Hi,
I came to US on May 2002 in F1 visa. I got an EAD (temporary work permit) from USCIS in 2004 and 2005. I received 1099-MISC in 2005. I filed 1040 for that & paid self employment, social security tax & medicare taxes. Silmilarly in 2006, I worked during my OPT & received 1099-MISC form my employer. I Filed 1040 & paid social security & medicare Taxes. Now, I received a bill from IRS saying that I owe them money for self employment tax for 2006. I did some research and it turns out, I should have filed 1040NR instead of 1040 for both years and should not have been liable for social security, medicare or self employment taxes.
Now, I am trying to figure out how to proceed in refiling taxes for both 2005 & 2006. Is 1040X the correct form to fill??

Any help and guidance will be highly appreciated.
:confused:

Your 2002 to 2006 you are nonresident and exempt individual. Your income is not subject to FICA taxes.
For 2005 (and for 2006) you will file 1040X and full complete nonresident tax return.

Also note that on your resident tax returns, you must have claimed standard deduction, which is not available to nonresidents (except students from India). You will get deduction as per tax treaty. So by doing nonresident return, you will not pay FICA taxes but your income tax will increase.

You must reply to the IRS. Tell them that you are filing amended tax return as nonresident.

Thank you so much for your help.

1. In 2005, I have received w2 and 1099MISC from different employers. Do I need to fill up a different form to get my FICA taxes back for that year?

2.In 2006, I was on OPT and worked as a contractor (1099 MISC) and my H1B started from mid of November 2006. Can I still file 1040NR for the year 2006? I have already paid my taxes for the 1099 MISC I received in 2006. How can I adjust that amount?

For 2005, when you file nonresident tax return and 1040X, it will automatically take care of SE taxes paid when you filed resident tax return. For getting FICA taxes withheld by your employer (reported on W2) you will file Form 843. It is filed separate from you tax return

I filed the amend (1040NR) for the year 2006. I was audited 2 weeks ago and got the report back from the IRS tax examiner. There is no change on the report which means I am liable to pay the SELF EMPLOYEMENT tax. According to the IRS website and as far as I know non-residents are exempt from SE tax. I provided the IRS a copy of that too but the only thing it says on the report is "Your income is liable for SE tax." Is there anything I can do so that I don't have to pay SE tax?

What about your 2005 tax return? If you filed resident return for 2005 or any previous year, then you can not file non-resident return for 2006.

MukatA, thanks for your prompt reply. I filed as a resident for the year 2004 and 2005. Should I amend for the year 2004 and 2005 as well as a non-resident? Since I filed the return for 2004 and 2005 on April 2006, I think I still have time to amend for those years. Is that correct?

Okay, your interpretation of the tax law IS correct. For 2002 through 2006, you were a non-resident alien and should have filed Form 1040NR.

However, since you filed as a resident alien in 2004, the IRS carries that status over to the successive years of 2005 and 2006.

In order to fix this, you MUST amend your 2004 AND 2005 tax return and request that your non-resident alien status for those years be restored.

Once that is done, you can then re-submit the amended return for 2006 and re-assert your non-resident alien status for 2006.

AtlantaTaxExpert thank you so much for your help.

I suggest that you contact AtlantaTaxExpert for professional help. It may ultimately prove to be a better option.

Thanks MukatA for your help and suggestions. One more question, I have filed for the labor certification some time in April 08. Is this will create any problem on my GREEN CARD process?

It COULD be an issue with your green card application if you do NOT fix it by amending the returns in question.