Student Employment FICA Exemption Policy
The Internal Revenue Code imposes a tax on employers and employees referred to as the Federal Insurance Contributions Act (FICA). The Code, however, contains a number of exceptions to the FICA tax. The first is the Student FICA exception of Section 3121 (b)(10), which exempts services performed for a college or university by a "student who is enrolled and regularly attending classes" at the institution. The second is the Nonresident Alien (NRA) FICA exception under Section 3121(b)(19), which exempts a NRA employee in F-1, J-1, Q-1 status.
This policy is intended to inform university employees and others about relevant FICA tax issues; it does not constitute legal or tax advice.
Student FICA Exception
A student employee of Loyola University Chicago is eligible for this exemption if the following conditions are met:
The student employee must be enrolled and attending classes on at a least half time basis, either in an undergraduate or graduate program of Loyola University Chicago, during the semester/quarter in which the work is being performed.
The student employee must be classified in a student employee job code (L7XXX, 14XX, or 15XX) as designated by the Human Resources Department.
Their primary role at Loyola University Chicago is that of a student; i.e. Regular Full and Part Time Staff & Faculty are not eligible for the exemption.
Determination of Eligibility for Exemption
Upon hire, Human Resources will verify, via the Student Information System, that the student employee is enrolled at least half time for the semester/quarter. Half time basis is defined as:
|Student Status||Fall, Spring, Winter Term||Summer Term *|
|Undergraduate||6 hrs||6 hrs|
|Graduate - Semester||4 hrs||2 hrs|
|Graduate - Quarter||3 hrs||3 hrs|
|Law School||4 hrs||4 hrs|
*Summer term is defined as all sessions within the summer term
If the student is enrolled in the minimum number of credit hours, they will be considered exempt from FICA for the duration of the term/session. Should circumstances change after the "add-drop" period and the minimum thresholds are not met, FICA tax will be withheld.
Exceptions to the credit hour requirements are:
If the student is in his/her final semester/quarter (has applied for graduation).
If the student is taking Thesis or Dissertation.
Human Resources will reassess eligibility for FICA exemptions at the start of each new semester/quarter and again after the “add-drop” period each term via a report of active student employees and their number of enrolled hours per term.
The FICA exemption is not eligible for a student employee during summer break if he/she is not enrolled at Loyola University Chicago during the summer sessions. Human Resources will monitor student employee enrollment each summer session to determine eligibility for the FICA Exemption.
The Summer 2013 term has multiple summer sessions, with the main sessions as follows:
|Summer Session A||May 20 - June 28|
|Summer Session B||July 1 - August 9|
|Summer Session C||June 3 - July 26|
If there is a break in enrollment of more than five weeks in length, the student employee will not be eligible for the FICA exemption. For example, if the student is enrolled at least half time in Summer Session A, but not enrolled in Summer Session B or C, the FICA exemption will end effective June 15th.
The FICA exemption does not apply to any other University break if that break extends more than five weeks in length.
NRA FICA Exception
A student, teacher, researcher, or scholar temporarily present in the U.S. on an F-1, J-1, or Q-1 visa is usually exempt from FICA taxes, as long as they are considered “nonresident aliens” for income tax purposes.
Determination of Eligibility for Exemption
Upon hire, any visa holder should fill out the Foreign National Information Form. The University must perform a substantial presence test on each employee to determine their status as either a nonresident alien or resident alien for tax purposes.
An F-1 student visa holder is considered a nonresident alien for five calendar years
A J-1 visa holder whose primary purpose is a student is considered a nonresident alien for five calendar years
A J-1 visa holder whose primary purpose is that of a teacher, researcher, or scholar is considered a nonresident alien for two calendar years
Employees in H1-B, TN, O-1 or E-3 status are fully subject to FICA tax withholding. No FICA exemption is available to these visa categories
In order to measure an employee’s status we must look at their date of entry in the U.S. If an individual is physically present in the U.S. for any part of a calendar year, that year counts as a full year. For example, a J-1 researcher who arrived in the U.S. on December 27th, 2011 counts calendar year 2011 as their first calendar year. They would be exempt from FICA from December 27th, 2011 through December 31st, 2012. On January 1st, 2013 this employee would be considered a resident alien for tax purposes and no longer be exempt from FICA.