H1-B visa holders cannot stay in the country for more than six years, and one can only claim social security benefits when you have worked for AT LEAST TEN years in the US. Therefore is it not just that H1-B visa holders be exempt from Social Security and Medicare taxes because :
a. the BCIS(INS) laws do not permit H1-B visa holders to live and work in the US for more than six years.
b. the Social Security Administration will not pay Social Security benefits unless H1-B visa holders work for AT LEAST TEN years in the US ?
A11
Based on the information provided, H-1B visa holders are liable for social security (FICA) and Medicare taxes and not refundable on their departure after six years term. One way to escape applicability of above FICA and Medicare taxes is to see if you are covered under 'Totalization Agreement'. The United States has entered into social security (totalization) agreements with Canada and a few European countries to eliminate duplicate coverage and taxes on the same covered employment. A totalization agreement allows a citizen or lawful permanent resident of one country temporarily working in the other country to avoid paying that country’s social security taxes under the detached worker rule. In general, a detached worker is an individual who is on a temporary employment assignment that is anticipated to last five years or less.
For more information on the above issue. please refer to Publication 519, U.S. Tax Guide for Aliens. You may also contact Social Security Administration at 1-800-772-1213 or through their web site at:
www.ssa.gov/international
You can also write to them at:
U.S. Social Security Administration
Office of International Programs
P.O. Box 17741
Baltimore, MD 21235-7741
IRS forms and publications may be accessed on the following address: http://www.irs.gov/formspubs/index.html
or ordered through IRS toll-free forms line at 1(800) 829-3676 which is available 24 hours a day, 7 days a week, with 7-10 days delivery time.
[Index]
[Compiled by Law Offices of Rajiv S Khanna]
Many temporary work visa holders return home at the end of authorised stay in the US or at will. And all of them must have paid Social Security and Medicare taxes into the US Treasury. For those who will never return to the US to avail of the Social Security or Medicare benefits when they turn 65 or 70 or whatever, should the IRS and or the SSA not refund the taxes that these folks paid while working in the United States? Given that the refund may be taxed at the then prevailing tax rate. This question affects not only full-time non-immigrant employees but also non-immigrant students. And, therefore is of great significance to honest tax-payers. Please advise whom to contact and what the procedure is to apply for a refund and the repercussions
A12
Compensation for services performed in the U.S. by a nonresident alien individual temporarily in the U.S. in F-1, J-1, M-1, or Q-1 status is exempt from FICA and Medicare taxes so long as the services performed are in connection with the purpose for which the individual entered the country. If they were exempt from social security and medicare taxes, they should contact their individual employers for reimbursement. The employer is responsible for reimbursing the social security and medicare taxes withheld from their pay which was not subject to the tax. After, contacting their employers, and they are still unable to get a refund, they can file a claim with the Internal Revenue Service on a Form 843 'Claim for Refund and Request for Abatement'. They should attach the following to the claim: a copy of Form W-2, Wage and Tax Statement, to prove the amount of social security and medicare taxes withheld, a copy of BCIS(INS) Form I-91, Arrival/Departure Record, and a statement signed stating that they asked the employer for reimbursement of social security and medicare taxes withheld in error and have been unable to get a refund.
For more information, you can refer to the Publication 519, U.S. Tax Guide for Aliens. To obtain a copy of the publication, forms, and instructions you can download it from IRS website at
http://www.irs.gov/formspubs/index.html
IRS forms and publications may be accessed at the following address:
http://www.irs.gov/formspubs/index.html
or ordered through IRS toll-free forms line at 1(800) 829-3676 which is available 24 hours a day, 7 days a week, with 7-10 days delivery time.
My son and his wife were married last week and now we understand she, being from Guatemala, will need a sponsor who paid
income tax on more than $14,000.00 for the past three years. Can I be that person and what other responsibilities might I have?
A13
According to the BCIS(INS), someone else can file as a "joint sponsor", so long as the visa petitioner's household income is not sufficient to meet the requirements of the BCIS(INS), and the "joint sponsor" fulfills the necessary affidavit requirements. The joint sponsor (or the joint sponsor and his or her household) must reach the 125 percent income requirement alone. You cannot combine the visa petitioner's household income with that of a joint sponsor to meet the income requirement. A joint sponsor is someone who is willing to accept legal responsibility for supporting this family member. Please note that the joint sponsor does NOT need to be related to the immigrant.
I am working as a non-immigrant and just converted to H1-B for the first time. Before that I used to work on my OPT permit which I obtained as a student and converted to H1-B starting from Dec-03.
The MEDICARE AND FICA taxes had not been cut from my pay check when I used to work on my OPT and I heard that they will cut from now on. Could you please tell me what all paper work I need to fill once I convert to H1-B (like I-9) so that the MEDICARE and FICA will be taken care.My HR-DIRECTOR is new to all these and its my responsibility to remind him about the visas.I would really appreciate if you could take some time and let me know what all tax forms I have to fill after I converted to H1-B.
A14
Your employer must provide and ask you (immediately on your employment) to fill out following forms :
1. Employment Eligibility Verification ( Form I-9). (This requires
proof of eligibility of employment as support)
2. Employee's Withholding Allowance Certificate -Federal ( Form W-4)
3. Employee's Withholding Allowance Certificate -State (This
depends upon the state you are residing in e.g. for VA it is VA-4)
Your employer is required to keep above forms duly filled, signed and proper
supporting.Also your employer is obligated to withhold right amount of FICA Taxes (Social Security and Medicare Taxes) on every payroll you are given by him.These taxes should be timely deposited with appropriate authorities. There
are strict penalties if these taxes are not deposited in time.
