[Dresden]

H1B + H1B from OPT, separate states, married filing jointly Questions

Hi, I know you guys are probably very busy with it being tax season but I've searched all over these forums and could not find many relevant posts matching my situation of H1B/H1B from OPT, multiple states.

Me:
* I've been on H1B for several years, filed as resident for several previous years
* Worked in IL for entire 2009
Spouse:
* On OPT from 5/2008~9/30/2009 (OPT + cap-gap), filed as non-resident for 2008 , but meets SPT for 2009
* Worked in IL for a few months in 2009, no medicare/ssn taxes withheld due to OPT
* Worked in CA for after that (>6 months), regular medicare/ssn taxes incorrectly withheld
Us: Married in 2008

Planning to do married filing jointly, using Turbotax. Everything seems OK until the state taxes section. In here, perhaps due to no FICA taxes withheld on spouse's part for IL, it turns out we actually owe money to both IL and CA.

My question is this: Under married filing jointly, we get a high standard deduction, but it also seems that any amount that is not withheld is directly added to the tax owed, so... is it worth it to get the incorrectly-withheld FICA taxes from spouse's CA employer, or would those amounts, once we get a corrected W2 from that employer, be immediately paid out again in our tax bill? If this is the case, then there's no point getting the FICA taxes back, right?

Sub-question: TurboTax asks questions like "Select the residency status you want to use" - I assume the 'you' means 'both of us', so we should select part-year resident for both IL and CA?

[MukatA]

1. You are resident so you can only file as married filing jointly or married filing separately.
2. If your spouse in nonresident and has never filed resident tax return, spouse can file nonresident tax return or resident return as married filing jointly. On the joint return she does not owe FICA taxes for 2009 but must start paying FICA taxes from 2010.

[Dresden]

Thanks for the quick answer MukatA,
I still have a question - I know spouse does not owe FICA taxes, and that we will file as married filing jointly (required since we both contributed to roth ira), what I'm asking is whether the FICA taxes she can get back from employer will exactly equal the amount of additional tax we will pay.

For example, suppose $3000 was incorrectly withheld as FICA taxes for her job. If she requests and receives this amount back from the employer, I assume she will get a corrected W2, with 0 in the taxes withheld boxes. Consequently, Turbotax will look at this and think we owe additional taxes since it thinks we are resident for tax purposes. My exact question is that in this case, are the additional taxes we need to pay this year on top of whatever I have figured out already = $3000 (same as FICA withheld taxes)? If so, there is no need to go through the hassle of requesting this amount back from the employer.

Alternatively, is there an additional form I can attach or some box to fill in Turbotax that will specify spouse as non-resident alien, even though we are married filing jointly? I think that this option would allow us to recover incorrectly-withheld FICA taxes without increasing our tax figures for this year, I think. If I'm wrong on this pease let me know :)

1. You are resident so you can only file as married filing jointly or married filing separately.
2. If your spouse in nonresident and has never filed resident tax return, spouse can file nonresident tax return or resident return as married filing jointly. On the joint return she does not owe FICA taxes for 2009 but must start paying FICA taxes from 2010.

[AtlantaTaxExpert]

Your Social Security and Medicare taxes are NOT a factor in determining your income tax liability. None of the commercial, off-the-shelf tax software will factr the lack of Social Security and Medicare taxes when calculating your income tax liability.