F1 to H1b transition and FICA taxes

[yashK]

Hello,

I am filling the taxes as Non resident. I shifted from F1 to H1b. It looks like my company has withhold FICA taxes from Oct. 1 2019. If I am filing as Non resident Alien, then will I receive the FICA taxes back.

@pk Do you know about this

Thanks 

[LinaJ2020]

As an H-1B holder, you might be a resident.  When did you enter the US with your F-1 visa?  And how long have you stayed within the US?

@yashK

[yashK]

I came in august 2015. I was on f1 till sept. 30 2019. I do not pass the substantial Presence test for year 2019 as I was on h1b for 90 days and rest of the days I was on F1. Thats why my company hold FICA taxes only from Oct 1 2019. But since I am filing taxes as non resident Alien , I think i might get the FICA taxes back. Not sure about it though

[LinaJ2020]

I would like to clarify.   Technically, you are considered a non-resident for five years from 2015-2019.  You are exempt from counting days for the F-visa and you did not fulfill the SPT Substantial Presence Test for the H-visa.  You are exempt from paying the FICA taxes while on the F-visa.  However, IRS requires you to start paying FICA after you change to your H-visa even though you might still be a non-resident for tax purposes.

To see the information from the IRS, click here: https://www.irs.gov/government-entities/employers-must-withhold-fica-taxes-for-aliens-who-change-vis...

You do have another option to file as a dual-status if you meet the rules.  See post from @pk below.

[Edited 4/6/2020 | 10:19 AM]

@yashK

[pk · Accepted solution]

@yashK , disagreeing with @LinaJ2020  --- based on our earlier discussion , you were a Non-Resident Alien for 2019 but under H-1B ( as an employee and not a trainee ) you are not immune to FICA taxes .  So yes your employer will withhold Federal, State and FICA taxes from the date of adjustment.    Also note ( and perhaps I should have pointed out earlier )  that a NRA you file form 1040-NR ( not supported by  TurboTax ).

You always have the option of  filing a form 1040 under the first year choice -- 1. you have been present  for 31 days  continuously;      2. have  been present at least 75% of the days in the test period of Oct.1 through 12/31/2019;  3. you have not been a resident / resident for tax purposes during the previous year;  4. you will be a resident for tax purposes by the time you file in April of 2020.   This may be advantageous for you  ( especially if you have had zero foreign income during 2019 ).  All you need to do is add a  note along with your return   stating the above items  in a letter and requesting that you wish to be treated as resident for tax purpose for 2019.   This of course means  you file by mail because that will get human intervention.

Namaste ji

[yashK]

@pk and @LinaJ2020  Got it. Thanks for pointing this out. But i am thinking of keeping it simple and filing as 1040NR. 

[LinaJ2020]

I have done some more research from the IRS resources and edited my answer above.  Sorry for the confusion. 

Due to the complexity of the process, it might be easier for you to file a Form 1040-NR as a non-resident.  As TurboTax does not support the form, you are advised to contact Sprintax which is affiliated with TurboTax to help our nonresident aliens with their US tax returns.

Or you can download the forms free from the IRS websites:

https://www.irs.gov/pub/irs-pdf/f1040nr.pdf

https://www.irs.gov/pub/irs-pdf/i1040nr.pdf

Please write back for any further questions.  

@yashK

[raghavgupta93]

I have a related question - I transferred from F1 to H1B status in late January 2019, so I definitely meet the SPT and, from what I can tell, will be considered a resident for 2019. What I'd like to know is whether I have to pay FICA on any pay I received before transferring to H1B status.

Thanks for your help!

[pk]

@raghavgupta93 , if the earnings prior to the adjustment of status was  for OPT type of work  ( generally termed as required training ), then you are not require to contribute FICA taxes  ( Social Security & Medicare ). Does that answer your query? or you need more on this  ( then please tell the type of work -- was this school related employment or was it a case of CAPGAP or similar  ).

Namaste ji

pk

[raghavgupta93]

Thanks @pk, that is what I would have thought - I was on OPT.

Followup - how do I take this into account when filing 1040 (i.e. part of my income is exempt from FICA)?

Thanks for your help.

[pk]

@raghavgupta93 , you should not have to do anything special.  Your W-2 ( assuming it is the same employer ( as at OPT), would adjust the Box-3 and Box-5 of your W-2 to account for this .  There should be a difference between Box-1 and Box-3 ( and generally Box-5 should be the same as Box-3  unless of course you are over the limit of Box -3 -- very well paid indeed ).   If your employer has not taken care of this  then you need a corrected W-2 from your employer  (note that when you contribute to FICA the employer has to also contribute an equal amount ).

Namaste

[raghavgupta93]

Thanks @pk. My W2 was indeed in error so I'll work on getting an updated one.

Thanks for your help. 

[ankrtemp]

---

@pk wrote:

@yashK , disagreeing with @LinaJ2020  --- based on our earlier discussion , you were a Non-Resident Alien for 2019 but under H-1B ( as an employee and not a trainee ) you are not immune to FICA taxes .  So yes your employer will withhold Federal, State and FICA taxes from the date of adjustment.    Also note ( and perhaps I should have pointed out earlier )  that a NRA you file form 1040-NR ( not supported by  TurboTax ).

You always have the option of  filing a form 1040 under the first year choice -- 1. you have been present  for 31 days  continuously;      2. have  been present at least 75% of the days in the test period of Oct.1 through 12/31/2019;  3. you have not been a resident / resident for tax purposes during the previous year;  4. you will be a resident for tax purposes by the time you file in April of 2020.   This may be advantageous for you  ( especially if you have had zero foreign income during 2019 ).

Hi @pk , can you please explain what kind of advantages?

 All you need to do is add a  note along with your return   stating the above items  in a letter and requesting that you wish to be treated as resident for tax purpose for 2019.   This of course means  you file by mail because that will get human intervention.

Namaste ji

---

[pk]

@ankrtemp , as a resident for tax purposes  , most of the credits and deductions are applicable, just like a US citizen -- the only limitations   are ones where  SSN and/ or immigration status are in the statutes/rules.  The one affects  many students  is the standard deduction - for Non-resident it is  always single ( even when married ) whereas for residents  single/married filing joint / HoH are all available.  Ditto for educational credits. etc. etc.  If you need more specific answer, please provide info about your particular situation