[dturjans]

Hi,

I have been studying in the US for about 6 years now and have been recently employed in a US engineering company. I am currently under the OPT status and will be applying for the H1 visa in January of 2009. Since I am under the OPT status I am not required to pay for the Social Security, but I was instructed once my status goes H1 I will have to pay for the SS and my tax brackets will also change. Is this true? If so, where can I find this "new" tax bracket for the H1 visa holders?

Thank you for your time and insight.

Dario

[AtlantaTaxExpert]

Dario:

FICA taxes are Social Security (6.2%) and Medicare (1.45%), which are required to be withheld from anyone who is a resident alien for tax purposes.

BTW, YOU are a resident alien for tax purposes, and probably have been since 1 January 2007.

This is due to the duration of your stay while attending school in the U.S. The FICA tax-exempt status for students under a F-1 visa lasts for FIVE calendar years.

Based on your posting, it appears that you arrived in country in 2002. If so, your exempt status expired on 31 December 2006. For 2007 and beyond, you were a resident alien and should have filed Form 1040 and paid FICA taxes on any job that was off-campus (all students, U.S. or international, who work for the universities where they are attending class, are still exempt from FICA taxes).

Now that you know, you have the legal obligation to inform your employer of your current resident alien status and have them withhold FICA taxes, retroactive to 1 January 2008.

That's the bad news!

The GOOD NEWS is that you may be able to amend your 2007 return and file as a resident alien, which may make you eligible for the tuition tax credits/deductions like the LIfetime Learning Credit. If you arrived in 2001, you can also amend the 2006 return as well. Even if you are not eligible for these credits, you should amend the return in any event, because, technically, by filing as a non-resident alien in those years, you filed incorrectly! This may be an issue if you later decide to apply for a green card.

If you need help filing the amendments, contact me at the email address below.

[MukatA]

Yes, on F1 or OPT you are exempt from residency (and FICA taxes) for 5 years. After that your days in the U.S. count toward residency status.

[mgabriele]

H1 Visa - they have to pay FICA & MEDICARE?

[AtlantaTaxExpert]

Yes, holders of the H-1, L-1 and H-1B visas ARE subject to FICA taxes (which are Social Security at 6.2% and Medicare at 1.45%).