Married filing jointly (h1b) and F1 visa FICA taxes question

[rtax1]

Hi,

I am an resident for tax purposes on H1b visa and my spouse is on F1 visa. Last year (2022) we filed taxes married filing jointly as resident. In the current year my spouse earned income through internship on which Social security and medicare taxes were withheld by her employer.

Question 1: We wanted to see if my spouse can get refund of social security and medicare taxes? If yes how?

Question 2: In the current year can she file as non resident return even though last year filed as married resident?

Thanks.

[DaveF1006]

No. Since you filed Married filing jointly in 2022, your spouse will need to pay FICA taxes. No refund is available.\

According to this Turbo Tax article, if you made the choice to file Jointly in a previous year, this election is permanent unless it’s suspended or revoked. Once revoked, the nonresident alien can’t elect to be treated as a resident in the future, even if married to someone else.

[rtax1]

so there is no chance for my spouse to be treated as non resident for 2023 calendar year and file separately? She wants to get refund of Social security and medicare taxes since an F1 student is not liable for payment of those taxes.

[Opus 17]

I think the issue of FICA taxes on an F-1 visa is separate from the residency issue.  

I agree that, having chosen to treat your spouse as a US resident for tax purposes, that is permanent unless you can get the IRS' permission to revoke it.  Exactly how you would do that is unclear.  It might be that you just file separate returns and include a written statement requesting to revoke your previous election, and see if the tax returns go through.  Or, it might be a more complicated process.  If you really want to revoke the election, you should get professional guidance.  However, being treated as a resident is not what triggered FICA withholding.  (The employer probably doesn't even know what you did on your tax return.)

On the FICA issue, F-1 students are exempt from FICA as long as their work is connected with their education.  If they work outside of their educational program, they are subject to FICA whether or not they are being treated as residents.  (In other words, residency is not directly connected to FICA, but rather, it is about the nature of the job and the relationship of the employer to the school.)

This is the same with students who are US residents--they are exempt from FICA if they work for their school as part of their degree program.  

This then goes to internships -- if an internship is arranged by the school and is a mandatory part of the degree program, it should usually be exempt from FICA both for US citizens and for F visa holders, but if the job is not arranged by the school and is not directly related to their degree program, it is probably correctly subject to FICA, both for US citizens and for F visa holders.

There is a form 843 that can be used to request a refund of miscellaneous taxes including FICA and Medicare tax.  You would have to very clearly describe the circumstances and include proof that the job was an official part of the student's education and should have been exempt from FICA and Medicare withholding.  I can't guess your chances of success.

@Hal_Al  do you have any further comment or clarification?

[Opus 17]

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@rtax1 wrote:

so there is no chance for my spouse to be treated as non resident for 2023 calendar year and file separately? She wants to get refund of Social security and medicare taxes since an F1 student is not liable for payment of those taxes.

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F-1 students are liable for FICA if they work outside their student authorization.  It is completely separate from the election to be treated as a US resident for income tax purposes.   If the "employer" made a mistake, the first step is to go back to them.  (You should have done this when you got the first paycheck.)  However, internships are more complicated than they seem, and you would have to do more research (or consult a professional) to determine if this job should have been exempt.

More specifically, even if you reverse the election to treat your spouse as a US person for taxes (assuming that is possible), that by itself will have no effect on the social security and medicare withholding.  

[rtax1]

She worked within her student authorization itself. I will have her reach out to her employer.

[Opus 17]

This is what the IRS says about revoking the election to file as a US person.

Ending the Choice

Once made, the choice to be treated as a U.S. resident for federal income tax and withholding purposes applies to all later years unless suspended (as explained above) or ended in one of the ways shown below:

• Revocation by either spouse
• Death of either spouse
• Legal separation
• Inadequate records

For a more detailed explanation of these items, refer to the section titled "Ending the Choice" in Chapter 1 of Publication 519, U.S. Tax Guide for Aliens.

CAUTION! If the choice is ended for any of the reasons listed above, neither spouse can make this choice in any later tax year, even if married to a different individual – it is a once-in-a-lifetime choice.

@DaveF1006 

[rtax1]

Hi Sorry to reask. She did internships with an employer outside of school. She was granted 1 course credit for doing this internship. I have asked several individuals and dint get a clear if she is exempt from FICA or not. What should we do? Please help.

