[pyjbz]

My wife changed her status from H4 to F1 in Oct 2006. In 2007, she worked as "Independed Contractor(self-employment)" using her F1-OPT. Under "Substantial Presence Test", she will be considered as non-resident. I work on H1B and am a resident.

1. Can I file as "Married filing jointly" and choose to treat her as "resident"?
2. If so, does she need to pay self empoyment tax(social security+medicare)?

I read this on IRS web site:

U.S. Citizens and Resident Aliens Abroad - Nonresident Alien Spouse

If you make this choice, you and your spouse are treated as residents for your entire tax year for the purpose of your federal individual income tax return, and for the purpose of withholding U.S. federal income tax from your wages. However for the purpose of Chapter 3 withholding you may still be treated as a nonresident alien. Refer to Withholding of Tax on Nonresident Aliens and Foreign Corporations (Chapter 3 of the IRC) in Tax Withholding Types. In addition, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. Refer to Aliens Employed in the U.S. – Social Security Taxes.

Any advise will be highly appreciated.

Thanks,
-PB

[AtlantaTaxExpert]

1) Yes

2) In my opinion, despite what have read, if she is treated as a resident alien, she MUST pay self-employment taxes. She has the option of filing her own tax return as a non-resident alien and NOT pay self-employment taxes.

See this link:

Aliens Employed in the U.S. – Social Security Taxes

Then look on the F/J/M/Q visa bullet and look at the LAST square bullet under "Limitations on exemptions".