If I dont want to pay the Social Security Medicare through the monthly check can I pay it together when I submit the tax payment
A16
Your employer is obligated by law to deduct FICA taxes (Social Security and Medicare) every time he pays you wages. If your employer does not deduct above taxes, he would be liable to pay them later with penalties which can be up to 15% of the unpaid taxes. You do not have option of paying them together at the year end as your employer matches equal amount to your contribution of 7.65% of your wages. So you should not ask your employer not to deduct them from your periodical pay check.
My uncle is in the merchant marine and is a non resident in India (exempt from paying taxes). He needs to know if he would be able to continue sailing with his company which is not American and also be exempt from paying taxes in the US although he is exempt from paying taxes in India too as he really does not want to pay off such heavy taxes in the US.
A17
From IRS point of view, only resident aliens are taxed on their worldwide income, if you meet either 'Green Card Test' or 'Substantial Presence Test'.
You are considered to meet Green Card Test, if you are permanent resident of US at any time during the calendar year.Secondly, if you are physically present in US for at least 183 days during the current year. Or at least 183 days during current year and previous two years considered altogether (counted as per given formula), you may meet 'Substantial Presence Test'.
Again in some situations permanent residents or US citizens working abroad can deduct up to $80,000 from their wages earned from foreign sources.
I am here on H1 visa and my wife holds H4 visa. I recently opened up a Traditional IRA account for my wife thinking that she is a "Resident Alien" as far as IRA accounts are concerned and wanted to confirm that this was ok.
Since the definition of term "Resident Alient" is different for USCIS (earlier INS) and IRS I am not sure as to what should be her correct status when opening an IRA account.
A18
Your spouse will be treated as resident for tax purposes as she meets
substantial presence test. Secondly, if at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident.
I have not recieved my W2 form from my previous employer for the year 2003.
They sent me a mail asking for my current address,on 20th January afternoon.
I replied by giving them my current address on 22nd Jan morning.They responded by saying that the W2 was already posted to my address they last had with them.It is now over 10 days. I have not recieved it, nor have they got it back.What can I do to get the W2 forms from them ?
A19
Since you have communicated with your employer for missing W-2, give them a reasonable time to redeliver the returned W-2. I would advise you to wait until this month. Meanwhile, you can request your employer to fax or mail you a copy of your W-2 from their record (Employer's copy). If you are eFiling your tax return, you may find this copy meet your requirement as you don't have to mail or attach your W-2. In case you prefer filing a paper return and the deadline for filing the return (April 15) is nearing, you can attach Form 4862. This form is a substitute to Form W-2. Also attach your last paystub (Dec 31 '03) with this form as an additional proof for payroll and withholdings. Please find the Form 4862 attached.
What is the requirement (no. of years & age) to be eligible for
Social Security? If I contribute for the X (?) number of years, would I be
eligible to receive Social Security if I were to be living in India when I
reach the qualifying age Y(?)
A20
1. You need to have worked for at least 10 years or earned at least 40
earnings credits under the U.S. Social Security system to be eligible for
social security retirement benefits. You can start your Social Security
benefits as early as age 62, but the amount you receive each month will be
less than if you start at full retirement age. If you were born before 1938,your "full retirement age" is 65, eventually reaching age 67 for individuals born after 1959.
2. You may receive your Social Security payments outside the U.S. as long as you are eligible for them which applies to a US citizen
and also the citizen of India.
I was wondering if I could claim all my legal expenses for tax return documents that I had to pay for H-1B application in the year 2001 and 2003. I heard from some people that I am not supposed to since it has to be paid by the company, but in my case I paid the full amount (both legal expenses and USCIS fee) and my accountant says that I should definitely claim them.
A21
You can deduct the expenses as Unreimbursed Employee Business Expenses on
Form 1040-Schedule A. The deduction will be subject to 2% Adjusted Gross
Income limit.
Can a person on H1 in US open a company India ? What will be the
tax / legal implications of this ?
A22
If you are a resident alien, you must follow the same tax laws as U.S.
citizens. You are taxed on income from all sources, both within and outside
the United States.
If one is a non-resident, can he/she open a company in India?
A23
Non-resident alien has to pay US taxes only on the income generated from US sources. This is unlike US citizen or resident alien who is taxed on worldwide income.
From IRS point of view you may be resident if you meet any one of the 'Green Card' or 'Substantial Presence' tests. On the basis of 'Substantial Presence test', you may considered resident if you were physically present in the United States on at least 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before.
Can a foreign student holding F-1 visa contribute to IRA and have tax deduction?
A24
There are two conditions to meet. Any individual can open and make
contributions to a tax deductible traditional IRA, as long as you or your
spouse (if you file a joint return) receive taxable earned compensation
during the year and you were not 70 1/2 years old by the end of the year.
I am going to have an interview at the USCIS . How can I get a report of the last 2-year tax report?
A25
Please call IRS at 1-800-829-1040 and request tax return transcripts. I think they will be able to fax you the requested tax reports. You can also order by mail using IRS Form 4506. No fee is charged for the transcripts, which are delivered in about two weeks.
My parents both have green cards and they visit us 3 months of the year for the past 4 years. My question is with respect to taxes. Should we fill in tax returns for my parents? My father is retired and they are both over 74 years old and they have never worked here.I was planning to fill a travel reentry form and came across a question regarding taxes. I was wondering whether they may loose their green cards if we do not fill tax returns for them.
A26
For US citizen or green cardholder the rules for filing income tax return are generally the same whether you live in the United States or abroad.
Whether you are required to file an income tax return is determined by income, age and filing status. Your parents will be required to file tax return only if their income is more than $17,500 during 2003 from all sources (whether US or non-US). I don’t think they will loose their green card for non-filing a tax return, if they are not required to file one.
