "in general terms referring to exempt individual"....this is in response to the case where spouse is F-1 (Students, even US citizens/residents DO NOT pay FICA anyway if they are enrolled for classes in a semester and working on campus).....in our case, my wife is J-1. So it is not the same...but again, IRS response is on "exempt individual in general"...

Anyone has any reference clarifying this, or can make this thing clear for us please?

No one has any idea? MukatA,ebaines,IntnlTaxExpert,taxsearcher... AtlantaTaxExpert is probably not checking this... but any other experts have any idea on what we can do for now?

You already know the answer by AtlantaTaxExpert. Now you are only asking about the references and that too on April 15, 2009!

You already know the answer by AtlantaTaxExpert. Now you are only asking about the references and that too on April 15, 2009!

Sorry to bother you... But I really am not sure about the answer. For AtlantaTaxExpert did say we Don't have to pay (due to change in IRS policy) and gave a reference (the Square bullet) that says we COULD be liable, which confuses me. Maybe I am not understanding something here and will appreciate if you can clarify please.

And my apologies for asking this question on April 15. I worked very hard to prepare these papers (had 2 very important questions posted here earlier, but no one responded). Finally, I was all set to mail this out filing as residents when this FICA thing struck me. I was on the phone today for 1.5 HOURS with the IRS and they could not give a definite answer (they said they will email me back)

So I suppose it is not that trivial a question or has a obvious answer. But you guys are experts and help people prepare their tax returns. So in case you know of a clear answer and do not mind stating it here one more time, I will really appreciate it... for we are so confused now that we are considering filing her return as a nonresident. So please help to clarify if you can.

Thanks!

To clarify: Your wife will NOT be liable for back FICA taxes for 2008, nor will she be liable for FICA taxes for 2009 as long as she would otherwise be exempt.

In other words, had she filed as a non-resident alien, she would have been exempt from FICA taxes. The fact that she filed jointly with you will NOT now make her liable for FICA taxes.

However, if, in 2009, she would have been liable for FICA taxes by virtue of the fact that she has exceeded TWO calendar years in the U.S. then she IS liable for FICA taxes.

BOTTOM LINE: If your wife arrived in country in or before 2007, she IS liable for FICA taxes starting on 1 January 2009, regardless of how she filed her 2008 tax return.