Employer has not withheld social security and Medicare taxes after visa status change from F1 to H1-B. How do I pay the taxes?

[asct19]

Hi!

My employer wasn't aware of my visa status change from F1 to H1-B and hence has not withheld any FICA taxes from my paycheck for the months of October, November and December 2020. Is there a way I can pay these taxes upfront while filing my returns ?

[DaveF1006]

Yes but it is a procedure that takes a lot of work. First of all:

1. You need to speak to your employer to get this corrected for 2021 and going forward.  Also, they need to assist you with resolving this issue for 2020.
2. Paying FICA and Social Security taxes is not as straight forward as your regular income taxes. If you make additional tax payments, they need to be directed at Medicare and Social Security in your name. 
3. I've attached IRS information to assist you in getting this issue resolved with your employer: Please review this link. 

The IRS will process your tax return the way it is filed now.  If they review and decide to make adjustments, they will send you a letter describing their adjustments.  However, they may continue to process and send you a refund. After you receive a corrected W-2, you can amend your 2020 return. The following information will assist you in amending your return:

Open this TurboTax link and follow the instructions to add your corrected W-2 and amend your tax return.

1. Log into turbo tax
2. In your landing page, scroll down to the bottom of the page.  You will see an option to amend (change) 2020 return
3. Go to federal>income and expenses>JobW2>revisit
4. Delete the old W2 and then enter the corrected W2.

You especially need to wait until the IRS finalizes your original return and you receive your refund or your payment is processed.

You will mail your amended return to the IRS.  They do not accept electronic amendments.

[asct19]

Hi!

Thanks for getting back. However, I have a couple of follow up questions:

1. I did contact my employer and got it corrected for 2021. But when I asked them if they can update the 2020 W2 such that it reflects the FICA and social security taxes, they mentioned its not possible to correct my 2020 W2 since it was issued correctly and the FICA taxes were not withheld since my visa status wasn't updated to them. 

So in this case, if they are not issuing me a corrected W2, is amending my returns still an option? 

2. I did go through the IRS link and it suggests I fill form 4852. Is this what I should be doing to pay my FICA taxes ? Since both the federal and state taxes have been withheld accurately from my paycheck.

3. When you say IRS will be reviewing my tax return the way I have filed now (w/o FICA taxes) and send me a letter with adjustments will it also include a penalty or will it just be the taxes I owe to them? 

Thanks a lot for your help!  

[DaveF1006 · Accepted solution]

It depends. if you you know how much FICA taxes was withheld in 2020, you can fill out the 4852 for 2020. Just remember, when you amend your return to file the 4852, delete the other W2 so that only one form will a in the return. Make sure you have a copy of your original W2 so you can enter that information on the 4852 along with the FICA information.

As far as any adjustments, there may or may not be a penalty. Just make sure you delete the original W2 because you are updating iwth the 4852. You don't want both tax forms in your return when you amend it.  

[asct19]

That sounds good! Thanks a lot for your help, appreciate it! 

[DaveF1006]

@asct19   This is a parting state that my colleagues have suggested I pass on to you.  Pursuant to § 31.6205-1(b), an employer that has underreported and underpaid FICA tax with respect to any payment of wages can correct the error as an interest-free 4 adjustment if the error is ascertained after the return reporting such tax has been filed. An error is ascertained when the employer has sufficient knowledge of the error to be able to correct it." https://www.irs.gov/pub/irs-drop/rr-09-39.pdf  Please look at this link for more details. 

[asct19]

This helps! Thank you so much!

[arash_asadabadi1992]

 @DaveF1006 , I'm in the same boat with @asct19  but I haven't filed my 2020 return yet. 

 I was a NR before 2020 so my company did not withhold any FICA for 2020 but my status actually had been changed to Residency since 2020. Now they say I should still use the current W2 with blank box3 and box4 and later IRS will tell me what to do. Is this correct? or should I ask them for a new W2? Since we are already in April, that might be tricky. Or should I use the current W2 version and add form 4852 with my return? 

[DaveF1006]

Yes, you can take the advice and report the W2 as is and wait for the IRS to instruct you further. The unpaid FICA taxes is a Social Security issue rather than a tax issue.If you have a social security office nearby, I suggest you visit them, explain your dilemma, and then ask advice on how you can make restitution. This may be your best course of action.

[Edited 04-15-2021|01:17 PM PST]

[arash_asadabadi1992]

Thanks a lot! They did not deduct any FICA as they didn't update my visa status so both social security wage and social security tax in w2( box 3 and 4) are empty.

If I file the tax return with the current w2 normally , is it possible that I face penalties when IRS wants me to pay the FICA for 2020? my understanding from your response is what you said this is a SSA problem and I can pay them later

[DaveF1006]

Yes there may be because IRS will send a demand notice informing you that you have ten days to make a deposit of face a 15% fine. I would strongly encourage you however to contact the Social Security Administration and get this resolved as soon as possible to avoid this.

[rpincha10]

Could you please share how did you resolve it, been in the same boat now.

[rpincha10]

Could you please suggest how did you resolve this issue, in the same boat currently

[DaveF1006]

To clarify, what was the period of your F-1 exemption period? 

@rpincha10