Discussion:Nonresident Alien treat as Resident
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Discussion Forum Index --> Tax Questions --> Nonresident Alien treat as Resident
| 29 March 2007 | |
| I have a client who is a US Citizen, who got married to a nonresident alien currently on a J1 visa in October of 2006. (She originally entered on an F1 visa 2003, changed to J1 in March 2005.)
She received a revised 2006 W2 from her employer reflecting social security and medicare taxes (previously not withheld due to J1) for the portion of the wages post-marriage. My question is: if we take the 6013(g) election and treat her as a resident for the entire tax year, does that mean that she (and ultimately her employer) would be required to pay the social security and medicare taxes on her wages for the entire year? Seems that way to me, but I'm still not certain. If so she would owe about $6000 more just for her half of the ss/mbs taxes, which more than exceeds the benefit they get from filing jointly. Also, this is a community property state, so if they do NOT take the 6013(g) election then I can file MFS and treat them as "spouses who live apart all year" for community property rules, yes? Also let me know if there are other angles to this I am missing! Thanks. | |
| 29 March 2007 | |
| The 6013(g) election affects only Chapter 1 and Chapter 24 taxes. FICA taxes are included in Chapter 21. Therefore, the FICA withholding is not affected by the 6013(g) election at all. | |
| 29 March 2007 | |
| If the 6013(g) election is not made and one or both spouses is a nonresident alien, then the earned income of the spouses is treated as non-community property for purposes of allocating the income between the spouses. See Sec. 879(a) and Sec. 879(b) | |
| 29 March 2007 | |
| many thanks Riley2...
looks like I understood the community property issues, but I was unaware that the election didn't include FICA liability- very helpful. | |
| 29 March 2007 | |
| Don't understand why the wife's employer withheld FICA from an individual on a J-1 visa just because her marital status changed. What am I missing? | |
| 29 March 2007 | |
| DLS, just to clarify. The noncommunity property treatment of earned income will continue each year until she becomes a resident -- even if they live together all year long. | |
| 29 March 2007 | |
| Riley2,
(Yes, thanks for the clarification on noncommunity property treatment.) I was confused about the W2 change also - which was why I started wondering if she'd be liable for the entire year if they elected the 6013g. I found the text that originally caught my eye: (It was under the "Aliens Employed in the U.S. – Social Security Taxes" heading on IRS site) "F-visas, J-visas,... Nonresident aliens temporarily present in the United States in F-1,J-1,...nonimmigrant status are exempt from Social Security/Medicare Taxes on wages paid to them for services performed within the United States..." etc. and then it lists under a heading of "Limitations on exemption:" "The exemption does not apply to nonimmigrants in F-1,J-1,M-1, or Q-1/Q-2 status who become resident aliens for tax purposes." I'm confused again, I guess. Thanks in advance for your help. | |
| 29 March 2007 | |
| In order to qualify for the FICA exemption, the taxpayer must be a nonresident alien as defined in Internal Revenue Code § 7701(b) and Immigration and Nationality Act Sec. 101. Therefore, if the client obtains a green card or satisfies the substantial presence test, she may not claim an exemption from FICA. Additionally, if the client expresses an intent to abandon her foreign residence, then she may not claim the exemption from FICA.
However, I see nothing that would cause the client to lose her exemption from FICA simply because she elects to be taxed on her worldwide income in order to file a joint return [Sec. 6013(g) election]. In addition, I see nothing that would suggest that an alien who marries a citizen of the United States is expressing an intention to abandon her foreign residence. | |
