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Being an international student on F1 visa, I am a non-resident alien who cannot claim unemployment or SS benefits.

Currently I am working on an internship and my employer was not aware that FICA is not deducted from non-resident aliens and has been deducting it for a while now.

It was only recently, that I looked through my payslips to realize this has been happening.

I believe it is possible to:

  1. Let my employer know that FICA is not to be deducted
  2. Ask my employer to issue me a "corrected W2" so that the FICA deductions so far are refunded to me?

    Is this correct?

    There is a second component to my query: my HR told me that although I can opt out of FICA now because of my current status, in the future, they plan to file a H1B (a work visa) for me and later a greencard so I can continue working with them.

    FICA is supposedly deducted when on H1B and surely greencard stage onwards and my HR tells me it's beneficial to contribute to FICA as early as possible, even when you are not required to?

  3. Is it legal for me to contribute to FICA now: will my current FICA contributions be deemed as valid later when I naturalize, although I am not a resident (for immigration purposes and not tax) now?

  4. Is there a tangible benefit for me to contribute to FICA now, keeping at mind that I intend to naturalize a few years? (For example, be able to live off SS earlier or get a larger monthly check from the SSA because I have been contributing longer, or...)

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2 Answers 2

up vote 2 down vote accepted

Ask my employer to issue me a "corrected W2" so that the FICA deductions so far are refunded to me?

Is this correct?

You can also claim credit on your 1040NR, to the best of my knowledge, and get the money back from the IRS.

FICA is supposedly deducted when on H1B and surely greencard stage onwards and my HR tells me it's beneficial to contribute to FICA as early as possible, even when you are not required to?

If you plan on staying in the US until the age of entitlement, then yes, because the SS payments are calculated based on the reported salary, and only paid to people who paid for 40 quarters or more. So you're starting gaining points at the SS earlier and will have more entitlements when you retire (provided you're a GC holder/citizen by then).

Is it legal for me to contribute to FICA now: will my current FICA contributions be deemed as valid later when I naturalize, although I am not a resident (for immigration purposes and not tax) now?

I think its legal to contribute, but you're not required by law, and cannot claim benefits until you're a permanent resident/citizen (but you can start contributing).

Is there a tangible benefit for me to contribute to FICA now, keeping at mind that I intend to naturalize a few years? (For example, be able to live off SS earlier or get a larger monthly check from the SSA because I have been contributing longer, or...)

See above. Not earlier, yes a larger monthly check.

Edit

Here's a relevant table of exemption criteria for non-residents.

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You have already answered my question, but what "more entitlements" are we talking about? Where/how do I know about this: should I ask this question separately? (my question is already answered) –  f1StudentInUS Jan 6 '12 at 4:07
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@f1StudentInUS You can read more about the SSA and its entitlements and benefits at ssa.gov, as a place to start with. Or the Wikipedia article. –  littleadv Jan 6 '12 at 7:27
    
"You can also claim credit on your 1040NR" Do you have a citation for this? According irs.gov/Individuals/International-Taxpayers/… , when FICA taxes are withheld in error he needs to file Forms 843 and (in his case) 8316 –  user102008 Dec 28 '12 at 0:17
    
@user102008 In some cases you can claim credit directly from IRS, see instructions for form 1040NR/line 65. If in this case it is not applicable - then it has to go through the employer. –  littleadv Dec 28 '12 at 2:33
    
@littleadv: Right, I saw that; but in the case of this question, it is not applicable –  user102008 Dec 28 '12 at 2:59
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I started working with the F1 OPT (Optional Practical Training) 1-year allowance after finishing my PhD, and the employer didn't know better and withheld FICA taxes. I simply had to point the accountants of the company I was working to the right information, and I got my withheld FICA taxes refunded in a nice, big paycheck. In fact I only needed to point them to this page (this is not even the school I did my PhD at !):

http://www.dfa.cornell.edu/dfa/tax/foreign/exemptions/sstaxes.cfm

see under section "The Social Security / Medicare Tax Liability", quoted: "The Code grants an exemption from social security and Medicare taxes to nonimmigrant students, scholars, teachers, researchers, and trainees (including medical interns) temporarily present in the United States in F-1, J-1, M-1, or Q-1 status. The Social Security Act contains the same provision. Both code sections exempt the above-named nonimmigrants from social security/Medicare taxes for as long as these nonimmigrants are "NONRESIDENT ALIENS" in F-1, J-1, M-1, or Q-1 status."

Don't let them keep your FICA - when you just come broke out of school, $2000 - $3000 you'll be getting refunded is a big help. As for the long term, if you end up staying in the USA permanently, you have 30-40 working years ahead of you until retirement to pay enough FICA to get benefits (I am know on H-1B for 2 years now and paying FICA).

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