Employer didn't withhold SS and Medicare taxes since 2021 - what now?

Your situation is actually pretty common with international students transitioning from exempt to non-exempt status. Let me clarify a few things for you. Line 16 on Form 1040 is your total income tax, but it doesn't include Social Security and Medicare taxes (FICA taxes). These are handled separately because they're technically employment taxes, not income taxes. That's why you can get an income tax refund but still owe FICA taxes. Since your employer didn't withhold these FICA taxes (which should appear in boxes 4 and 6 on your W2), there's unfortunately still an obligation to pay them. Typically, the employer is responsible for half and the employee for half - about 7.65% from each party. Your employer should calculate the correct amount and work with you on how to handle it. They may need to file corrected payroll tax returns, and you might need to reimburse them for your portion.

I had a similar situation a few years back with some missing withholding, and it was a nightmare trying to sort through all the paperwork and calculations. I ended up using https://taxr.ai which was super helpful because it analyzed my past W-2s and tax documents to help me figure out exactly what was withheld and what wasn't. The tool showed me where I was actually missing withholdings and calculated the amounts for me - saved me tons of time rather than trying to manually figure it out from tax forms. They also helped me understand my options without having to amend anything unnecessarily. The document analyzer catches things I would've missed completely.

I was super skeptical about taxr.ai when someone recommended it, but I was desperate after my company messed up my W-2 for two years running. I uploaded my documents and it immediately caught that my employer had been improperly calculating my retirement plan contributions. The detailed analysis really saved me - it showed exactly where the errors were and gave me a complete breakdown of what should have been withheld versus what actually was. I handed their report to our payroll department and they fixed everything without me having to file any amendments. Definitely worth checking out for anyone dealing with FICA or withholding issues!

If you're having trouble getting in touch with the IRS about this situation (which is likely, their phone lines are impossible), try https://claimyr.com - I used their service when I needed to speak with someone at the IRS about a similar withholding issue. I'd been trying to reach them for weeks with no luck. Instead of waiting on hold for hours hoping someone would answer, Claimyr held my place in line and called me when an IRS agent was ready to talk. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c My situation was that my employer had misclassified me as an independent contractor for a while, which meant no withholding at all. I needed specific guidance from the IRS on how to handle it, and there was no way I was figuring it out on my own.

I need to apologize for my skepticism about Claimyr. After struggling for weeks trying to reach the IRS about my missing withholding issue, I decided to try it as a last resort. I was genuinely shocked when I got a call back connecting me to an actual IRS representative the next day. The agent was able to explain exactly what forms my employer needed to file and confirmed I wouldn't need to amend my personal returns. She also gave me documentation I could share with my HR department explaining their obligations. Saved me so much stress and probably thousands in potential penalties. Sometimes admitting you were wrong feels pretty good!

One thing nobody's mentioned yet - check if your employer is willing to pay both portions of the FICA taxes (employer and employee). I was in almost the exact same situation with my F1 visa, and my university employer acknowledged it was their mistake and covered both portions. They're supposed to know the rules, and this is a fairly common error with international employees. It doesn't hurt to politely ask if they'll cover the full amount since they failed to properly withhold. The worst they can say is no!

Just to add a data point - when this happened to me, my employer filed forms 941-X to correct their payroll tax returns and W-2c forms to give me corrected W-2s. They then set up a payment plan where they took a small amount from each paycheck for about 6 months to recover my portion of the taxes. The good news is that you don't have to deal with the IRS directly on this - your employer should handle most of it since it's primarily their mistake with their payroll tax filings.

One thing to keep in mind is the statute of limitations for payroll taxes. The IRS typically has 3 years to assess additional taxes. So while you technically owe these taxes, if your employer doesn't correct this soon for the 2021 tax year, the IRS may not be able to come after either of you for it after the statute expires. Not saying you should evade taxes, but there is a practical time limit on when corrections need to be made. Your employer might focus on fixing 2022-2023 and not bother with 2021 if it's getting close to that 3-year mark.

I went through something very similar when I transitioned from F1 to H1B status. The 5-year exemption rule is really poorly communicated and catches a lot of international students off guard. One important point - make sure your employer calculates the correct dates for when FICA withholding should have started. It's not automatically January 1st of your 6th calendar year in the US, but rather based on when you actually completed 60 months of physical presence. If you had any trips outside the US during those 5 years, it could push the start date later. Also, double-check that your employer is only asking you to pay the employee portion (7.65%). Some employers mistakenly try to have employees cover both the employer and employee portions, but that's not correct - they're still responsible for their half even if they failed to withhold properly. Good luck with your HR conversation tomorrow! Document everything in writing so there's a clear record of what was agreed upon.

The 60-month calculation can be tricky, but it's worth getting right since it could save you hundreds or even thousands of dollars. You need to track your actual days of physical presence in the US, not just calendar time. Start with your initial entry date on F1 status and count forward 60 months (1,826 days), but subtract any days you were outside the US during that period. Those summer trips home definitely count against your presence, so if you were gone 3 weeks each year for 5 years, that's about 105 days total that would extend your exemption period. You can request your I-94 travel history from CBP's website (i94.cbp.dhs.gov) to get exact entry/exit dates if you don't have detailed records. This will give you the precise date when your FICA exemption ended. Given that your employer is just now discovering this issue, I'd be surprised if they did the calculation correctly the first time. Most HR departments just assume calendar years rather than doing the actual day-by-day count. Definitely worth double-checking their math!