FICA Exempt Determination Process
- Jennifer Zatarski
This process will help employees determine if they are exempt from Social Security and Medicare taxes.
FICA Exemption Rules for International Students and Scholars Based on IRS Tax Code
Under Section 312 (b)(19) of the Internal Revenue code, students and scholars in F-1 and J-1 visa status are exempt from FICA taxes, as long as they are nonresidents for income tax purposes under section 770 (b) of the IRS tax code.
This exemption applies to the following:
F-1 and J-1 Students for the first 5 calendar years
J-1 Scholars for the first 2 calendar years.
It is the calendar year of entry which is counted toward the two or five calendar years respectively, the actual date of entry is not important.
This exemption does not apply to the following:
Spouse and children on F-2 and J-2 visas
Non-resident aliens who have become resident aliens for tax purposes (Internal Revenue Code section 7701 (b))
The Code provides one exemption from Social Security/Medicare taxes for international students and it provides another exemption from Social Security/Medicare taxes for all students, American and international. This is the “student FICA exemption” and it may operate to exempt an international student from Social Security/Medicare taxes even though he/she has already become a resident alien under tax purposes.
However, international students are eligible for the Student FICA Exception under the same rules that apply to U.S. citizen students. Revenue Procedure 2005-11 provides instructions for determining who is eligible for the “student FICA exemption.”
Human Resources has this statement on the new hire onboarding email:
Valparaiso University is obligated to withhold all federal, state, and county taxes as determined by the respective governing bodies. The tax forms completed during onboarding help to insure taxes are withheld as the employee deems necessary for his/her personal tax situation. FICA taxes (Medicare and Social Security) will be withheld from all employees unless the employee can provide supporting documentation that proves exemption from these taxes. If an employee believes they are exempt, he/she should contact Payroll (payroll@valpo.edu) as soon as possible after hire.
Instructions
When a new employee contacts Payroll regarding FICA eligibility
The Payroll Department cannot give tax advice. Send the employee the email template below from the payroll@valpo.edu inbox.
Reference items for Payroll staff
Mainly two statuses are FICA exempt:
Have F-1 or J-1 Student VISA and in U.S. less than 5 years from initial entry.
Have J-1 Scholar VISA and in U.S. less than 2 years from initial entry.
If the employee needs additional guidance in determining their FICA status, refer new employee to Janice Lin, Director of International Students and Scholars, x.1543. She will not be able to give tax advice or determine their FICA eligibility, but she will be able to provide additional resources:
If they believe they are FICA Exempt, they must provide Payroll with an email stating why they believe they are exempt. Save supporting email with NOE in Perceptive for changes made. If an individual voluntarily includes supporting documentation, all details and documents provided will be attached to the NOE in Perceptive; however, Payroll will confirm with HR before saving government documents.
Email Template:
Hello!
Thank you for your inquiry regarding the FICA Exempt tax status. The information provided in this email is meant for general reference and guidance. It is not meant nor should be used in place of professional tax, legal, or immigration policy advice.
Determining if the FICA exemption applies is the responsibility of the employee, not Valparaiso University. The criteria of whether or not an individual is exempt from FICA taxes (Medicare and Social Security) is determined by the Internal Revenue Service (IRS). Below is information from the IRS that may be helpful:
FICA Exemption Rules for International Students and Scholars Based on IRS Tax Code
Under Section 312 (b)(19) of the Internal Revenue code, students and scholars in F-1 and J-1 visa status are exempt from FICA taxes, as long as they are nonresidents for income tax purposes under section 770 (b) of the IRS tax code.
This exemption applies to the following:
F-1 and J-1 Students for the first 5 calendar years
J-1 Scholars for the first 2 calendar years.
This exemption does not apply to the following:
Spouse and children on F-2 and J-2 visas
Non-resident aliens who have become resident aliens for tax purposes (Internal Revenue Code section 7701 (b))
It is the calendar year of entry which is counted toward the two or five calendar years respectively, the actual date of entry is not important.
The Code provides one exemption from social security/Medicare taxes for international students and it provides another exemption from social security/Medicare taxes for all students, American and international. This is the “student FICA exemption” and it may operate to exempt an international student from social security/Medicare taxes even though he/she has already become a resident alien under tax purposes.
However, international students are eligible for the Student FICA Exception under the same rules that apply to U.S. citizen students. Revenue Procedure 2005-11 provides instructions for determining who is eligible for the “student FICA exemption.”
If you need assistance in calculating the number of calendar years you have been in the United States, you can request your travel history records from U.S. Customs and Border Protection at their website: I94 - Official Website .
If after reading the above information you require additional guidance to determine whether or not you may qualify for the FICA Exempt tax status, please contact Janice Lin, Director of International Students and Scholars, x.1543. Although she will not be able to give you tax advice or determine your FICA eligibility, she will be able to provide you with additional resources for clarification.
To update your payroll tax withholding records with Valparaiso University, send an email to payroll@valpo.edu stating you are exempt from FICA taxes. In the email, please explain how you arrived at your determination. Once we receive your email and do not have any follow-up clarifying questions, we will remove the FICA taxes and assist in filing for a refund of any FICA taxes already paid.
Best regards,
Finance-Payroll