As October 1st approaches and F-1 student employees change to H-1B status, it is important that employers review payroll procedures and update tax withholdings for these employees. Under the Internal Revenue Code, employees in F-1, J-1, M-1, Q-1 or Q-2 non-immigrant visa status may not be subject to FICA. The FICA tax exemption becomes inapplicable when a payee changes to H-1B non-immigrant status. Employers must start withholding FICA taxes on the effective date of the H-1B status change for effected individuals.

In addition to the updated tax withholdings, employers should also be sure to reverify new H-1B employee I-9s with the updated H-1B status documentation. This can be completed on Supplement B of the new Form I-9.