Hi, I am from India and has been on H1 (Resident Alien) since Oct 2011. My wife came to US on H4 in Nov 2012 and changed her status to F1 (Non-Resident Alien) in May 2014. My wife has been working on CPT since August 2014.

My questions are:
1. Can I file jointly with my wife
2. As I paid for her fees, can I claim Tuition and Fees deduction;
3. If the answers to my previous questions is yes, Is she still waived from paying social security and medicare tax?

Yes to all three questions.

If you need professional help filing, please contact me at the email address in my profile.

Thanks Atlanta Tax Expert for your expert opinion. I am honestly planning to file my taxes on my own with some expert guidance from expert people like you.

While filing tax for year 2014, do I have to send a statement stating that my wife should be treated as a Resident Alien. I read that FICA exemption is only for Non-Resident Aliens, but now that my wife is filing her taxes as a Resident Alien, is FICA exemption still applicable.

I understand that to file jointly, my wife will be filing with me on a Resident Alien Status. She will be on F1 and CPT for the entire year of 2015 as well. Does she have to start paying FICA in 2015.

Looking forward to hearing from you soon.

Best Regards,
Gautam Malhotra

Gautam,

You DO have to attach a Spousal Choice Statement for your wife.

Even though she is filing as a resident, it does NOT affect her exemption from FICA taxes. There is even an IRS website that explains that, but I lost the link when I had to have my computer hard drive scrubbed in 2013.

The FICA exemption is good until the end of 2018.

Thanks for your response again. I did a little more research and found these 2 links which are creating confusion for me. Can you please review them.

http://www.irs.gov/Individuals/International-Taxpayers/Nonresident-Spouse-Treated-as-a-Resident
http://www.irs.gov/Individuals/International-Taxpayers/Aliens-Employed-in-the-U.S.-%E2%80%93-Social-Security-Taxes

In the second link, this is what is mentioned. Can you please read this through and confirm that your statement that F1 is exempted from FICA for 5 years even though they are treated as resident aliens still holds.

F-visas, J-visas, M-visas, Q-visas. Nonresident alien students, scholars, professors, teachers, trainees, researchers, and other aliens temporarily present in the United States in F-1,J-1,M-1, or Q-1/Q-2 nonimmigrant status are exempt from Social Security / Medicare Taxes on wages paid to them for services performed within the United States as long as such services are allowed by the United States Citizenship and Immigration Services (USCIS) for these nonimmigrant statuses, and such services are performed to carry out the purposes for which they were admitted into the United States.

Exempt Employment includes:
On-campus student employment up to 20 hours a week (40 hrs during summer vacations)
Off-campus student employment allowed by USCIS
Practical Training student employment on or off campus
On-campus employment as professor, teacher or researcher

Limitations on exemption:
The exemption does not apply to spouses and children in F-2, J-2, M-2, or Q-3 nonimmigrant status.
The exemption does not apply to employment not allowed by USCIS or to employment not closely connected to the purpose for which they were admitted into the United States.
The exemption does not apply to nonimmigrants in F-1, J-1, M-1, or Q-1/Q-2 status who change nonimmigrant status to a status which is not exempt or to a special protected status.
The exemption does not apply to nonimmigrants in F-1, J-1, M-1, or Q-1/Q-2 status who become resident aliens for tax purposes.

The links your found were NOT the link I was referring to. The following link is one I was referring to; the items in BOLD ITALIC PRINT is the notation that allows you to STILL be exempt from FICA taxes:

http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad---Nonresident-Alien-Spouse

Here is the relevant extract:

U.S. Citizens and Resident Aliens Abroad - Nonresident Alien Spouse

Election to File Joint Return

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident. This includes situations in which one of you is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other is a nonresident alien at the end of the year.
If you make this choice, the following rules apply:

• You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect,
• You must file a joint income tax return for the year you make the choice, and
• Each spouse must report his or her entire worldwide income on the joint income tax return

If you make this choice, you and your spouse are treated as residents for your entire tax year for the purpose of your federal individual income tax return, and for the purpose of withholding U.S. federal income tax from your wages.

In addition, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. Refer to Aliens Employed in the U.S. – Social Security Taxes.

Generally, neither you nor your spouse can claim tax treaty benefits as a resident of a foreign country for a tax year for which the choice is in effect and you are both taxed on worldwide income. However, the exception to the saving clause of a particular tax treaty might allow a resident alien to claim a tax treaty benefit on certain specified income. You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years.

I found this link: http://www.uc.edu/international/services/taxes/special_topics.html

Following is the excerpt from the link above. Please advise me on this.

Social Security and Medicare Tax

Lawfully employed nonresident F-1, J-1, M-1, and Q visa holders are not subject to social security withholding or reporting requirements until their 6th year in the U.S. (However, the law requires that social security tax be withheld from wages received from unauthorized employment.) Therefore, wages received by nonresident F-1, J-1, or M-1 visa holders working on the campus they are authorized by DHS to attend, performing off-campus work with DHS permission, undergoing approved practical or academic training, and Q visa holders working for their authorized employer are not subject to social security requirements. To claim an exemption from social security tax, they must provide verification of visa status and proof of work permission to the employer.

If an F, J, or M visa holder who is a resident alien for tax purposes, their wages are subject to social security (FICA) and unemployment (FUTA) taxes on the same terms which apply to U.S. citizens. J-2 and H visa holders, whether resident or nonresident, must pay social security tax. Social security taxes and benefits apply to U.S. permanent residents on the same basis as U.S. citizens.

Thus, to summarize, both the Internal Revenue Code and the Social Security Act allow an exemption from social security/medicare taxes to international students who have entered the United States on F-1 or J-1 status and who are still classified as nonresident aliens under the residency rules of the Internal Revenue Code. As discussed above, this means that foreign students in F-1 or J-1 nonimmigrant status who have been in the United States less than all or part of 5 calendar years are still nonresident aliens and are still exempt from social security/medicare taxes. This exemption also applies to any period in which the international student is in practical training allowed by the DHS, as long as the international student is still a nonresident alien under the code.

International students in F-1 and J-1 nonimmigrant status who have been in the United States more than 5 calendar years are resident aliens and are liable for social security/medicare taxes. When measuring an alien's date of entry for the purposes of determining the 5 calendar years mentioned above, the actual date of entry is not important. It is the calendar year of entry which is counted toward the five calendar years respectively. Thus, for example, an international student who enters the United States on December 31, 2009 counts 2009 as the first of his/her five years as an exempt individual.