[crazee85]

Doing PhD in US on F-1 visa since August 2007...
Getting salary from the university...

I understand that the tax status will change to resident alien this year (2012)... How about FICA taxes?

Thanks!

[taxesforaliens]

Yes, you will be a resident alien starting in 2012. AS such you would be liable for FICA taxes on your wages. Scholarships are exempt from FICA taxes

[AtlantaTaxExpert]

Actually, your 2012 status is that of a RESIDENT alien.

Tax Year 2011 was your FIFTH year in country under the F-1 visa. That being the case, you became liable for FICA (Social Security and Medicare) taxes on 1 January 2012 (this past Sunday).

MAKE SURE your employer is aware of this fact. Under the law, you need to notify him of this fact, preferably in writing (an email with DELIVERY and BEEN READ notification is PERFECT for this).

[crazee85]

Actually, your 2012 status is that of a RESIDENT alien.

Yup... sorry it was a typo...

MAKE SURE your employer is aware of this fact. Under the law, you need to notify him of this fact, preferably in writing (an email with DELIVERY and BEEN READ notification is PERFECT for this).

Thanks a lot for letting me know about the legal requirement of notifying the employer...

[AtlantaTaxExpert]

Glad to help!

[tedcwfung]

Wouldn't 2012 be his 5th year if he started in Aug 2007?

[MukatA]

Your 5 years of F1 are 2007, 2008, 2009, 2010 and 2011; ends on Dec 31, 2011.

[AtlantaTaxExpert]

Any part of a calendar year (2007) counts as a full year.

[tedcwfung]

Ah I see. I started in Aug 2006, so my 5 years would have been 2006, 2007, 2008, 2009, 2010. I had no job income in 2011, but do have stock dividends; I will need to file 1040 as resident alien is that correct? What if I claim the closer connection exception for 2011?

[AtlantaTaxExpert]

Yes, you file as a resident unless you pursue the Closer Connection option. Do not bother if you intend to apply for an H Visa.

[tedcwfung]

I will be utilizing OPT starting later this year, then STEM after that. H visa may be foreseeable but won't know till 2+ years later. Closer connection option still OK?

[AtlantaTaxExpert]

Possibly.

Burden of proof for closer connevtipn is on YOU.

You will still have to pay FICA (Social Security & Medicare) taxes, and normally filing as a resident is a bettet option unless you have sognificant overseas income.

[tedcwfung]

Oh, I thought if my closer connection claim is accepted, I would be considered a nonresident alien hence exempt from FICA taxes?

Also, are the tax rates different for nonresident aliens than resident aliens? Why is filing as resident a better option?

At this point, what should I tell my employer regarding my alien status for 2012?

Thanks so much for answering my questions, AtlantaTaxExpert!

[tedcwfung]

I am currently on part-time CPT, by the way

[AtlantaTaxExpert]

Filing as a resident is better because you are eligible for more deductions & credits.

The FICA exemption ends after five years for F-1 students as a matter of U.S. tax law whether you retain non-resident status or not.

[MukatA]

After 5 years on F1, you must pay FICA taxes even if you claim closer connection option.