Following is IRS response:
Dear Sir Madam I am a Resident alien for tax purposes for 2008. My wife is a Nonresident alien (F1 visa) for 2008. We have decided to take the choice of filing jointly and treat her as a Resident alien for tax purposes. Her FICA taxes were not withheld during 2008. In the IRS website when I looked at Nonresident Spouse treated as a resident, I saw the following: If you make this choice, you and your spouse are treated as residents for your entire tax year for the purpose of your federal individual income tax return, and for the purpose of withholding U.S. federal income tax from your wages. However, for the purpose of Chapter 3 withholding you may still be treated as a nonresident alien. Refer to Withholding of Tax on Nonresident Aliens and Foreign Corporations (Chapter 3 of the IRC) in Tax Withholding Types. In addition, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. My question is, am I right in assuming that we do not have to worry about the FICA taxes that werent withheld for her in 2008? Also is there anything we need to do now, like as to report to the employer that it needs to be withheld from now on as we have made this choice of treating her as Resident alien for tax purposes? Thank you very much.
The Answer To Your Question Is:
Hello. Thank you for your inquiry dated March 10, 2009. We apologize for the delay in responding to your inquiry. You have questions about the withholding of United States (U.S.) social security and Medicare taxes from your spouse’s pay.
You have not provided enough information to properly answer your question. We will summarize the information that you provided.
1. You are a U.S. resident alien for 2008.
2. Your spouse is a nonresident alien for 2008 (your spouse has an F-1 student visa). Your spouse’s pay for working in the U.S is not subject to the social security and Medicare taxes for 2008.
3. You and your nonresident alien spouse are making the election to treat the nonresident alien spouse as a resident alien, for income tax purposes, for 2008. You and your spouse are treated as residents for your entire tax year for the purpose of your federal income tax return, and for the purpose of withholding U.S. federal income tax from your wages. You and your spouse will not suspend or end the choice for a later tax year.
We need to know whether your spouse will be an F-1 student who is exempt individual pertaining to substantial presence test in 2009 or whether your spouse will have a green card at any time during 2009. If your spouse is an exempt individual pertaining to the substantial presence test for 2009 or if your spouse does not have a green card at any time during 2009, your spouse may still be treated as a nonresident alien for the purpose of withholding social security and Medicare tax.
A nonresident alien temporarily in the U.S. on an F-1 visa is not subject to social security and Medicare taxes on pay for services performed to carry out the purpose for which the alien was admitted to the United States. Social security and Medicare taxes should not be withheld or paid on this amount. This exemption from social security and Medicare taxes also applies to employment performed under Curricular Practical Training and Optional Practical Training, on or off campus, by foreign students in F-1 status as long as the employment is authorized by the U.S. Citizenship and Immigration Services. However, if an alien is considered a resident alien, that pay is subject to social security and Medicare taxes even though the alien is still in the nonimmigrant status. Any student who is enrolled and regularly attending classes at a school may be exempt from social security and Medicare taxes on pay for services performed for that school. However, the election to file a joint return with a U.S. resident alien spouse has no effect upon the nonresident alien spouse's liability for social security and Medicare taxes if the nonresident alien spouse is an F-1 student who is exempt from counting days of presence in the U.S. toward the substantial presence test in 2009.
Under the rules pertaining to the substantial presence test, your spouse is considered a U.S. resident alien for tax purposes if your spouse is physically present in the United States on at least:
1. 31 days during 2009, and
2. 183 days during the 3-year period that includes 2009, 2008, and 2007, counting:
a. All the days your spouse is present in 2009, and
b. 1/3 of the days your spouse is present in 2008, and
c. 1/6 of the days your spouse is present in 2006.
However, your spouse does not count the days of presence in the U.S. during the tax year that your spouse is an exempt individual. The term “exempt individual” does not refer to someone exempt from U.S. tax. An exempt individual is someone exempt from counting days of presence in the U.S. toward the substantial presence test. There are several categories of exempt individuals. One of them is a student temporarily present in the United States under an F-1 visa, who substantially complies with the requirements of the visa. The student will be an exempt individual for 5 calendar years.
If your spouse has a green card at any time during 2009, during that time your spouse will be a U.S. resident alien under the green card test and your spouse's pay will be subject to the social security and Medicare taxes.
Thank you for using our service.