Discussion:Explanation of different types of Visa's needed
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Explanation of different types of Visa's needed
| 20 March 2006 | |
| Can anyone point me to a publication that explains all of the different types of visas issued? I have clients with E1 and some with H1 visas and they are all here for the same reason. My clients with an E1 visa don't have to pay SS or Medicare taxes, and my new client with an H1 visa does. Thanks. | |
| 20 March 2006 | |
| An E-1 visa is issued to certain managers and executives from certain treaty countries. H-1B visa’s are issued to certain types of professional workers.
Any individual present in this country under an F, J, M, or Q visa is exempt from FICA and Medicare. In addition, any individual temporarily present (less than 5 years) under any other type of non-immigrant visa can apply for exemption from FICA and Medicare if he is from a country that has signed a Social Security Totalization Agreement with the United States. | |
| 20 March 2006 | |
| Yes, we do have a Social Security totalization agreement with Norway. | |
| 20 March 2006 | |
| I have a couple of H1 clients from Chile (which has signed a Totalization agreement). How do they apply for exemption from payroll taxes? Nice idea, first I've heard of it.
As I understand it, if they do not apply for the exemption there is some way that their SS contributions can get added to their Chilean pensions at the time they retire. I had another Chilean client who worked in the US during the 1970's and is currently in the process of trying to do this -- don't know exactly how it works. | |
| 20 March 2006 | |
| Clarification. In order to apply for a totalization based exemption for FICA and Medicare, the individual will need to provide proof of current contributions to the foreign SS system. This means that the individual will need to be working for a foreign corporation here in the United States.
Thus, an individual on an E-1 visa is usually working for a foreign corporation, and is therefore, eligible to apply for the totalization agreement. | |
| 20 March 2006 | |
| Thanks for the clarification. I just looked this up and as I understand it they can only be exempted from FICA taxes if they are paying into a similar system in their own country, which is not the case with my H1B clients.
Where totalization has affected my overseas clients is that before the totalization agreement US citizens abroad with SE income had to pay SE tax. After the agreement they do not. Theoretically they are supposed to file some document showing that they are covered by a foreign retirement system, but I could never get a clear answer from the IRS as to what counted as proof, and I have never done this. Also I was told that the IRS would not accept SE payments from a US citizen in a country with a totalization agreement, even if we swore he was not covered by a foreign system. (One client wanted to keep paying into the US system.) | |
- add search terms: J-1 visa, H-1 visa
