FICA tax exemption

[Anonymous]

I have been in the US since August 2016 under F1 status. I'm currently working as STEM OPT.

After I filed my 2020 taxes, I learned that F1 status are exempt from FICA taxes so I talked to my employer and they changed my tax status so that for year 2020, I got a w2-c and for 2021, they gave me a refund and no longer withheld FICA taxes since May 2021. 

However, recently I learned that I'm no longer exempt from FICA taxes beginning 1/1/2021 since I'm considered a resident alien for tax purposes starting 2021. 

I talked to my employer but I quit and changed my employer recently so they told me they can't fix it since I'm no longer getting paychecks from them.

What is the best way to fix this and pay back the FICA taxes that was supposed to be withheld from my income this year? 

Should I just wait until next year when I file my 2021 tax return and fix it then? Or is there a way to pay IRS the FICA taxes that I was supposed to pay right now? 

Also, I understand that my previous employer may not be able to take away the FICA taxes from my paycheck but should they still issue me a w2-c for this year or no? 

[DanPaul02]

The IRS Direct Pay website  would be quickest and most easy for this situation.

[rjs]

There is no way for you to correct the error. The employer has to correct it. They can still make the correction, even though you no longer work there. The page at the following link on the IRS web site outlines the procedure for the employer. The IRS page has a link to Revenue Ruling 2009-39, which gives the details of the procedure for the employer.

Correcting Employment Taxes

There would be no reason for the employer to issue a W-2c for 2021, because they have not yet issued your W-2 for 2021. The W-2 for 2021 that they send you next January should show the correct amount of Social Security and Medicare taxes. All you will have to do is enter the W-2 as-is in your tax return.

Direct Pay on the IRS web site is for paying income tax, not FICA taxes. You cannot pay FICA taxes with Direct Pay.

[Anonymous]

Thank you for your reply!

I have a follow-up question to your reply. My employer said that the reason that they cannot fix this issue isn't only because I quit.

They said they cannot fix it is because there isn't a way for me to pay my employer the FICA taxes that should have been withheld for this year 2021. 

They told me they would normally fix this by taking the FICA taxes that I should have been paying from my paychecks but since I'm no longer working there and not receiving paychecks, there is no way for me to pay back and thus they cannot correct this.

But are you saying that my employer should be able to accept some other form of payment from me like a check or something?

Or are you saying that I don't necessarily have to pay back to my employer right now but after my employer corrects this issue and later when I receive my w2, it will show the correct amounts in Box 3 and Box 5, then am I supposed to pay all the FICA taxes that I didn't when I'm filing my 2021 tax return with that w2 next year? 

[rjs]

You can give them a check. That's the simplest way to handle it.

On the W-2, boxes 3 and 5 are the amount of wages subject to tax. The actual taxes are in boxes 4 and 6. Box 4 should be 6.2% of box 3, and box 6 should be 1.45% of box 5. Box 3 should not be more than $142,800 (for 2021), so box 4 should not be more than $8,853.60. Box 6 could be more than 1.45% if box 5 is more than $200,000. The amount that you repay should be equal to box 4 plus box 6.

You can pay back the employer anytime that you and they agree on. You should do it as soon as you can. If the FICA taxes had been correctly deducted from your pay, you would have paid it already. And the employer is not going to wait until the end of the year to send the payment to the government. The only thing you should be cautious about, since they seem to be unfamiliar with the procedure, is to make sure, before you pay them, that you and they have a clear understanding about what is going to be on your W-2, and that they are going to pay the FICA taxes to the government on your behalf.

You don't pay the FICA taxes when you file your tax return. You are paying the taxes now by paying the money back to the employer. They will send it in to the government, the same as they would if they had withheld it from your pay.

(Oddly, Revenue Ruling 2009-39 doesn't say anything about the employer getting the money back from the employee. It just talks about the employer paying the FICA taxes. But it makes sense that they would ask you to pay back the amount that should have been withheld from your pay.)

[Anonymous]

Thank you for your reply. I had additional questions from your reply.

I've tried talking to my employer again and told them that I heard from TurboTax that I should be allowed to send them a check instead of pulling it out from my paycheck since that's not possible anymore. They said they'll get back to me after checking but they sounded very reluctant about it and insisted that there probably isn't anything they can do.

If they keep on insisting that they can't fix this issue, is there another way to fix this? 

Will I be in big trouble if I don't get this fixed? 

[rjs]

You didn't hear from TurboTax. I don't work for TurboTax or represent TurboTax. I'm just a nameless person who answers questions here in the forum. You heard from an anonymous source on the internet. If you want a more authoritative source, consult a local tax professional. But I did refer you to Revenue Ruling 2009-39, which is the authoritative official IRS instructions for how the employer should correct the error. You can point out the Revenue Ruling to the employer, and suggest that they consult their tax adviser, accountant, or payroll service.

As I said earlier, there's no way that you can fix the problem yourself. If the employer refuses to fix it, I suggest that you just drop it and don't worry about it. I don't think you'll get in any trouble.