FICA IRS Student Guidelines and Rules
Students generally do not have to pay FICA taxes. The University follows IRS rules in determining a student's exemption from FICA withholding. FICA (Federal Insurance Contributions Act) refers to taxes for Social Security (OASDI) and Medicare. When eligible, OASDI is withheld at 6.2% and Medicare at 1.45%, for a total tax of 7.65%.
To be considered a student, an employee must be enrolled and regularly attending classes in pursuit of a course of study. All active UVA positions must be categorized as "student" positions. In addition, the employee's services must be "incident to and for the purpose of pursuing a course of study," which means the relationship between the employer and the employee must be primarily educational.
Number of Credit Hours
Determination of student status is made prior to the processing of each bi-weekly payroll. Employees will be exempt from FICA taxes if they meet the minimum criteria for a half-time student:
A half-time undergraduate, graduate, or professional student is deemed to be enrolled if he/she is carrying a half-time academic load, as determined by the University Registrar. The per-semester course loads that qualify the student for the FICA tax exemption under safe harbor rules for the fall and spring semesters are as follows:
- Undergraduates eligible for the FICA exemption: 6 or more credit hours.
- Graduates and professional students eligible for the FICA exemption: 6 or more credit hours.
The course loads that qualify the student for the FICA tax exemption for any of the summer terms are as follows:
- Undergraduates: 3 or more credit hours.
- Graduates and professional students: 3 or more credit hours.
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 of 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.
The IRS can ignore the FICA exemption if the institution "inappropriately" applied the guidelines to mischaracterize the relationship between an employee and the institution to avoid paying FICA taxes.