[Opus 17]

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@rtax1 wrote:

Hi Sorry to reask. She did internships with an employer outside of school. She was granted 1 course credit for doing this internship. I have asked several individuals and dint get a clear if she is exempt from FICA or not. What should we do? Please help.

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The only way you could get the FICA refunded is either by convincing the internship employer to refund them, or by requesting a refund using form 843.  If you can get a professional to offer a written opinion, that may help, or a professional can help with the forms, but ultimately it will turn on can you convince the employer, and if not, can you convince the IRS?

There is a general student exemption from FICA under section 3121.  Off-campus work does not qualify, even if it is educational.

There is a specific exemption for F-1 students who are in the US less than 5 years.  The rules for that are listed here.

https://www.irs.gov/individuals/international-taxpayers/foreign-student-liability-for-social-securit...

The employment would have to fit in the category of "Off-campus student employment allowed by USCIS" or "Practical Training student employment on or off campus".  

Ask the employer first.  If they refuse, you can file a form 843.  This is not included in Turbotax, you will have to do it yourself or hire a professional. Pay attention to the "explanation." You will want to write a detailed explanation that includes a copy of the W-2, documentation of her F-1 status, copies of correspondence with the employer trying (and failing) to get a refund, and possibly a course transcript or other documents from the school showing this internship was for credit.  Mail your documentation and the form to the IRS at the address on the instructions.  

There is no way to get this tax refunded as part of your "regular" form 1040 tax return. 

See also this blog post.

https://blog.myrawealth.com/insights/students-on-an-f1-visa-dont-have-to-pay-fica-taxes

[rrj]

Hi @Opus 17, I have a follow up question on this. I am in a similar situation. In my case, my spouse's employer did not deduct FICA since she was a non-resident alien (on F1 OPT visa) and working under the practical training authorization and stayed in the US for less than 5 years. So, her W2 shows 0 for social security and medicare taxes. We are filing jointly.

For tax purposes, is there a difference between 'considered a non-resident alien' (for joint filing) vs 'become a resident alien'? The following link shows

https://www.irs.gov/individuals/international-taxpayers/foreign-student-liability-for-social-securit...

"Generally, foreign students in F-1, J-1, or M-1 nonimmigrant status who have been in the United States more than 5 calendar years become resident aliens for U.S. tax purpose if they meet the “Substantial Presence Test” and are liable for Social Security and Medicare taxes. (unless they are exempt from FICA under the "student FICA exemption"." But it does not mention that, individual becomes resident alien if they file jointly with a resident alien. 
Therefore, my understanding is: if an individual is treated as resident alien for joint filing (but is non-resident alien otherwise who satisfies the F1 exemption), the resident is exempt from FICA tax. Please correct me if I am wrong. Also, in my case, do we need to include the 8843 in this case?

Thanks for your help. 

[DaveF1006]

If your wife is considered a resident for tax purposes, she is not required to file form 8843. Also, the wife was not required to have FICA deducted from her taxes if she makes this choice.  Here is the procedure for filing your return jointly.

1. Prepare your return in Turbo Tax and choose Married Filing Jointly as your filing status. Leave your spouses SSN number blank when it asks for it unless she has one.  if she has one, report it.
2. When you get to the Let’s get ready to e-file screen, select File by Mail.
3. Attach a statement to your return, signed by each of you that states that one of you is a U.S. citizen and the other is a nonresident alien and that you’re electing to both be treated as U.S. residents for tax purposes. You can include in the explanation that your wife has been exempt and FICA taxes were not withheld from her check.
4. Include the full name, address and Social Security number (or Individual Taxpayer Identification Number) of each spouse.  
5. Mail the return to the address on the instruction sheet that prints with the return

For 2024, have your wife inform her employer that FICA taxes will need to be taken from her check because she is now a resident for income tax purposes.

@rrj 

[skat2]

Hi RRJ,

I'm in the similar situation as you are and we filed 2022 and 2023 both Jointly. Prior two employees of my wife never withheld FICA taxes. 

Did your wife ask the employer to start deducting FICA taxes? 

I'm having second thoughts on if it's wise to file 1040X amendment for both 2022 and 2023 to change filing status from MFJ to MFS. So that there no issues.

What did you end up doing?

Thanks,

SK