Student Exception to FICA Tax
FICA (Social Security and Medicare) taxes do not apply to service performed by students employed by a school, college or university where the student is pursuing a course of study. Whether the organization is a school, college or university depends on the organization’s primary function. In addition, whether employees are students for this purpose requires examining the individual’s employment relationship with the employer to determine if employment or education is predominant in the relationship.
- Treasury Decision 9167: Final regulations published December 21, 2004.
- Revenue Procedure 2005-11: Safe harbor standards that colleges and universities can apply in determining if an employee is eligible for the student FICA exception.
- Department of Treasury News Release: Announcing publication of final regulations and safe harbor standards.
- Background Information: Background information on the final regulations and revenue procedure providing guidance on the student FICA exception (section 3121(b)(10) of the Internal Revenue Code).
- United States v. Mount Sinai Medical Center (11th Cir. May 11, 2007): Recent appellate court decision on whether medical residents are students within the meaning of the student FICA exception.