Today's tax question comes from Ronnie in New York. He asks:
"I was wondering if you would be able to help me find the answer to my question. I did my undergrad here in the US and am a current student in a Masters program also in the US as an international student. I was on my OPT (optional practical training) from August 2004 to August 2005. Now, I have researched quite a bit and also called the tax refund number listed on the IRS website to confirm if I am eligible for a refund of my Social Security and Medicare taxes and so far, all my research points to a yes. Since I am on an F-1 visa and have never worked without INS authorization under a student visa, all the articles I have read state that I am allowed to file for a social security/medicare tax refund. Now I did not know this while I was on my OPT. But since my OPT ended August 2005, do you think I can still file for my refund for Social Security and Medicare taxes?"
Great question, Ronnie. Non-immigrant scholars on an F-1, J-1, M-1, or Q-1 Visa are exempt from Social Security and Medicare taxes and may claim a refund for the employee's share of these taxes withheld from your paycheck. You must first attempt to claim a refund from your employer. If that fails, you can submit your refund claim to the Internal Revenue Service.
The clearest explanation of this issue was found in an IRS training manual for volunteer tax preparers, Publication 678-FS (no longer published), starting on page 8-1:
"An exemption from Social security and Medicare taxes applies to nonimmigrant students, scholars, teachers, researchers, and trainees (including medical interns) who are temporarily present in the U.S. in F-1, J-1, M-1, or Q-1 status, as long as they remain nonresidents for federal income tax purposes. The exemption also applies to any period in which a foreign student is in 'practical training' or other off-campus employment allowed by the USCIS. Such persons are exempt from Social security and Medicare taxes as long as they remain nonresident aliens for tax purposes. Those who become resident aliens must start paying Social security and Medicare taxes."
The IRS briefly lists the steps for claiming a refund of Social Security and Medicare taxes on their Web site. This topic is also discussed in chapter 8 of Publication 519, U.S. Tax Guide for Aliens. There is a three-year statute of limitations for claiming tax refunds.