Hi Expert,
I am a J1 researcher from China, I entered USA in August 25, 2007. Part of my income is from Chinese Government and part from USA(1500 per/month). From this JULY 2, the payroll office in USA started to withhold the FICA tax and medicare, but according to the US-China treaty, there is three-year exemption for the Chinese scholar, so what I can't undstand is that why from the July I need to pay FICA tax, it should start in 2010 January I think , am I right?
I called them but they told me that is the policy, are they right?
Hope that is not because I mailed the 1040NR-EZ at this Apirl.
Thanks for your replay, I really appreciate.

The three-year exemption from taxation for J-1 researchers does not apply to FICA taxes!

That exemption for only TWO calendar years, so, in fact, the USA payroll department made a mistake: they SHOULD have started FICA withholdings starting on 1 January 2009.

This policy has NO effect on your Form 1040NR-EZ. Your exempt status for income taxes is for three years from date of entry, so your exempt status ends on 26 August 2010.