The Internal Revenue Service (IRS) regulation defines the requirements that make a student FICA Exempt. A United States resident student is subject to FICA taxation when not enrolled in classes during school breaks of five weeks or more (including summer breaks of more than five weeks).
Students must meet all of the following criteria to be exempted from Fica
- Registered for at least half-time during the Fall, Spring, or Summer terms.
- Not a full-time employee.
- Not a professional employee. A professional employee is defined as an employee whose work: (i) consists of advanced or specialized knowledge; (ii) requires consistent discretion and judgment; and, (iii) is intellectual or varied rather than routine, manual, or physical. Another indication of a professional employee is if a license (other than a normal driver’s license) is required.
- The employee’s primary relationship with the institution that employs him or her must be as a student and secondarily as an employee.
Student enrollment is verified before the processing of each payroll. If a student
drops below a half-time status Fica taxes will be deducted from their paycheck. If
a student is enrolled at least half-time for atleast one day of the pay period they
are exempt from Fica taxes for the whole pay period.
If a student is enrolled in only Summer 1 only, pay would be exempt from FICA taxation during enrollment in the 1st summer session.
If a student is enrolled in only Summer 2, then pay would be exempt when enrolled
in the 2nd session, but would be subject to FICA taxation for Summer 1 session.
If a student is enrolled in full-summer, then the student is exempt from FICA taxation for the entire Summer. At the end of the session, the student then will have a 5-week break before being subject to FICA.
If a student is NOT ENROLLED in any Summer Sessions, the student then is subject to FICA for all summer sessions. NOTE: Future FICA taxation Status is based on enrollment for fall session (when classes begin)
If a retiree who is drawing Social Security retirement that is working on a temporary basis is exempted from Fica Social Security Taxes but not Fica Medicare.
|F-1||Exempt for the first 5 years from date of entry; thereafter may be exempt based on student enrollment.|
|J-1 Students||Exempt for the first 5 years from date of entry; thereafter may be exempt based on student enrollment.|
|J-1 Scholars, Researchers||Exempt for either the first 2 calendar years in the US, or 2 out of the first 6 calendar years in the US regardless of visa status|
|H-1B, O-1||Must pay FICA.|
|J-2, H-2||Must pay FICA.|