[szczyszek]

I have been on J1 visa in the U.S. from February 2009 till August 2010 when we left the U.S. Now I have H1B visa and my wife has H4 visa since October 1, 2010. We arrived in the U.S. on October 25, 2010. I have questions regarding my tax liability:
1) under J1 I did not have to pay Social Security and Medicare taxes. As I understand, under H1B visa my employer needs to pay these contributions. Is that correct?
2) As I understand, these contributions must be paid since the validation of my H1B visa which happened not when the visa was valid (October 1, 2010), but when I arrived in the U.S. on October 25, 2010. Is that correct?
3) Under J1 visa, even though I was married, I had to file as single. Can I under H1B file my 2010 taxes in 2011 together with my wife as married? That would help me to offset SS and Medicare contributions taken from my pay. I intend to stay in the U.S. for next 18 months.

[AtlantaTaxExpert]

1) Partially. Your employer is required to pay BOTH sides of FICA (Social Security and Medicare) taxes, then collect the employee's share from the employee's salary. This being the case, you ARE liable for FICA (Social Security and Medicare) taxes.

2) Your liability begins the day you begin work for pay.

3) You can file jointly with your wife and you both CHOOSE to be treated as resident aliens. This will allow you to claim the $11,700 joint standard deduction plus two $3,800 personal exemption (for yourself and your wife). Your wife will need an ITIN.

To apply for an ITIN, you need to complete Form W-7 for your wife. You need to make a photocopy of her passport, then get the photocopy notarized. This can be done at your local bank in most states in the U.S.

The downside is that:
• You must wait until 10 June 2011 to meet the Substantial Presence Test before you can file for Tax Year 2010. We will file the extension (Form 4868) for you as part of our service at no additional charge.
• You must declare ALL 2010 world-wide income (your AND your wife's home country income, if applicable). There is an offset available by either claiming the Foreign Tax Credit (Form 1116).

Even with the downside, this is probably the best way for you to file.

[szczyszek]

I can see that AtlantaTaxExpert has replied, but I cannot see the response. What should I do?

[szczyszek]

Excellent, thank you very much for your answer. I have few comments though:

1) Understood.

2) I have been on a payroll since February 2009 under J1 visa and now it continues. So I worked for pay before I came into the U.S. on H1B visa on October 25, 2010. Should I then be paying FICA from October 25, 2010 or earlier?

3) Regarding my wife, she already has Social Security Number she received when she was on J2 visa. Given that, does she still need to file for ITIN?

[AtlantaTaxExpert]

You were exempt from FICA taxes while under the J-1 visa.

Your wife can use the SSN that was issued to her.

[szczyszek]

Thank you very much for your answer. I guess that in this case I should:

1) pay U.S. taxes and request for an extension to file in the U.S.
2) then pay taxes in my home country (I will have to provide information about the U.S. income and the income from my country)
3) file in the U.S. and claim my foreign tax credit

What do you think?

Thanks,

[AtlantaTaxExpert]

1) Yes, file Form 4868 for the extension.

2) I see NO reason why you would have to pay taxes in your home country on the U.S.-sourced income. Most tax treaties calls for ONLY the host country to tax income earned in that country. You WOULD, however, pay taxes to your home country on the income earned IN the home country.

3) Now, U.S. tax law requires you claim ALL world-wide income if you file jointly with your wife as residents. So, you would file Form 1116 to claim the Foreign Tax Credit for those income taxes paid to your home country.

[peter1944]

Hello,

I have quite similar situation as described above. I have a quick question:

AtlantaTaxExpert - you wrote that "You are exempt from FICA taxes while under the J-1 visa". What is your situation when you receive salary, but your J1 visa expired and H1B is still not valid? Are you exempt from FICA or not?

Thank you,

[clstadum]

Here is a helpful article explaining tax liability for individuals on H-1b visas... basically it all depends on whether you are considered a resident alien or a non-resident alien...

http://www.hmalegal.com/2/post/2013/03/making-the-big-move-considering-the-tax-liability-of-moving-to-the-united-states-on-an-h-1b-visa.html.

[AtlantaTaxExpert]

CLSTADUM,

You do understand that you are answering a post that is over rwo years old, right?