[miny]

Dear Expert, here I have two questions regarding my tax status.

I came here to the United State in Aug 2000, so technically this is my 5th calendar year, I believe I should file as a Resident on tax purpose. However, because I am still working on OPT, my company's payroll says I do not need to pay SS and Medicare, even after I told them that this is my 5th year. So I am wondering is it my responsibility or my company's that I didn't pay SS and Medicare? Am I considered as resident on tax purpose?

Also, I filed jointly as resident with my husband last year because he is on H1B, so I am wondering does that affect that I need to pay SS and Medicare as well? Can I file separately as non-resident if applicable?

In a word, I am wondering what shall I do with my SS and Medicare? Shall I pay for it? What if I don't? Thanks for your advice.

[lakshmi]

Minny, I am also in a similar situation as you. If you find an answer to your question please email me at lakshmi_ramachandran at rediffmail.com

Thanks
Lakshmi

[AtlantaTaxExpert]

Miny:

The fact that you filed jointly with your husband last year effectively made you a resident alien. You can reverse that decision by filing an amended return (Form 1040X) and attaching a Form 1040NR. That is the only way you can file as a non-resident alien for Tax Year 2005.

You may want to amend your 2004 return, because, in my opinion, your joint filing for 2004 makes you liable for Social Security and Medicare taxes as a resident alien in 2005. Inform your company’s payroll that you filed as a resident alien last year and I suspect they will change their position about your Social Security and Medicare tax liability.

If they do not change their position and insist you do not have to pay Social Security and Medicare taxes, then do not worry about it. Withholding Social Security and Medicare taxes from employees, paying these taxes to the IRS in a timely manner and understanding the tax law is the responsibility of your employer, not you.

[Vio]

Dear Expert,

I have a similar question:

I came to USA in August 2000 on F1 student visa. Now I am working on OPT (my OPT started July 15th 2005). My employer withholds social security and Medicare taxes from my stipend. Is this OK? Am I still a non-resident alien for tax purposes or I am considered a resident alien?

Thank you,
Violeta

[AtlantaTaxExpert]

Vio:

The day you switch over to an OPT, your visa status should convert to H-1 or H-1B.

Any income earned after that day is liable for Social Security and Medicare taxes. Your employer is correct in withholding these taxes.

For 2005, you probably need to file as a dual-status taxpayer. You also have the option of filing as a resident alien.

[kt168]

Dear Expert,

I have a similar question:

I came to USA in August 2000 on F1 student visa. Now I am working on OPT (my OPT started July 15th 2005). My employer withholds social security and Medicare taxes from my stipend. Is this ok? Am I still a non-resident alien for tax purposes or I am considered a resident alien?

Thank you,
Violeta

Me too I have the same quetion;

I started my OPT this year. And I'm paying SS and medicare tax I want to know if I can have medicare insurance like a us resident or a us native. Please I really want this answer!

Thank you,
Kathy

[MukatA]

If you have not completed 5 years on F1/OPT, then you do not pay SS tax and Medicare tax on your wages.
When did you enter the U.S. on F1?

[AtlantaTaxExpert]

The posting I made back in 2005 is in error!

Someone on OPT is considered to be STILL under their F-1 visa and this are EXEMPT from FICA (Social Security and Medicare) taxes UNLESS their total stay while under the F-1 visa exceeded FIVE years.

Please answer MukatA's question about WHEN you first entered the country on your F-1 visa so that we may provide good guidance.

[rainycloud]

Similar question:

I entered the US in Sept 2004, so I have been here for 5 years + 3 months. I was on F1 visa but it just expired in July 2009 so I am visa-less now. But I am on an OPT 17-month extension so I am legally working here. I have been a non-resident alien for tax purpose and I haven't been paying social security and medicare. Do I need to switch my status to resident alien now? If I do, when do I switch? Do I file as a dual-status alien or a resident alien for year 2009? What tax forms do I need? Can I still file 8843 along with the 1040NR?

[AtlantaTaxExpert]

RainyCloud:

Under the nromal rules, you are considered to be a resident alien by default for 2008, because you exceeded the normal five-year exemption period authorized for F-1 visa holders.

However, you CAN continue to be a non-resident alien if you can show that you are maintaining a "closer connection" to your home country. This is done by completing Form 8843 and attaching proof of this closer connection to the Form 8843, then filing it with Form 1040NR for 2009.

None of this will work if you have applied for a H-1 or H-1B visa, because that undercuts your "closer connection" argument.

[mninlapan]

Hi there,

I came here on June 2006 under F-1 visa. I just graduated last May and now I am on OPT. I was withheld of SSN and Medicare taxes from my last two paychecks. I believed this is my fifth year under F-1 visa. Doesn't it mean that I am still able to refer to five-year exemption period authorized for F-1 visa holders?

I have never been filed any tax form before. Could you please advice me how to claim the money back? Which form I should get and also when I have to get it done?

Also, could you lease define the term " closer connection" ? Is going back to my home country every winter break and summer break while I was in school considered that I have a closer connection to my home country?

Thank you very much.

[AtlantaTaxExpert]

The calendar year 2010 IS your fifth year under the F-1 visa, which means you ARE exemption from FICA (Social Security and Medicare) taxes.

Download IRS Pub 519 from the Internal Revenue Service and print off pages 54-55, which details your exempt status. Then go visit your payroll department, explain that you are exempt from these taxes, arrange to have NO more FICA taxes withheld and request a refund of those taxes already withheld. Since you were paid within the third fiscal quarter for 2010, getting a refund should not be too difficult.

:Closer connection" is determined by a number of factors, to include loaction of family, permanent housing, ability to vote, driver's registration and a number of other variables. You need not worry about cloer connection for 2010, but it may be an issue for 2011.

If you apply for a work visa of ANY type in the U.S. you effectively kill any argument for closer connection to your home country.