Hello
I am a physician working in the US, I am on a J1 visa. I came to learn that its different for us when it comes to filing for tax refund. I started my job in 2005, and since then I have been my employer has been holding federal, state, local, social security and medicare taxes from my payroll. I filed twice for tax refund and I realised recently that they filed my taxes as a resident. Now I have some questions:
1) Since I filed my first 2 years as a resident and I should have filed them as non-resident, what would happen to me? Do I have to contact the IRS and explain? Do I owe the IRS money or do they owe me? What should I do?
2)I have been paying social security and medicare taxes for the last 2 years, I understand now that I should not pay those taxes in my first 2 years with the J1 visa. How can I get my money back?
3)When you file as a non-resident, are you eligible for the same deductions as a resident? I mean since I filed my first 2 years as resident, if I recalculate the tax refund as a non resident, would I owe the IRS money or what?

Please help me with this matter I am really confused and I do not want to have problems with my taxes as I am trying to change my visa to H1 soon.

THanks

1) Nothing will happen to you, because you did not attempt to avoid paying your taxes; you just filed incorrectly. You need to amend your returns for 2005 and 2006, using Form 1040X and attaching a copy of Form 1040NR or 1040NR-EZ with the word "AMENDED" printed on the top of the fist page of the form.

2) If you did not spend any time in the U.S. on a F-1 visa, then you ARE exempt from Social Security and Medicare taxes. Contact your hospital and request that they refund these withheld taxes for 2005 and 2006. When they refuse (those tax years are over, so they WILL refuse), get the refusal in writing. You can then file Form 843 with some required documentation to get a refund as specified in IRS Pub 519.

3) You MAY owe money; you may not. I do not have enough information to provide an answer.

If you want my professional help on thiese issues, contact me at [email protected]. You will find my fees most reasonable.

There is another rule that affects your status. J1 visa holders exemption is for 2 years and it is lost if you over stay. Then you must pay the back taxes.

The J-1 visa tax exemption applies ONLY in very specific cases.

I have several clients from the past year who are physicians on J-1 visas. They did NOT qualify for that tax exemption, so I expect Mkhalil does not qualify either.