Hi,

I came to the US on an F-1 visa in Aug 2001.

I filed 1040NREZ for years 01, 02, 03, 04, 05.

I was on an internship with employer A (a for profit, non higher education employer) in 2006 (at that time I had just filed year 2005 returns as a non resident), and no FICA taxes were withheld for me.

When I filed taxes for year 2006, I discovered that I was a resident for tax purposes and filed 1040EZ instead.

For year 2007, I was back at my school and FICA taxes were not withheld (which is okay, because higher education students are exempt irrespective of their resident/nonresident status)

Currently, I started full time with employer B and they are not withholding ss/medicare taxes yet. I have emailed their tax team asking them to withhold it as I am a resident for tax purposes.

My questions are:
1) What can I do about my situation with employer A (for whom I worked for in 2006). I did not know that I was a resident at the time of employment. What can I do regarding the SS/medicare taxes that were not withheld? Am I correct in my assumption that ss/mc taxes should have been withheld? What are my options?

2) W.r.t. employer B, am I correct that ss/medicare taxes should be withheld currently?


Thanks for your opinions. Your help is greatly appreciated.

Thanks

Were did you read "...higher education students are exempt irrespective of their resident/nonresident status." This is not true.

Since you filed 2006 return as resident, you were resident for 2007 and were required to pay FICA taxes.
Now recently, IRS has changed its stand. Social Security Tax / Medicare Tax and Self-Employment

Employer is not withholding taxes. Did you get W2 of 1099-Misc from the employer?

What I meant is higher education students working for higher education institutions are exempt -- the student FICA exemption.

My question is regarding year 2006 (for which I filed as a resident, but 2005 I filed as a non resident); how can I proceed on that.

For 2008 I will ask my employer to withhold FICA taxes...

For 2006, you WERE legally liable for FICA taxes, so you need to inform your employer at that time of that fact.

If the 2006 employer is also your current employer, then he MIGHT want to correct the problem, but I suspect it will NOT be corrected because it will subject the employer to one HUGE fine for not getting it to begin with.

The IRS is noted about NOT being very forginving about such issues with employers.

If your current employer is NOT the same employer for 2006, then just forget about it. There is NO WAY the 2006 employer will bring this to the attention of the IRS (due to the fact that they would be subject to the fine noted above AND because they have NO WAY to collect the money from you).

Thank for for the reply, Atlanta Tax Expert.

I sent an email to my current employer asking them to withhold taxes.

My current employer is not the same as the 2006 employer --- therein lies the problem. What is my liability here? Should I try contacting them and letting them know. I would like to be on the right side. Would I be held liable for this by the IRS?

Thanks for your opinion --- I really appreciate it.

On a side note, I read some testimonials on your visataxes website and am considering getting my taxes for year 2008 done by you guys...

You will NOT be held liable for the 2006 FICA taxes by the IRS.

The IRS position on this issue is clear: The EMPLOYER is responsible for collecting these taxes from the employees, matching the collected taxes, and forwarding the payments to the IRS.

The ONLY times the employee gets involved with making payment is if he is classified as an independent contract, but wants to be classified as an employee and makes the payment with his annual tax return (which, BTW, is a sure-fired formula for getting fired IMHO)...

OR

The employer convinces the IRS that the employee concealed his true visa status from the employer.

The second option rarely works in my view, especially if the employee does not have the resources to pay the back taxes.

BOTTOM LINE: Do not worry about it; the IRS will NOT be tracking you down to collect these taxes.

Thanks for your reply.

There is another data point.

In 2004 when I was working for the same employer as in 2006, they were withholding SS/Medicare taxes wrongly (since I was a NR). I let them know and they refunded the taxes.

In 2006, I am quite sure I did not send them any such email. All they could go by is the email I send in 2004 which was correct at that time. We are talking about three months in 2006 and about $20K in wages FYI --- so maybe about $1.5K in taxes max!

Since I am paranoid, if my memory is incorrect and I did send them such an email in 2006 as well, would I be liable? I am 99.9% sure I did not send them such an email in 2006, but still would like to know.

Would any of this have any impact on my immigration , e.g. when I start green card/citizenship processing?

Is the worst case scenario, something like paying penalties a few years hence on, or can this be classified as something worse?

Finally, I have sent of another email to my current employer to treat me as a resident and withhold SS/medicare taxes.

Once again, thank you very much for helping me out.

Hi,

Would you also be able to a link to IRS documentation that indicates "
The IRS position on this issue is clear: The EMPLOYER is responsible for collecting these taxes from the employees, matching the collected taxes, and forwarding the payments to the IRS.
"
Thanks.

The IRS Pub that governs Form 941 covers it rather well, but I cannot remember the Pub number.