Persons Employed in a U.S. Possession / Territory - FICA
U.S. territories are islands under the jurisdiction of the United States, but they are not U.S. states. U.S. territories can be divided into two groups:
- Those that have their own governments and their own tax systems (Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, and The Commonwealth of the Northern Mariana Islands), and
- Those that do not have their own governments and their own tax systems (Midway Island, Wake Island, Palmyra Island, Howland Island, Johnston Island, Baker Island, Kingman Reef, Jarvis Island, and other U.S. islands, cays, and reefs that are not part of any of the fifty states).
Wages paid to U.S. citizens, resident aliens, and nonresident aliens employed in both groups of U.S. territories shown above are generally subject to Social Security and Medicare taxes under the same conditions that would apply to U.S. citizens employed in the United States. However, certain types of services are exempt from Social Security and Medicare taxes. Examples of services exempt from Social Security and Medicare taxes include:
- Compensation paid to lawfully admitted foreign agricultural workers, including foreign agricultural workers in H-2A nonimmigrant status;
- Compensation paid to students employed by a school, college, or university if the student is enrolled and regularly attending classes at such school, college, or university (Refer to Student Exception to FICA Tax);
- Compensation paid to a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry;
- Compensation paid to nonresident aliens temporarily present in the United States or its possessions in F-1, J-1, M-1, Q-1, or Q-2 nonimmigrant status, including:
- Nonresident alien students in F-1, J-1, M-1, or Q-1 nonimmigrant status
- Nonresident alien teachers and researchers in J-1 or Q-1 nonimmigrant status
- All other Nonresident alien Exchange Visitors and Cultural Exchange Visitors in J-1, Q-1, or Q-2 nonimmigrant status
Caution! Wages paid to aliens in F-1, J-1, M-1, Q-1, or Q-2 nonimmigrant status who have become resident aliens for tax purposes are subject to Social Security And Medicare taxes under the same conditions that would apply to U.S. Citizens. For a list of other exempt services, refer to Publication 15, Circular E, Employer's Tax Guide.
- Social Security Tax / Medicare Tax and Self-Employment
- Form 941, Employer's Quarterly Federal Tax Return, and Instructions (PDF)
- Internal Revenue Code Section 3121
- Income Tax Regulation 31.3121-1 et seq.
- Publication 15, Circular E, Employer's Tax Guide ( PDF)
- Publication 51, Circular A, Agricultural Workers Tax Guide
- Publication 80, Circular SS, Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands
- Publication 179, Federal Tax Guide for Employers in Puerto Rico (Published in Spanish only as Circular PR - Guia Contributiva Federal Para Patronos Puertorriquenos)
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.