Hello,

My situation is as follows: I am a Belgian citizen and came to the US on an F-1 visa in Aug, 2003. I filed tax form 1040NR for 2003, 2004, 2005, 2006 and 2007. Since Aug 2007 I have been working, on F-1 with OPT, and will continue to do so until Oct 2008 when I change to H-1B status.

My question is as follows: When I file my 2008 taxes, will I have to file dual status?

My confusion arises because my exempt status from being an F-1 may have ended since I will have been on F-1 status more than 5 years*. If my exempt status did end in 2007, then I would have to file the regular 1040 for my time as an F-1 in 2008, which is what I will have to do for my time in 2008 on H1B, so that would not be dual status? Or will I be considered dual status because I am going from F1 to H1 even though I am no longer exempt with the F1?

If I do not have to file dual status, and am considered a resident for the entire tax year of 2008, then do I have to pay FICA for the period from jan-oct? I am currently not paying FICA, but I have informed payroll that I think I should be once I am H1B. Should I notify them that I may owe fica for the entire year, so they can correct it now?

*And finally, I am confused about the 5 year rule. From IRS publication 519 - " You will not be an exempt individual as a student if you have been exempt as a teacher, trainee, or student for any part of more than 5 calendar years unless you establish that you do not intend to reside permanently in the United States and you have substantially complied with the requirements of your visa. The facts and circumstances to be considered in determining if you have demonstrated an intent to reside permanently in the United States include, but are not limited to, the following." This seems to state that I could be exempt as a student if I prove that I do not intend to reside permanently in the united states. I think having an approved H1B petition proves I can not reside in the US permanently, so perhaps if it would be better, I can claim exempt up to October 2008? Is that an option, and would it be worth doing? In that case I think I would definitely have to file dual status, and thus lose the standard deduction, but I may avoid paying FICA for anything before October.

Your exempt status expire on 31 December 2007, which means you file as a resident alien for 2008.

Yes, you ARE liable for FICA taxes starting on 1 January 2008. Now that you know, you have the legal obligation to so notify your employer of that fact, which WILL result in you paying these taxes starting on 1 January 2008.

Now, if you can show a closer connection to your home country and provide evidence that getting the education degree took longer than the allocated 5 years, then you maintain your F-1 status and NOT pay FICA taxes.

But that is a TOUGH SELL to the IRS. They routinely start FICA tax liability at the start of the 6th year of residency in the U.S. on a F-1 visa. The burden of proof otherwise rests with you.

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Originally Posted by AtlantaTaxExpert

Your exempt status expire on 31 December 2007, which means you file as a resident alien for 2008.

Yes, you ARE liable for FICA taxes starting on 1 January 2008. Now that you know, you have the legal obligation to so notify your employer of that fact, which WILL result in you paying these taxes starting on 1 January 2008.

Now, if you can show a closer connection to your home country and provide evidence that getting the education degree took longer than the allocated 5 years, then you maintain your F-1 status and NOT pay FICA taxes.

But that is a TOUGH SELL to the IRS. They routinely start FICA tax liability at the start of the 6th year of residency in the U.S. on a F-1 visa. The burden of proof otheriwse rests with you.

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Thank you for your answer, I thought this might be the case. I shall inform my employer of the FICA matter (haha that sounds... dirty). If I go this route, I just file a regular 1040? I don't have to submit anything showing that I am 'declaring' myself a resident for the entire tax year?

And if I did try to claim a closer connection, which from what I gather requires me to fill out an 8840, do I still file 8843 too? Might need to pay a professional to help me out here...

Again, thank you for your help.

Yes, you will be paying FICA taxes, but you will also get standard deduction and other deductions available to the citizens and residents. So it is not that dirty.

If you file as a resident alien, the Form 8843 is NOT required.

If you attempt to show the closer connection, then Forms 8840 and 8843 will be required, along with Form 1040NR.

Quote:

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Originally Posted by AtlantaTaxExpert

If you file as a resident alien, the Form 8843 is NOT required.

If you attempt to show the closer connection, then Forms 8840 and 8843 will be required, along with Form 1040NR.

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Sorry to revive an old thread, but I have been trying for months now to get my employer to withhold FICA for all of 2008. They claim they don't need to since I was F-1 until October 2008, but I informed them that my 5 year exemption was used up by being in the US on F-1 for any part of calendar years 2003,2004,2005,2006, and 2007. They still haven't done anything about it. I have sent them 18 e-mails and called them more than 5 times, and I have documented each of my attempts. Is there anything more I can do? What happens if my employer don't withhold, I file my taxes as a resident alien, and the IRS wonders where the missing FICA is? Am I liable?

My employer is a large multinational, and they have experienced immigration lawyers, HR tax specialists for their visa holders etc. but for some reason they are unwilling to believe me, even when I quote the relevant IRS documents to them.

You will NOT be held liable for the FICA taxes not withheld.

The IRS position on this issue is VERY CLEAR: The EMPLOYER is responsible for paying the FICA taxes and for withholding the correct amount from the employee's salary. If they fail to do so, and the IRS determines that FICA taxes were due, they will not even bother you; they will contact the employer for the tax payment.

Further, the IRS position on withholding is also rather clear. The employer has until January 31 of the following year to correct any back withholding. After 31 January 2009, the employer has no legal standing to do any back withholding of FICA taxes for 2008.

The ONLY time the IRS may go after the employee is if the employer can prove that they were willfully misled by the employee regarding his/her visa status. Given the emails you have set (and presumably have printed off and retained for your records), you can easily show that this is NOT the case.

You have done that you can do. If I were you, I would put aside 7.65% of your aggregate 2008 salary into a bank account just in case your employer wakes up and asks for your share of the FICA taxes before 31 January 2009. Other than that, continue to work and hope the situation resolves itself.