Social Security and Medicare (FICA) Tax Deductions
FICA refers to the combined taxes withheld for Social Security and Medicare (FICA stands for the Federal Insurance Contributions Act). On your pay statement, Social Security taxes are referred to as OASDI, for Old Age Survivor and Disability Insurance. Medicare is shown as Fed Med/EE.
Your FICA withholdings depend on the employee group you belong to:
Nonstudent employees are generally subject to FICA tax withholding. Social Security (OASDI) is withheld on taxable gross income up to a certain wage limit each year, but there is no wage limit for Medicare withholding. The current rates of withholding are 6.2% for OASDI and 1.45% for Medicare. However, some federal employees and police department employees only have Medicare taxes withheld. When an employee's wages exceed $200,000, an additional .9% Medicare tax is withheld beginning with the pay period when the wages go over $200,000 through the end of the calendar year.
FICA wage limits and tax rates: FICA taxes are taken on earnings up to a certain limit. This limit may change from year to year. For more detail on FICA wage limits, visit the Social Security website and search "OASDI and SSI Program Rates & Limits."
Students generally do not have to pay FICA taxes. The University follows IRS rules in determining a student's exemption from FICA withholding.
To be eligible for a student exemption from FICA taxes, an employee must be regularly attending classes, and the student's job must be "incident to and for the purpose of pursuing a course of study," according to IRS rules.
Number of Credit Hours
Employees will qualify for a FICA exception if they meet the minimum criteria for a half-time student:
Undergraduate: 6 credit hours
Graduate student: 3 credit hours
Ph.D. candidate: 1 credit hour
Advanced master's candidate: 1 credit hour (as long as they have completed their coursework and are working on a thesis or dissertation for credit)
Employees Not Eligible for Student FICA Exemption
Full-time employees: Those with a normal work schedule of 40 hours a week
Professional employees: Defined as employees whose work:
- Requires advanced knowledge in a field of science or learning
- Requires the consistent exercise of discretion and judgment
- Is predominantly intellectual and varied in character
Some exceptions may be made after considering all the facts and circumstances.
Career employees: Defined as those eligible for:
- Retirement plans
- Vacation, sick leave, and paid holidays
- Tuition benefits
- Life insurance, dependent care, and other considerations
Postdoctoral students and fellows
Medical residents and interns
Students Working at Beginning or End of an Academic Term
If the academic term begins or ends at any point within a pay period, the entire pay period is eligible for the exemption from FICA.
Breaks of Under or Over 5 Weeks
If the student is registered for the following semester, the student will be eligible for the FICA exemption if the break is less than five weeks. If the student works during a school break of more than five weeks (over the summer, for example), the student will not be eligible for a FICA exemption if the student is not attending classes during the break.
For More Information
For more details or questions about student FICA exemption and IRS Revenue Procedure 2005-11, contact Payroll Services at 4-UOHR (612-624-8647, or 800-756-2363 in Greater Minnesota).
Students and scholars temporarily in the U.S. on F-1, J-1, M-1, and Q-1 visas are usually exempt from FICA taxes. (They must be nonresidents for income tax purposes under section 7701(b) of the IRS tax code.) This exemption applies to wages for work in the U.S. that is allowed by INS and "performed to carry out the purposes for which such visas were issued to them."
This exemption applies to:
- F-1 and J-1 student visa holders for the first five calendar years
- J-1 scholars (including teachers, professors, researchers, and alien physicians) for the first two calendar years
This exemption does not apply to:
- Spouses and children on F-2, J-2, M-2, and Q-2 visas
- Nonresident aliens who have become resident aliens for tax purposes (Internal Revenue Code section 7701(b))
- Nonresident aliens who have changed to any visa status other than F-1, J-1, M-1, or Q-1
Definition of Calendar Year
For IRS exemption rules, IRS uses the period from January 1 to December 31, not 12 consecutive months. No matter what part of the year the F-1 or J-1 visa holder originally entered the country, it is counted as a full calendar year when determining the exemption for FICA withholding.