Letter From Employer, Social Security & Medicare tax witheld in error?

Question

One of my friend is on F-1 visa & her employer witheld Social Security & Medicare tax in error. She already left that job. I have a question, while claiming for the refund from IRS, she need to attach a letter from her ex-employer stating refusal of refunding taxes. What should be the reason for refusal by employer? Is there any particular formate for the letter? Does the letter have to be on Company's letter head?

Answer 1

The taxes have already been forwarded to the government, so the company doesn't have them any more to refund them. Yes, she should attach the letter from the company, and yes, it should be on company letterhead.

Answer 2

If she had exempt income -- usually limited to on-campus employment or employment closely related to and part of the course of study -- the income should be exempt from SS and Med tax. Employment outside the scope of her F-1 visa would not be exempt AND is probably illegal under immigration laws.

If she had income that was exempt and the employer improperly withheld SS and Med taxes and refused to reimburse the taxes withheld she would need to file a Form 843 to request a rebate of the taxes. See IRS Pub 519 http://www.irs.gov/pub/irs-pdf/p519.pdf , page 46 for the filing and documentation requirements.

One of the requirements is a statement from the employer acknowledging her having authorized the employer to claim a credit for any SS withholdings and how much of that credit they claimed. While the instructions don't specify a format or stipulate a that a reason needs to be stated, common business practice would dictate that the statement would be on the employer's business letterhead. The instructions also tell you how to proceed if the employer does not provide the statement, including attaching Form 8316 http://www.irs.gov/pub/irs-pdf/f8316.pdf to the Form 843 package.