Non Resident alien to Resident Alien

[raj98]

Hi,

I just wanted get an idea with respect to the FICA tax exemption, is this still valid for me?

Here is my case study:-

I came to US on a J1 student visa in Dec 2019 and went back in May 2020. Then I procured F1 visa and re-entered US in Jan 2021 and I've been here since. 

Until last year, I used to file my returns on Sprintax but this year Sprintax suggested that I am now a resident alien for Tax Purposes. 

I am currently doing by STEM Optional Practical Training right now, and hence there are no FICA taxes on my W2. 

I am unsure how to liable to pay FICA taxes when I file my return as a resident this year, or Does the exemption still apply to me since I am in Optional Practical Training right now. 

Please clarify this, it is very confusing as IRS website says that there is student FICA exemption for students on Practical Training.

My country is India, and I do not understand the current tax filing situation.

[pk]

@raj98 , since you are still a student  ( in training  -- OPT/STEM ) you are still immune from FICA regs  -- see this :

Student FICA exception | Internal Revenue Service

On your W-2  Box 3,4,5 and 6 should be empty.  So when you enter you Social Security Wages as  blank, TurboTax  may ask you to verify this   but will also compute NO Social Security taxes. Ditto for Medicare  wages and tax.  Thus there should be no issue your recognizing the  FICA exception.

Does this help ?  Is there more I can do or you ?

Namaste 

pk

[raj98]

Thanks, this is helpful.

I am working under my STEM Optional Practical Training, this still counts in exemption from FICA right? As the university sponsors my STEM OPT and I work at a company. 

@pk 

[pk]

@raj98   that is correct  -- you are not an employee of the entity -- you are in training.  And still a student.

No worries.

Is there more I can do for you ?

pk

[raj98]

That sounds right, thanks a lot  @pk ! It is a big breather for me since resident filing is new to me.

That will be all I needed to know, I will file my return shortly.  

[pk]

@ you are welcome -- till next year -- Namaste ji --pk

[raj98]

Hi @pk, just wanted to confirm all of this applies even if I was on J1 in 2019 and then transitioned to F1 in 2021, correct ?

I've been going through many posts in the community, maybe they are older, but many posts are making me  confused with 5 years on student visa, substantial presence test and exemption of FICA as terms. 

[raj98]

Also, I wanted to know what should I put for occupation and is there any other form I need to put as I am now a resident for tax purposes.

[pk]

@raj98 , yes  I agree that there are issues surrounding  the five year exempt period -- it is generally  five calendar years when one  enters as a student.   However,  the issue of FICA exception is not tied to  Exempt  ( i.e. exempt  from counting days present ) status.    I went by your statement that Sprintax has  confirmed that you are out of the exempt period and therefore you have to file as a resident for tax purposes.   

As long as you maintain your student status and  in training  you are immune from FICA requirements.  If , however, you become an employee ( work visa ) all this changes .  I am assuming here that your EAD  is related to OPT/STEM OPT / CPT  and thus  you are still a student/trainee.   Just because you are filing as resident for tax purposes does not  take your  FICA exception away.

Does this make sense ?

Namaste ji

[raj98]

Yes @pk, my EAD is tied to my STEM OPT currently, and I've not been on any work visa apart from this. 

I will go with your confirmation. 

Please tell me what should I fill as my occupation, are there any forms I need to fill apart from 1040 and should I report my worldwide income to FBAR or 1040.

[pk]

@raj98 , you are a student;  while you do come under FBAR and FATCA regs but I am assuming here that you do not have any other taxable income ( except for  the training income ) from foreign sources.   FBAR   ( with threshold of  US$10,000 ) is unlikely  ( do you really have   Indian bank accounts  -- own or signature  authority over )  and FATCA  ( with a much higher threshold and depending on your filing status -- you are single right ) is  more unlikely.  Most students do not  face these regs --- generally pretty poor .

No there are nothing else that you have to do or recognize.

[raj98]

Okay, thanks for the clarification. Yes, I don't have any other income apart from the one from training. 

Last question, @pk I also don't have to fill form 8843 that I used to fill with Form 1040NR, correct?

[pk]

@raj98 , that is correct -- you are no longer an exempt status person.

pk