Dear Tax experts,

I still have a question regarding the social and medicare tax after reading quite a few posts in this forum. This year is the 6th calendar year I've been on my F1 status. According to IRS, I am a resident alien now. I just got a job (on OPT right now) and the company has filed H1-B petition for me. I am told by my company's payroll that they would only start to withhold social and medicare tax from Oct. 1 (The day I am supposed to change to H1-B status). So am I liable for social and medicare tax before Oct 1st? I am confused. Thank you.

YG

YG:

If your employer does not withhold the Social Security and Medicare taxes while you are on F-1 visa status and you have in good faith properly informed the company of how long you have been in country, then you have nothing to worry about.

The requirement to pay these taxes rests with the employer! If they fail to collect the employee's half of these taxes, they have a very narrow window to make up that mistake. If they fail to make the payments, the IRS will not come back to you to ask for the missing payments. They will come back to the company for the back taxes.

Thank you so much for your quick reply. This is exactly the information I am looking for.

Glad I could help!

I have a similar issue, and I still don't know how to go about it.

I came to the US to do research in 3/2002 on a J-1. I changed universities in 7/2003, but kept the J-1 status and still didn't pay FICA taxes. As far as I understand, that's fine for 2002 / 2003, since I was considered non-resident. However, the university didn't withhold any FICA taxes in 2004, either, but I filed as a resident alien for 2004 -- and I'm wondering what's going to happen.

I changed to H1-B in 3/2005 now, and submitted an updated Form XXX (sorry, forgot, eligibility for employment). I asked the HR person in my department twice since still no FICA were deducted. She said everything will be fine since I submitted that form, but I could double checked with payroll. I called them and they said they're going to look into it -- they didn't know whether they need to deduct FICA for all of 2005 or starting in 3/2005 only (I suspect they actually should have started in 2004 already, but anyway... ) However, it's been more than a month and still no FICA deducted.

I feel I've basically done my part to get the situation taken care of (I don't really feel enthusiastic about paying FICA since I'll never receive any benefits, yet I agree to following the rules even if they're disadvantageous for me). I'm just still anxious about the possible outcome and whether I should have done more to get this cleared up beforehand.

Kaig:

You are obligated to pay Social Security and Medicare taxes starting on the day your H-1B visa became effective (March 2005? ). However, as noted earlier, as long as you act in good faith and promptly notify your employer of any changes in your visa status and/or the purpose of your visit to the US, you are not obligated to demand that payroll withhold Social Security and Medicare taxes. That is the employer's responsibility to pay the tax and withhold the employee's share from the employee's paycheck. Now, eventually, the employer will figure this out and then may withhold all the back taxes from 1 March 2005 on over one or two paychecks. The effect of that is that you may not get any pay for about a month when they realize their mistake. If I were you, I would put some money aside to live on in case this happens. They cannot go back and recoup their mistake after they have filed the annual reconciliation in January 2006, so if it has not happened by 1 Jan 2006, you are home free (so to speak).

BTW, based on what you told me, you should have filed as a non-resident in 2004. You can fix that by amending your return with Form 1040X and attaching a Form 1040NR or Form 1040NR-EZ to the 1040X and send it to the Philadelphia IRS Center (address can be found in IRS Pub 519). If you are an Indian citizen, then it is likely that no additional taxes are due.

AtlantaTaxExpert,

Thanks for your reply, and also thanks for all the valuable advice you're giving out in this forum.

I do not understand why you're saying I should be considered NR for 2004, though.
I lived in the US for basically all of 2004. For the substantial presence test, no days are excluded, since while I was in J-1 status,

(Pub 519)
Teachers and trainees. [... ] You will not be an exempt individual as a teacher or trainee if you were exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years.

I was an exempt individual for 2002 and 2003. I wouldn't want to file as NR, either, since I'd lose the standard deduction (I'm a German citizen, btw).

Kaig:

You are correct! I've been focusing so much on F-1 status that I misread your posting.

1) re: FICA as IC:

I am FT employed. But I also have some income each year as a Independent Contrctor. My husband is a US citizen. On his income, he already has withheld max FICA tax each year. We file jointly.

My question is if my FT employer already withhold FICA tax on my FT income, do I need to pay the 15.3% FICA tax on my 1099 income?

I do not want to pay the 15.3% FICA, to be honest. Also, if the small business is in both my husband and my name, can I put the 1099 income under his SSN so since he already paid the max FICA tax, that portion of my 1099 income can be free of the 15.3% tax?

2) I came to this country 8-9 years now. I have a F1 visa but I soon will obtain my Green Card. I filed joitly w/ my husband in 2003 and 2004. So I was treated NOT as a NR. But regarding the FICA tax, would you please tell me at what point, I became liable for the FICA? I worked as a student on occasional basis. In the first 3-4 years w/ very minimum income such as $5000/year. I do not think the FICA was withheld in the first few years.

But then from 2000 to 2005, esp. since 2002, FICA tax has been withheld from my pay whether I work PT or FT. I did get a little benefit the beginning of 2004 since the PT job had limited hours so I actually got about 3000+ unemployment income, which I attribute to the fact that FICA tax was withheld in my income, right?

So I would like to know theoretically, from what point SHOULD I start to pay the FICA tax since I still have a F1 now and this July will have the greeen card? My case is a little different from the F1 transition to H1. My Green Card application is on the basis of marriage. But as the appilcation is pending, I am still a F1 visa holder.

Is this a good idea to have a part of the FICA tax I paid refunded back to me? Is this possible? What is the procedure?

Please advise.

THANKS!!

LearningYing:

You sent this as a private message, and I answered it privately. Please refer to that answer.