Wednesday, April 15, 2009

Information on Tax Exemptions for OPT Students


Wednesday, April 15, 2009 | , , , , , , , ,

Most of the students who are on F-visa or on Optional Practical Training (OPT) having a legitimate job should remember that they are exempted from U.S. Social Security (FICA) and Medicare taxes. These students should inform their employer about this to avoid inappropriate deduction from their pay.


OPT students, who recently applied for H1B FY 2010 should also make sure that their employer must start deducting U.S Social Security and Medicare taxes from 1st October 2009 (start date for their H1B visa). Failure to do so could lead to heavy tax penalties during annual tax return.


Below is some information on certain classes of alien employees are exempt from U.S. social security and Medicare taxes


Resident aliens, in general, have the same liability for Social Security/Medicare Taxes that U.S. Citizens have. (Please see Resident Aliens definition for Tax purposes)


Non-resident aliens, in general, are also liable for Social Security/Medicare Taxes on wages paid to them for services performed by them in the United States, with certain exceptions based on their non-immigrant status. The following classes of non-immigrants and non-resident aliens are exempt from U.S. Social Security and Medicare taxes:


  • A-visas: Employees of foreign governments are exempt on salaries paid to them in their official capacities as foreign government employees.
    • The exemption does not automatically apply to servants of employees of such foreign governments.
    • The exemption does not apply to spouses and children of A non-immigrants who are employed in the United States by anyone other than a foreign government.

  • D-visas: Crew members of a ship or aircraft may be exempt if the vessel is a foreign vessel and the employer is a foreign employer, or if the services are performed outside of the United States
    • Crew members of an American vessel or aircraft who perform services within the United States ARE subject to Social Security and Medicare taxes.
    • Crew members of an American vessel or aircraft who perform services outside the United States ARE subject to Social Security and Medicare taxes if:
      • the employee signed on the vessel or aircraft in the United States; or
      • the employee signed on the vessel or vessel outside the United States but the vessel or aircraft touches a U.S. port while he is employed thereon.

  • F-visas, J-visas, M-visas, Q-visas: Non-resident Alien students, scholars, professors, teachers, trainees, researchers, physicians, au pairs, summer camp workers, and other aliens temporarily present in the United States in F-1,J-1,M-1, or Q-1/Q-2 non-immigrant status are exempt on wages paid to them for services performed within the United States as long as such services are allowed by USCIS for these non-immigrant statuses, and such services are performed to carry out the purposes for which such visas were issued to them.

    • Exempt Employment includes:
      • On-campus student employment up to 20 hours a week (40 hrs during summer vacations)
      • Off-campus student employment allowed by USCIS.
      • Practical Training student employment on or off campus.
      • Employment as professor, teacher or researcher.
      • Employment as a physician, au pair, or summer camp worker

    • Limitations on exemption:
      • The exemption does not apply to spouses and children in F-2, J-2, M-2, or Q-3 non-immigrant status.
      • The exemption does not apply to employment not allowed by USCIS or to employment not closely connected to the purpose for which the visa was issued.
      • The exemption does not apply to F-1, J-1, M-1, or Q-1/Q-2 non-immigrants who change to an immigration status which is not exempt or to a special protected status.
      • The exemption does not apply to F-1, J-1, M-1, or Q-1/Q-2 non-immigrants who become resident aliens.

  • G-visas: Employees of international organizations are exempt on wages paid to them for services performed within the United States by employees of such organizations.
    • The exemption does not automatically apply to servants of employees of such international organizations.
    • The exemption does not apply to spouses and children of G non-immigrants who are employed in the United States by anyone other than an international organization.

  • H-visas: Certain non-immigrants in H-2 and H-2A status are exempt as follows:
    • An H-2 non-immigrant who is a resident of the Philippines and who performs services in Guam;
    • An H-2A non-immigrant admitted into United States temporarily to do agricultural labor.



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5 comments:

Mussu said...

good post!

Anonymous said...

My employeer is asking for the proof stating that OPT students are not supposed to pay SSN and Medicare tax. So is there any document which states that??

sudheer said...

Any Proof of Document because Employer is Asking for it..... Any Help ?

CM said...

See "link" on document to share with your employer.

Mussu said...

good post!

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