Employer did not withhold FICA taxes after taxresidency status changed

[ss1811]

Hi!

I am on an F-1 visa and was exempt from FICA taxes through 2020. I should be paying FICA in 2021 because I am a resident alien for tax purposes now, but my previous employer who I worked for until June 2021 did not withhold these taxes for 2021. I misunderstood the tax residency rules and my employer also did not catch this mistake. I only discovered the mistake after leaving the employer. I’m not sure how to fix this error. Any help would be appreciated!

[pk]

@ss1811 , you will have to provide more on your situation ----

which country are you from?  When did you enter the USA with F-1 and was this your first  entry?  Are you single ? Your earnings for 2020 was   part of a training program  or what?  Are you still F-1?  Are you still working with DHS permission / school or training related or what?

It is possible to be  a resident for tax purposes, be on F-1 and still be exempt from FICA -- depends on facts and circumstances -- therefore the questions.

[ss1811]

@pk thanks for the response. Details:

- I’m from India

- My first entry in F-1 status was in Sep 2016

- I am single

- Earnings in 2020 were partially from an on-campus job on CPT, and partially from a job on post-completion OPT. My earnings in 2021 were on post-completion OPT (I’m only concerned about 2021 taxes)

- I’m still in F-1 and working with DHS permission on OPT

[pk]

@ss1811 , first Namaste

Second -- I am not sure I am clear when you say that  some of your earnings  during for 2021 would be  "post OPT" i.e.  from gainful employment which may be subject to FICA,  while you say you are still working with DHS on OPT ( extending? ). 

What I get ( and that is why I want to be certain that my understanding is correct ) is that  during 2021  you completed your OPT and then started working for an employer as an employee ( not trainee / co-op etc. etc. ) while you are still trying to get approval for additional  OPT status.  If this is true  and actually FICA is due, then you employer whom did not withhold the FICA can go ahead  and pay his share of FICA and you can either pay that through him or you can pay that at the time you file your 2021 return next year.  TurboTax supports  1040 returns and  does  tell of the  deficient  FICA amount  as  taxes due.

Does this make sense?  Is there more I can do for you ?

Namaste

pk

[ss1811]

@pk To clarify, I have been working on OPT since Aug 2020. My OPT authorization is till Aug 2021. I have applied for the STEM extension and am continuing to work on OPT.

If I pay with my 2021 tax return, will my employer have to update my W-2 to reflect the additional FICA taxes?

[pk]

@ss1811 , if you are still on OPT, then  you are exempt from  FICA taxes ( both you and your employer ).  As far as I know  ( I will have to look at the  statutes / rules on this  again )  training  using STEM category, you are still immune from FICA.   So I do not expect that you will have to pay any FICA in any case.  Will come back to you in a few days --- please excuse

Namaste

pk

[ss1811]

@pk Thanks for the insight! I was just wondering if you'd had a chance to look at the rules again? Since I've been in the US on an F-1 for more than 5 calendar years, I do believe I don't qualify for the exemption anymore. Please let me know if otherwise.

If I do have to pay FICA, I'm not sure what the process would be. Would the employer have to update my W-2 and I pay the remainder with my tax return? Or is it something else?

Really appreciate your help!

[pk]

@ss1811  my very humble apologies  --- I had looked over the material but somehow forgot to  come back to you.  The most applicable  references are  --> 

https://www.irs.gov/pub/irs-drop/rp-05-11.pdf

https://www.irs.gov/government-entities/federal-state-local-governments/student-fica-exception

https://www.irs.gov/individuals/international-taxpayers/aliens-employed-in-the-us-social-security-ta...

Basically what this boils down to is ---- (a) the  F-1 student based FICA/ Medicare  exemption runs out once the  taxpayer meets the Substantial Presence Test  (SPT);  (b) Continuance as F-1 student while on training  may still allow the exemption to continue  ONLY if the "employer' qualifies  and the "employee" is NOT a "professional" employee.  There are lots of "ands", "ifs" and "buts" involved but suffice it to say that if your OPT / STEM training is  approved by the USCIS and is with an educational/ research institution  you are  most likely immune from FICA/MEDICARE.   I would suggest  very strongly to consult with  your foreign student office  -- they must have had this situation earlier and generally are well versed  in these subjects.   Going through the details  in this forum  will be too involved/ complicated ---- and  more than that we cannot  provide professional advice here.  Another option is to contact your school law college -- they may have  people well versed  in this  and definitely have the wherewithal to stand / represent you in this.

If on the other hand you do not want to pursue this anymore and just pay the FICA  ( and be done with it ), I would suggest that  you talk with your employer  as to the best course  to pay the taxes due --- he has to also pay some  ( even if you reimburse him for his share)   and be protected from IRS  levies for not complying.

Is there more I can do for you ?

Again my apologies  for being tardy/negligent.  Namaste

pk