[nihar15]

Hello,

Searching on the group I see some discussion on a similar topic for last year so would like to ask your advice.

I have been on H1b visa for the entire year and working in NJ, Got married to my girlfriend on Nov 2007 who is working in NC.

She is on F1-OPT since July 2007 so does not have to pay SS/Medic. How should I file my taxes? I believe it should be joint but how do I prove that she is not supposed to pay SS/Medic or should I just trust the IRS to understand looking from the filing.

Also, can we file taxes independently?

Thanks
Nihar

[AtlantaTaxExpert]

Nihar:

You have two options:

1) You can file jointly and she CHOOSES to be treated as a resident alien for all of 2007. Since this choice is made AFTER the end of the 2007 tax year (you file the return no later than 15 April 2008), your wife will NOT have to go back and pay FICA (Social Security and Medicare) taxes for 2007, but she WILL have to begin paying these FICA taxes starting on 1 January 2008 because she VOLUNTARILY CHOSE to be treated as a resident alien.

2) You can file as a resident alien, but you must file Married Filing Separately. She can file as a non-resident alien, which will allow her to retain her exempt status and NOT be subject to FICA taxes as long as she is under her F-1 visa. You can claim her as a dependent on your return if that is more advantageous for you as a family, but if you do that, she will NOT be able to claim herself on her own return.

Assuming you are both from India, it would appear at face value that it makes more sense to file SEPARATELY so your wife can retain her exemption from FICA taxes.

However, if you file jointly, you CAN claim an Education Credir or deduction for her college tuition. She CANNOT claim that credit/deduction if she files as a non-resident alien, nor can YOU claim the Education Credit/deduction with her as your dependent because of your Married Filing Separately filing status.

You may want to model all of the various iterations to determine which is best tax-wise. I can do such modeling for a fee.

If you are interested, contact me at [email protected] for details.

[MukatA]

If you file as Married Filing Separately, you can't claim your spouse's exemption since she has her own income.
Publication 17: Your Individual Income Tax; Chapter 3, p. 25, center column - Your Spouse's Exemption.

[AtlantaTaxExpert]

MukatA is correct. I am so used to clients having non-working spouses that I failed to factor in her OPT work and salary.

[nihar15]

Thank you guys. I really appreciate your reply.

[nihar15]

I am curious about your Answer 1. I know you have stressed on the "WILL" but I still want to understand better.

Here is my doubt, when I faced a situation in 2005 where half year I was on F1 and then on H1 for rest of the year, I did a dual status filing so I only paid FICA for the time I was on H1.

So my question is why can't we do a joint filing in 2007 (and get away with not paying FICA for her for the entire year since we got married in December) then in 2008, we can do a "Married Seperate" filing and she can do her "dual status" thing as I did in 2005.

[Visa Taxes Expert]

Hello

You can file a Married Filing Jointly, with Form 1040, since you qualify as a Resident Alien in H1B based on Substantial Presence Test.

You cannot deduct FICA for your wife, if you file jointly this way, but this is the straightforward and right choice.

Don't ever choose Dual Status, it is risky and has no advantages.

My sincere advice. Hope it helps!

[AtlantaTaxExpert]

Sorry, Nihar, you cannot have it both ways.

Either you file jointly and she pays the FICA tax, or you file separately wth her filing as a NRA so she can avoid the FICA taxes.

The IRS WILL consider her NOT telling her employer about her resident alien status as tax fraud.

[MukatA]

Nihar:

You have two options:

1) You can file jointly and she CHOOSES to be treated as a resident alien for all of 2007. Since this choice is made AFTER the end of the 2007 tax year (you file the return no later than 15 April 2008), your wife will NOT have to go back and pay FICA (Social Security and Medicare) taxes for 2007, but she WILL have to begin paying these FICA taxes starting on 1 January 2008 because she VOLUNTARILY CHOSE to be treated as a resident alien.

