Regarding SST & Medicare

[ActAccord]

I am here on H1b with family (2kids) from Feb 11 2008. When i saw my first pay slip i did saw there SST & Medicare was deducted (not the Federal & State Tax). When i asked about that my company account person told that my income on that period is well below the taxable amount (worked only for 1 week). But from the second pay slips (till now 4 pay slips) i see Federal & state tax got deducted but not the SST and Medicare, when i question about this my company accountant told that i don't have to pay SST & Medicare because i am on H1b. I did verified with few of my friends working on H1b, every one says i have to pay SST, Medicare, Federal and State Tax. When i shared this information with my company account person, he/she still stands on his/her own words (no medicare and SST for h1b). I am really confused with these tax issues. I don't want to get into issues at later stage because didn't paid my taxes properly. Can any one guide me on the taxes in have to pay and what are the exemptions i am eligible for. Thanks in advance.

[cncd1]

Both you and your employer must pay SS and Medicare taxes. You must also pay federal - and sometimes and state and local income taxes. Your employer should also be paying some business taxes - like unemployment insurance - as required by the state in which you work.

Your employer may be trying to say that you are an independent contractor and responsible for all SS and Medicare taxes. This is not true. On H1B, you are an employee not contract worker.

What an employer typically does is figure out the tax rate based on your annualized salary and makes income tax deductions at that rate so that the deductions are equal over the year. When an employer does not pay these taxes, it appears that they may be a fraud.

I would save up a couple of paystubs and go to your state Department of Labor if these taxes are not paid. In the meantime, look for a new employer to whom to transfer your visa.

I'm sorry not to be more positive about the situation that you find yourself in. Thank you for being concerned about following the law and understanding the tax deductions!

[ActAccord]

As of now (may be if they still deny my point, at later stage i will change my idea of my company) I don't see this issue as a fraud from my employer because my experience with them for past 3 months shows they follow each and every law. I am saying this based on few things, they never asked even single penny from ppl for filing h1b, they never ask for signing contract, they pay salary from day 1(i know very few consultants do this, though its our right to get paid from day 1) though i got project after 3 weeks. I only doubt the ability/understanding of the account person on my case. Because they do recruit (mostly) OPT students where they don't have to pay SST and medicare for first 5yrs (this is what i understood after some research in google). Anyway i did wrote a mail stating this issue so that i will be in good position at later stage. I know that its employer responsibility to deduct the required tax from the employee but i would like to take all required steps from my part.

[cncd1]

SS and Medicare are not required on OPT and F1. If you are on H1B, it is required. There is no rule that I know of that exempts former OPT from paying SS and Medicare taxes for any time after going to any work status. As far as I know all H1Bs and L1s are required to pay these.


If they employ primarily OPTs, then that is where the HR person is getting the rules.

If you have that link about not paying SS and Medicare taxes for 5 years, please post it.

[ActAccord]

here you go....i refered this forum for my doubts....


http://forum.visataxes.com/

[cncd1]

They confirm that my original answer is correct.

I do believe your employer is confused over the different requirements for F-1(OPT) and H-1B.

It is to your benefit to have this done correctly if you plan to make the US your home. In addition to retirement income, SS provides long term disability and survivors benefits but has participation requirements based on your age. Each year you should receive a statement listing how much was posted to you account; this runs a year or two behind so you probably will not see one for a while. Be sure to verify it when you receive it.

[ActAccord]

Thanks for your input....will keep update on this....

[ActAccord]

Finally our company accountant realized the mistake and now he/she will deduct the balance tax + current tax from my next pay in one shot (will receive very less pay) cool: ...