[luix]

Hello. Here is my situation. I live and work in Puerto Rico and my wife lives and works in Virginia. She is resident for taxes purposes. I changed from F-1 (OPT) to H1B in October.

We are planning to file separate in each state and joinlty for the federal taxes.

These are my questions:
1. Since I don't have to pay federal taxes in my income from Puerto Rico, how can we file our return? Which deductions can we claim? Excemptions? My salary is around 33% of our total income.
2. Since I was in F-1 for 9 months. Can we file together? What about the resident vs. non-resident status?
3. If I can file as resident, could I still get the medicare/ss taxes that I paid while working in OPT?

Thanks a lot! I know it's a complicated situation so any help would be greatly appreciated.

Thanks!!

[AtlantaTaxExpert]

You CANNOT file separately in Virginia if you file jointly on the federal return. Not sure about the PR tax return.

1) Not enough information to answer properly.

2) You can file jointly if you want, but, by doing so, you become obligated to declare ALL world-wide income.

3) In theory, yes. In reality, the IRS tends to deny refund requests if you file jontly for the tax year the Social Security/Medicare taxes were withheld. You should FIRST try to get the refund through your employer, because, that way, the employer gets HIS half of the tax back as well.

[luix]

Thanks a lot for your answer. I have some follow up question. I work for a very small company and this is the first time they have a foreign employee.

How could they request the refund and therefore refund me the money? I mean, did they already paid that to the IRS? Do they have to do it this year? (there are only 3 days left)

BTW, Looking at your email address I think you did my wife's taxes last year and she recommends you 100% (and more). She is planning to contact you again this year :)

[AtlantaTaxExpert]

They can request the refund when they file their Form 941 for the last quarter of 2008. That Form 941 is not due until 15 January 2009, so there IS time to handle this.

Download IRS Pub 519 and print out pages 47-50. The text that explains that F-1 and J-1 visa holders are exempt from Social Security and Medicare taxes can be found on those pages.

My email address is [email protected].

[luix]

I am sorry. I promise these are my last questions.

If they refund me the money with the first paycheck of January 2009. How will I handle my 2008 taxes? Do I need an adjusted W-2? Or should they refund me the money this year?

Thanks a lot!

[AtlantaTaxExpert]

There should be time to reflect that NO Social Security and Medicare taxes were withheld on your W-2.

If they refund the money in either 2008 or 2009, it will NOT affect your state or federal tax return one way or another, because the refund is tax-free.