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Subject Author Date
Social Security Tax pallav 03-21-2008
Posted by pallav on March 21, 2008, 4:25 pm
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 Good evening,

I have a question about Social Security Tax. I am a citizen of India.
I came into the USA in 1998 on F1 visa. I believe on this visa you
don't pay social security tax for 5 years. After 2003, when I was in
graduate school, I started paying social security tax on my earnings.
In 2006, I switched from F1 -> OPT and now am on H1B visa. I notice
that on my university paystubs for 2007 that no social security/
medicare tax is deducted for the entire year. I only see 'federal tax'
and 'state tax'. I am not sure why this is the case? Are people on H1B
exempt from paying social security tax? Or is there a US-India treaty
for this?

The reason I ask is today, I received the Social Security Statement. I
was comparing this against last year. On 2007, it stated that I had at-
least 20 credits at that time and qualified for disability. On 2008
statement, it is showing that I have at-least 12 credits and do not
qualify for disability. I don't understand why this has changed. I'm
not sure if this is an error or not. The earnings are correct on both
statements. For 2007 it says, 'not yet recorded' but I didn't pay any
social security tax on my wages and I don't know why.

Can someone explain this to me? Is this a mistake and should I be
contacting the SS office about this?

Thanks for any information.
Kind regards.

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Posted by Condor on March 22, 2008, 6:11 am
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> I have a question about Social Security Tax. I am a citizen of India.
> I came into the USA in 1998 on F1 visa. I believe on this visa you
> don't pay social security tax for 5 years. After 2003, when I was in
> graduate school, I started paying social security tax on my earnings.
> In 2006, I switched from F1 -> OPT and now am on H1B visa. I notice
> that on my university paystubs for 2007 that no social security/
> medicare tax is deducted for the entire year. I only see 'federal tax'
> and 'state tax'. I am not sure why this is the case? Are people on H1B
> exempt from paying social security tax? Or is there a US-India treaty
> for this?
>
> The reason I ask is today, I received the Social Security Statement. I
> was comparing this against last year. On 2007, it stated that I had at-
> least 20 credits at that time and qualified for disability. On 2008
> statement, it is showing that I have at-least 12 credits and do not
> qualify for disability. I don't understand why this has changed. I'm
> not sure if this is an error or not. The earnings are correct on both
> statements. For 2007 it says, 'not yet recorded' but I didn't pay any
> social security tax on my wages and I don't know why.
>
> Can someone explain this to me? Is this a mistake and should I be
> contacting the SS office about this?

Neither your visa type nor your citizenship has anything to do with social
security and medicare tax not being withheld from your university-paid
wages. As a university student, your wages are exempt from FICA tax by
Internal Revenue Code section 3121(b)(10). For details, see IRS Revenue
Procedure 2005-11.

http://www.irs.gov/pub/irs-drop/rp-05-11.pdf


Condor

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Mark Bole on March 22, 2008, 9:29 pm
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Condor wrote:
>> I have a question about Social Security Tax. I am a citizen of India.
>> I came into the USA in 1998 on F1 visa. I believe on this visa you
>> don't pay social security tax for 5 years. After 2003, when I was in
>> graduate school, I started paying social security tax on my earnings.
>> In 2006, I switched from F1 -> OPT and now am on H1B visa. I notice
>> that on my university paystubs for 2007 that no social security/
>> medicare tax is deducted for the entire year. [...]

> Neither your visa type nor your citizenship has anything to do with social
> security and medicare tax not being withheld from your university-paid
> wages. As a university student, your wages are exempt from FICA tax by
> Internal Revenue Code section 3121(b)(10). For details, see IRS Revenue
> Procedure 2005-11.

It's not that simple. In fact, aliens with F-1, J-1, M-1, or Q-1 visas
are normally exempt from FICA and FUTA, even if they work off-campus for
a private employer, as long as they are within the purpose for which
they were admitted to the U.S.

It is also true, as you indicate, that persons subject to U.S. tax law
as residents might be exempt from FICA withholding if they are students
performing work for a college or university, but that is not the only
factor. This law may not apply to the OP.

See Pubs 15, 515, and 519 for more information.

I can't answer the OP's question, nor do I know if there are any
totalization agreements in effect that would allow him to be subject to
the social security laws of only one country.

-Mark Bole

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Una on March 23, 2008, 9:50 am
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>Can someone explain this to me? Is this a mistake and should I be
>contacting the SS office about this?

Someone in your graduate school fellowships office should be able to
explain this to you. Or you can call the SS and ask, and get a clear
answer.

The short answer is that while you are a student receiving a stipend
or fellowship no FICA is paid and you gain no credits. This is one
of the costs to you of higher education, on top of lost earnings and
lost seniority. You also won't be eligible for unemployment income
if your stipend runs out before you finish your degree.

        Una

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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