Social security and medicare question

[manukris]

Because of my visa status, my employer did not withheld FICA and Social security taxes for the year 2022. However, they were incorrect in doing so (as i am considered a resident for tax purposes, irrespective of my visa status, since 2022 is my 6th tax year). For the year 2022, what are my options? Can i pay the IRS directly or do I have to go through my employer? 

[Anonymous_]

@pk?

[pk]

@manukris , based on your post I am assuming you are here on F-1 visa and thus  had five years  of exempt status --- please confirm  or modify ?

And now you are working on H-1 or EAD and essentially on OPT or similar -- confirm or modify ?

If on  practical training or similar , even if you are a resident for tax purposes  ( you are here "very" temporarily and generally immune from FICA  ( Social Security & Medicare ) taxes -- shared  50-50 between the employer and the employer.

Also which country  are you citizen of  and were you there a resident just prior to move to USA ?

I will circle back once I hear from you -- yes ?

[manukris]

Hi @pk ,
Yes for the year 2022, I was on F1-OPT and had already five years of exempt status (Filed taxes for the year 2017. 2018, 2019, 2020, 2021 as non-resident 1040-NR). For the year 2023, I changed my status to O1 (which is very similar to H1). 

So to answer your question, for the tax year 2022, I am on F1-OPT. The employer thought that I was on FICA tax exempt status and did not withheld my FICA. However I already had my five years of exempt status.  Hence, I am confused on what to do. From what you are saying, IRS wont hold me for not paying FICA?
I am a citizen of India. Yes, I was a resident there before my F1 status. Thank you for the information.

[pk]

@manukris , Namaste

1. for the 2022, since  you were  on OPT  but a resident for tax purposes, you are immune from FICA taxes  ( because this is training).  You were probably working  ( OPT ) with EAD in place.

2. For 2023 onwards though because you are  on work visa  and if you meet the Substantial Presence Test  for the taxable year you would be subject to Federal, State and FICA  ( Social Security & Medicare ) taxes just like an American citizen / GreenCard person ( US person ). 

Is there more I can do for you ?

Namaste ji

pk 

[manukris]

Thanks @pk and Namaste , that makes a lot of sense. Is there an option in turbotax i can specify this? Since I am resident for tax purpose, how would i specify that im on OPT and hence FICA doesn't apply in my case? I still would have to file 1040 right and not the 1040-NR? Thanks for all your help. 

[manukris]

@pk While reading this page, it specifies that,
"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".
"

• Student FICA Tax Exemption

Section 3121(b)(10) of the Internal Revenue Code provides another exemption from FICA (Social Security and Medicare) taxes for all students, regardless their U.S. tax residency status. Under this special exception rules, Social Security and Medicare taxes do not apply to services performed by students employed by a school, college, or university where the student enrolled at least half-time. The student’s on-campus employment must be incidental to and for the purpose of pursuing a course of study.  Consequently, a foreign student who become a resident alien may be eligible for exemption if qualified. Off-campus jobs or working for other employers do not qualify. "

Since I am employed by a company in my field of study and not employed by my university,  according to the above statement from IRS, it does seem like FICA applies to me. I am not sure if I am misinterpreting things. Please do help. Thank you and really appreciate your input. 

[pk · Accepted solution]

@manukris , I think I have to change my position.  

The issue here is whether you are an employee or a trainee.  OPT is usually a trainee position and generally  falls under the safe harbor ule for FICA.   But this is usually with F-1  or similar student visa extension.  See  Rev. Proc. 2005-11 and administrative Procedural note on the subject.  This depends  heavily on whether  the employer and the "employee" each qualify for the safe harbor  exemptions.  It does not delve into  visa  type. 

The ) visa type is a non-immigrant work visa  ( needs a sponsor  just like H-1 visa ).

 So my assumption here is that you are NOT on OPT / Trainee status but an employee.  Thus your employer  has to participate with you  on sharing FICA .     

Why did you not extend your F-1 visa if you are a trainee ?

Another issue is that for FICA an employer has to participate on a 50-50 basis for FICA contribution.  The  2022 year is passed and therefore his books are closed.

Suggest you talk to the employer  and seek a solution.  It is a case of sleeping dog ....."

When was your visa change affected  ?  If in October of 2022  or thereabouts it may be better to leave it alone.

Does your employer issue a W-2  or 1042-S ?

Is there more I can do for you ?

[manukris]

Hi @pk , For the year 2022, i was on F1 and on OPT. In OPT you can work with employers in your field of study, which was what i did for the whole of 2022. I only changed visa status to a work visa in July of 2023, which should not affect my status for 2022. 
I spoke with the employer and they are also confused on what to do. 

[pk]

@manukris  if your status change was in 2023, then you start FICA from the day after your status change -- you are no-longer a trainee  , even if you doing the same job -- because your  visa is a work visa.  As I said earlier F-1 and OPT together means  you are eligible for  safe harbor exemption from  FICA.

Does this make sense ?

I will circle back if you have any more questions.

[manukris]

Thanks @pk for providing all the answers to my query. Reading the internet and various posts, there are different opinions on the same topic. Your answer calms my anxiety regarding the FICA payments. Last question, is there somewhere that i need to specify that i am on OPT when i file taxes? 

[pk]

@manukris , please note that once your visa was adjusted , you are no longer on OPT -- you are an employee .

Thus for 2023 till the date of adjustment  you were on OPT, there after you are on work visa and therefore NOT immune  from FICA requirements.

You know that O-1  is a Non-immigrant work visa ( just like H-1 and many others ). 

Does this make sense  ?

how can I help you more ?

[manukris]

Thanks @pk that helps. Regarding my previous question, I am aware that for 2023 it doesn't apply. I was asking if i had to do anything more for 2022, since i filed as a resident and i dint see any option to let them know that I m FICA exempt. Appreciate all your inputs.