OPT is a period during which undergraduate and graduate students in F-1 status who have completed or have been pursuing their degrees for more than 9 months are permitted by the United States Citizenship and Immigration Services (USCIS) to work for at most one year on a student visa without needing to acquire a work H-1B visa towards getting a practical training to complement their field of studies. F-1 students are permitted total of 12 months towards practical training, on being certified by the advisor of the usefulness of the work towards goals of the degree, which can be distributed between Curricular Practical Training (CPT) and OPT. M-1 students are also permitted to engage in post-completion OPT. They are entitled to one month of training for every four months of study, with a maximum length of six months.
The OPT permit card (employment authorization document) can be obtained from USCIS before completion of a degree program through the university's International Student Office or equivalent upon filing of the relevant form (I-765), payment of fee ($340), and sending copies of I-20, passport, visa and other required documentation. The process can take up to 4 months to complete. M-1 students must also file the form I-539 to extend their status. This carries a $300 fee and requires additional processing time.
Taxation of International Students F1, J1 in OPT:Students (F1,J1) in Optional Practical Training, need not pay FICA Taxes(Social Security and Medicare Taxes)for their first five years in the USA. The following IRS web site provides a good overview on the FICA taxability of alien employees. In general aliens performing services in the United States as employees are liable for U.S. social security and Medicare taxes. Basically, there are 3 requirements in order for non US citizens to be exempt from FICA.
1. Their employment to work for your company must be authorized. If they don't have proper work authorization, they can't be FICA exempt.2. They must be F1, J1, M1 or Q1. (F2, J2's and most all other types including H1 and TN are never FICA exempt)3. They must be "nonresident aliens".
This is a complex tax formula discussed at the end of the IRS web site listed above. F1, J1, M1 and Q1's are generally only considered nonresident aliens for their first five years in the US. In their sixth they become resident aliens for tax purposes and are no longer FICA exempt. For example, if someone enters the US as F1 or J1 for the very first time on 12/01/2005 they are a nonresident alien for 5 years (2005,2006,2007,2008,2009) so long as they remain either F1 or J1. On 1/1/2010 you usually would need to start withholding FICA (unless you are a university and then other rules come into play).
If you have paid FICA Taxes in error, you can file Form 843 and Form 8316 to get a refund of Social Security and Medicare Taxes.
Latest developments:May 31th, 2008: The Immigration Reform Law Institute filed a lawsuit in Federal Court on behalf of various organizations and individuals challenging the validity of the 17 month OPT extension.
April 4th, 2008: SEVIS (Student and Exchange Visitor Information System) NOTE:The U.S. Department of Homeland Security (DHS) released today an interim final rule extending the period of Optional Practical Training (OPT) from 12 to 29 months for qualified F-1 non-immigrant students. The extension will be available to students who are employed by businesses enrolled in the E-Verify program. E-Verify is a free internet-based system operated by USCIS, in partnership with the Social Security Administration, which determines a new employee's eligibility to work.
General Provisions:
F-1 students in STEM (Science, Technology, Engineering, Mathematics) fields and granted initial post-completion OPT are now eligible to apply for a one-time extension for 17 additional months, a maximum of 29 months. STEM students need to file form I-765. The form is being amended to capture information needed to determine student eligibility.
F-1 students who file for a STEM extension prior to the end date of their post completion OPTs may continue employment while the application is pending, or for 180 days, whichever is shorter. Approved extensions allow for students to remain working for the STEM employer on the new EAD. If denied, the student must make preparations to depart or transfer to another school to continue studying.
To be eligible for the 17-month OPT extension, a student must have received a STEM degree in one of the following:
~ Actuarial Science
~ Computer Science Applications
~ Engineering
~ Engineering Technologies
~ Life Sciences
~ Mathematics
~ Military Technologies
~ Physical Sciences
