[Sac441]

I graduated from b-school in June 2010 and my OPT period began August 2010. My employer paid me a signing bonus in January 2010 and deducted FICA.

All of my friends in a similar situation at other (very reputable!) companies did NOT take out FICA on bonus payments, but my company says that I must be in 'live' OPT for that exemption to apply, in my case after August 2010.

The IRS website Is not clear on this specific case. It says that payments made at any time on F-1 don't attract FICA but doesn't explicitly state this. When OPT is not live, I am not allowed to work for an employer like the one that paid me the bonus, so its not clear whether the bonus should have been paid to me at all (since I was not allowed to be employed at that specific time) or if it should be taxed like income (though what else it could have been I am not sure). If it helps, the bonus would have had to have been repaid if OPT was not granted, as I would have had to return back to England and not take the job with my now-employer.

Who is right? Many thanks in advance!

[AtlantaTaxExpert]

You ARE exempt from FICA due to your F-1 visa status; whether you are on OPT or not is irrelevent.

You can download IRS Pub 519 from www.irs.gov and print out pages 54-56 to show your employer. The IRS REQUIRES you attempt to get improperly-withheld FICA taxes back through the employer if possible. A refund from the employer will take 4-6 weeks; the Form 843/8316 process can take up to a year!

If the employer refuses, try to get a refusal letter from the employer on company letter, then submit Forms 843 and 8316 to get the refund from the IRS. The refusal letter is NOT absolutely essential to the submission. But it DOES make it go faster.