[youthebest]

Hello tax experts,

I need your advice. I'm so confused. I've read so many forums and websites on this question. Every one seems to have a different answer.

Here's my situation. I graduated from College in May '07. I've been living in the states for more than 6 years. Currently, I'm working on my OPT visa. When I first started working in Aug '07, I paid the FICA out of my first paycheck. Then, I told my employer that I am exempt from the FICA(didn't know about 5year rule that time) and got my money back and have not been paying the FICA since then.

Correct me if I'm wrong.
1. I am a resident( for the tax purpose) ,because I've been living in the US for more than 5 years. RIGHT?

2. Do I have to file my tax as resident? If yes, What should I do with my W-2 having $0 for the FICA? Should I just keep filing as resident or should I wait for my company to change my W-2 somehow?

3. I found this website. It looks very credible website(Miller Johnson attorneys and counselors) The paragraph 7 on the website says that a resident on OPT(+5 years) does not have to pay the FICA. (Miller Johnson - Publications - International Student FICA Exemption) Is this information correct?

4. My bank keeps saying they can't issue 1099 (interest income) since my residency status is non-resident. They would only give me W-8BEN form. Isn't this for a non-resident?

5. What would happen if I just go ahead(w/ FICA=$0) and file my tax as a resident. Is this going raise a red flag automatically and am I going to get into a trouble?

6. What would happen if I tell my employer about the residency this late of the year (2/10/08)? Do you think I can get fired because of this?

I am very frustrated with my first ever tax filing.
Please help me.

[MukatA]

What is your citizenship? When did you enter the U.S. on F1 visa?

[youthebest]

I have a citizenship in Korea. I entered the US on F-1 Visa in 2000.

I called the IRS today and found the solution, I think.
The guy said I have two options.

Option #1: File as a non-resident
Requirement: show no intention to stay in the US. Never applied for a permanent residency(green card or H-1 or anykind)
What to do: File 1040 NR-EZ/NR + Form 8843 + Form 8840
How: Even though I have been living in the states for more than 5 years, I am still considered as a student with F-1 visa/OPT. If I don't intent to stay in the US, I can submit Form 8840 (closer connection exception) to get approved for the exemption.

Option #2: File as resident
Requirement: have to pay FICA taxes
What to do: File 1040 /EZ/A
How: 5-year rule makes me eligible to file my tax as a resident. This allows me to get some education credits , etc..

I think I'm going to file as a non-resident.
I might not get as much money back as a resident but it looks like it's the one with the least hassle to go through.

[MukatA]

The tax treaty between Republic of Korea and the U.S. clearly states:
"An individual is entitled to the benefits of this exemption for a maximum of 5 years."
Your deduction under treaty is $2,000 ("Income from personal services benefits in the United States of up to $2,000 each tax year.").

1. So if you file as nonresident, you will get exemption of $3,400 and deduction of $2,000 plus state taxes deduction. (If you go through the instruction to form 8840, you will find that you are not eligible to file this form. It can be filed if you did not spend over 183 days in 2007 in US or it is allowed as per tax treaty.

2. If you file as resident, you get exemption of $3,400 and deduction of $5,350. (This appears to be the right choice).

4. For 2008, decide now. May be it is best to file as resident. In that case, inform your employer to deduct FICA taxes. They will also collect back taxes from Jan 1, 2008.