The U.S. tax system requires that employers deduct a portion of each employee's income for payment directly to the Internal Revenue Service (IRS). In addition to federal taxes, there are also deductions for the state in which one lives and works, as well as city and/or county deductions.
J-1 physicians who have been in the United States less than two calendar years are considered NONRESIDENT ALIENS and are considered temporarily exempt from Social Security/Medicare taxes. However, J-1 physicians who have been in the United States more than two calendar years are RESIDENT ALIENS and are liable for Social Security/Medicare taxes. When measuring an alien’s date of entry for the purposes of determining the two calendar years mentioned above, the actual date of entry is not important. It is the calendar year of entry which is counted toward the two calendar years. Thus, for example, a physician who enters the United States on December 31, 2017 counts 2017 as the first of their two years as an "exempt individual." This is important information because paychecks will decrease when tax deductions begin. This typically occurs about 1 ½ years after a resident's start date, if they start on time.
We recommend consulting a tax professional when completing all tax forms and when/if filing taxes. More information on how taxes effect J-1 physicians can be found on the ECFMG website.