2) You can file as a resident alien, but you must file Married Filing Separately. She can file as a non-resident alien, which will allow her to retain her exempt status and NOT be subject to FICA taxes as long as she is under her F-1 visa. You can claim her as a dependent on your return if that is more advantageous for you as a family, but if you do that, she will NOT be able to claim herself on her own return.

Assuming you are both from India, it woudl appear at face value that it makes more sense to file SEPARATELY so your wife can retain her exemption from FICA taxes.

However, if you file jointly, you CAN claim an Education Credir or deduction for her college tuition. She CANNOT claim that credit/deduction if she files as a non-resident alien, nor can YOU claim the Education Credit/deduction with her as your dependent because of your Married Filing Separately filing status.

You may want to model all of the various iterations to determine which is best tax-wise. I can do such modeling for a fee.
If you are interested, contact me at [email protected] for details.

What AtlantaTaxExpert has suggested seems to be your best choice. You file as resident and your spouse files as nonresident. If she is from India, she will still get standard deduction ($5,350) as per treaty (so she also files 8833) and exemption deduction ($3,400).

[AtlantaTaxExpert]

Agreed, but Form 8833 is not needed.

Form 8833 is used in cases where the exemption being claimed in somewhat unique.

The claiming of the standard deduction by India students is so accepted that it is cited in IRS Pub 519.

[Visa Taxes Expert]

Agreed!

[nihar15]

Thanks for all your help guys. I was going to file separately for 2007 but now there has been more complication in 2008 to this issue thanks to almighty USCIS :mad: which is making me rethink how to file for 2007. Different story, will spare you guys the details

She was on OPT until March 5 2008 From then on H4 so March 5 2008 was her last working day (hopefully H1 in Oct 2008 so she can again start work.). That means she will pass the substantial presence test for 2008 so will have to file as resident-alien in 2008 even if she does it Married-filed-separetly. Am I right??? That means she will have to pay FICA for full 2008?? Another twist is , her employer has not withheld FICA for Jan/Feb 2008.

So to re-iterate my question
1. Will she have to pay FICA for entire 2008 if she files separately in 2008? If so, how will we handle Jan/Feb.
2. If #1 is true, I might as well file jointly for 2007 since her salary in 2007 was quite less which will help me save some tax AND she won't have to back-pay FICA for 2007 since we got married in Dec 2007.
3. If I file jointly for 2007, that means she definitely has to pay FICA for 2008. How will we handle Jan/Feb FICA payment since it has not been deducted?

[nihar15]

Hello,

I understand everyone is busy with tax season in full swing but will appreciate if someone can guide me on this.

Thanks
Nihar

[nihar15]

Hello,

I understand everyone is busy with tax season in full swing but will appreciate if someone can guide me on this.

Thanks
Nihar

[avnish]

AtlantaTaxExperts/Nihar,

I have similar situation, and I checked with IRS regarding same --

1) You can file jointly and she CHOOSES to be treated as a resident alien for all of 2007. Since this choice is made AFTER the end of the 2007 tax year (you file the return no later than 15 April 2008), your wife will NOT have to go back and pay FICA (Social Security and Medicare) taxes for 2007, but she WILL have to begin paying these FICA taxes starting on 1 January 2008 because she VOLUNTARILY CHOSE to be treated as a resident alien.

If you file married jointly, your wife WOULD NEED TO PAY FICA taxes back to IRS on her 2007 income under F1-opt. For details, you can check Publication 519 pg 48 2nd para under student and exchange visitor. Advantage would be that you will get education credit -- so check which is better tax wise.

To pay these taxes, form 8919 and SS-8 needs to be filed. But issue is that these forms are for independent contractors - thus softwares like turbotax will add any income put on this form in 1040 - thus double counting as you are not putting new income but number just to calculate FICA.

DOES SOMEONE KNOW IF THERE IS SOFTWARE OR WEB-FILING WHICH HANDLE such situation along with election of non-resident to be resident in joint filing?

[MukatA]

Reply yes it is not Form 8833, it is Form 8843.