[portakal]

Hi,

I am an international student who did an internship using CPT this summer. My employer did not withhold FICA taxes from my wages or the sign on bonus I received in December.

Prior to school, I filed my taxes as a resident alien and last year (F-1 status but all wages from H-1B period), I filed jointly with my husband again as a resident alien.

In November 2007, I filed for "adjustment of status" for permanent residency. From what I read, as a result my F-1 status is terminated immediately. My question is how do I treat wages I received under F-1 status and the sign on bonus I received in my new status with respect to FICA? Do I need to pay them back? In an old post, I read that even though I should be a resident alien for tax purposes, being a student in F-1, allows me to not pay FICA. Does this apply to me?


Thanks!

[AtlantaTaxExpert]

Because you filed jointly with your husband, you CHOSE to be treated as a resident alien for 2006.

That made you LIABLE for FICA taxes in 2007 even though you were on a F-1 visa (your F-1 visa was still in effect; you just voluntarily removed yourself from the exempt status that the F-1 visa normally confers on you when you file jointly with your husband).

You have the legal obligation of informing your employer of these facts so that they can (and probably will) impose the FICA taxes on your internship salary PLUS your sign-on bonus retroactively. Once you inform your employer (do it in writing and keep a copy), you have met all of your legal requirements.

If your employer fails to collect the FICA taxes retroactively (they may not because of the extra taxes THEY must pay, plus fines and interest), the IRS will NOT HOLD YOU RESPONSIBLE for these FICA taxes.

The IRS position on such matters is CLEAR: It is the EMPLOYER's responsibility to properly determine their employee's status, to collect any FICA taxes due from the employee's salary, match whatever FICA taxes are collected, then promptly pay these taxes, usually on a monthly basis. If this is NOT done, the IRS holds the EMPLOYER responsible for any unpaid taxes, plus interest, plus any late-payment penalties PLUS fines (which can be substantial).

Further, if the employer fails to retroactively collect the FICA taxes by 31 January of the following year, they have NO LEGAL STANDING to collect these taxes retroactively from you at any time AFTER the 31st of January of the year following the tax year in question.

The employer's only defense in such cases is if they are intentionally misled by the employee about his/her visa status.

That is why I stated above that you must inform your employer about your changed tax status in writing.

Please let us know what happens in your case.

[MukatA]

I think that portakal was required to submit form W4 to the employer.

[AtlantaTaxExpert]

The W-4 in no way affects FICA tax withholding.