[ashayh]

Hi,

I am on my H1 visa, living and working in Nassau County NY.

My Total tax burden is almost 35%

FICA 7.6%
Fed 21.31
NY St 5.94

I have been on my H1 since Oct06 and recently switched sponsors.
My previous employer was not paying FICA, though he knew my Visa status changes. (I had no idea about FICA until a few weeks ago).

So I guess my question would be, do I need to pay FICA, and are there any issues if my previous employer did not pay FICA?


Thank you for your time
Ash

[AtlantaTaxExpert]

Ash:

The IRS will NOT hold you responsible for the payment of the FICA taxes.

The IRS position on this is both clear and concise: It is the EMPLOYER's responsibility to properly determine the employee's status, collect the employee's share of the FICA taxes from him/her, then pay these taxes via deposits to a federal reserve bank, wth quarterly tax returns (Form 941) to reconcile the accounts.

If the employer fails to do this, the IRS holds the employer responsible, NOT the employee. The ONLY time the employee may be held responsible is if the employee actively attempted to hide the true nature of his visa status. This is not the case with you since the employer, as your SPONSOR, HAD to know your visa status.

BOTTOM LINE: Do not worry about it; it is NOT your problem.

[MukatA]

May be the previous employer employed you as an independent contractor and will send you 1099 (instead of W2 sent to regular employees). If yes, then with your form 1040 you will file schedule C (form 1040) to report this income and expenses for this job. On the net income (income minus expenses) you will pay 15.3% SE tax (double of FICA on wages at 7.65%). Then it will be your regular income on which you will pay federal income tax and state income tax.

On your wages you will pay FICA at 7.65%, but your net federal income tax for 2007 won't even come out to be 10%. Assuming you are Single your standard deduction is $5,350 and exemption is $3,400, so your taxable income is the amount that exceeds $8,750. Then first $7,825 of taxable income will be taxed at 10%. Since you are working in 2007 for only 3 months, your taxable income may even be less than $7,825.
So it appears that in 2007 your total taxes will be less than 20%.

[AtlantaTaxExpert]

MukatA's comments are accurate and timely.

[ashayh]

Thank you both your answers.

MukatA: I am a little confused: Why do you say I have worked only 3 months in 2007? My H1 is from Oct 06. And I switched H1 sponsors in Oct 2007.

Thanks

[AtlantaTaxExpert]

MukatA probably mis-read your post.