[Kukulkan]

I was on F1+OPT in 1999-2001.
Then 2001-2006 I was on H1B
I went back on F1 in 2006
Graduated in 2008 April and working on OPT since July 2008.

My wife was on H1 from 2002-April 2008

1. 1

Till last year (2007) I have always filed 1040 as resident- Married Filing Jointly
Even last year in 2007, I filed MFJ as resident since my wife was on H1 throughout 2007 although I was on F1 in entire 2007. Did I file my taxes incorrectly for 2007?

1. 2

I filed 1040 for 2007 taxes and got deduction on my tuition (continuing education). During 2007, I completed paid internship but the internship company withheld social security and medicare which I did not claim back since I was filing as resident for 2007. Does this make sense?

1. 3

Now it gets tricky. In 2008 April, my wife quit her job and gave up her H1B visa and came on F2 dependent visa. So, now for whole 2008 I was on F1 visa but my wife was on H1B from Jan-April and then on F2 from May-Dec. How do I file? Do I file as 1040NR non-resident now? Won't IRS get confused as to why these guys were filing as resident and now all of a sudden non-resident?

1. 4

My current employer (OPT) has not withheld any social security or medicare taxes for 2008. Now depending on the answer to my question above, I will file either 1040 or 1040NR. If I file 1040, as a resident, IRS will see that I have not paid social security and medicare and it will raise a red flag (audit candidate). But, if I file as 1040NR, I will not be able to take tuition deductions and I paid significant tuition for business school. What do I do?

Appreciate any recommendations/suggestions you can offer.

Kukulkan

[AtlantaTaxExpert]

1) You filed correctly.

2) You MAY be able to get a refund on the FICA taxes withheld; see link below:

Nonresident Spouse Treated as a Resident

3) You can STILL file as a resident. If you did so, however, you undercut any chance of getting a refund of your 2007 FICA taxes.

4) I cannot answer for sure, because I do not know how much was withheld for FICA in 2007, but filing as a resident is the least complex answer. Your chances of recovering the FICA taxes for 2007 are about 50-50 at best, while filing as a resident and getting the tuition deduction is a sure thing.

[Kukulkan]

Thank you so much AE.

So, how do I reclaim what I paid in FICA in 2007? Since for 2007 and for 2008, I filed as a Resident- 2007 because my wife was on H1 and 2008 because I had a choice to file as a Resident or as a Non-Resident. Of course, I chose to file as a Resident for 2008 because I could claim tuition deduction.

How can go back to 2007 taxes and get refund for what I paid in FICA? You said I have 50-50 chance. What do I need to do? Do I need to go back to my internship employer and ask him to pay me my FICA withholdings?

Thanks again,
Sarang

1) You filed correctly.

2) You MAY be able to get a refund on the FICA taxes withheld; see link below:

Nonresident Spouse Treated as a Resident

3) You can STILL file as a resident. If you did so, however, you undercut any chance of getting a refund of your 2007 FICA taxes.

4) I cannot answer for sure, because I do not know how much was withheld for FICA in 2007, but filing as a resident is the least complex answer. Your chances of recovering the FICA taxes for 2007 are about 50-50 at best, while filing as a resident and getting the tuition deduction is a sure thing.

[AtlantaTaxExpert]

Sarang:

Your first course of action would be to request the refund from the employer. The IRS requires this, and it is both easier and faster for the employer to get the money back than it is for you. Further, the employer gets money back as well, so he has an incentive to work with you.

If the employer says no, then get the refusal in writing and submit Forms 843 and 8316 plus several support documents to request the FICA tax refund.