Employer Alert: F-1 to H-1B Status Transition – Be Aware of FICA Tax Changes

Employer Alert: Be aware of FICA tax changes for your employees going from F-1 to H-1B status

Most international students in F-1 or J-1 status are exempt from FICA (Medicare and Social Security) taxes on wages.  However, H-1B visa holders are subject to withholding of FICA tax and federal and state income taxes. H-1B visa holders are taxed as “resident aliens” on their worldwide income and may claim deductions for family members.

As many foreign students transition from F-1 status to H-1B status in October, they will become subject to FICA taxes and their employers must begin withholding the required FICA tax upon the effective date of the change of status.

This can be a complex issue and we encourage employers to consult with their tax adviser and/or CPA on this issue.