Background
The Student Employee FICA Exemption rules provide an exemption from OASDI (Social Security) and Medicare taxes (along with the employer matching, FICA) when certain criteria are met. The rules governing this exemption are outlined in the Internal Revenue Code, Section 3121(b)(10), and they allow the university to exempt students from these taxes, when performing employee services, as long as certain criteria are met with respect to the type of work and enrollment status.
Eligibility Criteria
To be eligible for the exemption, students must:
- be enrolled in enough hours to be classified as at least half-time status, pursuing a course of study leading to a degree or certificate, or be enrolled in all hours needed in the final semester before graduation, and
- be working in a job less than full-time during the semester, and
- be working in a job that is not classified as a “professional” position that would qualify the employee for Teacher Retirement System (TRS) or Optional Retirement Program (ORP), and other leave benefits.
Note that the rules expressly prohibit employees working in a Post-Doctoral position from receiving the Student FICA exemption.
Hours Required for Half-Time Status
Eligibility status will be evaluated on an ongoing basis throughout the semester. Adding or dropping classes could affect the exemption status for the remainder of the semester.
|
Half-Time Requirements |
Undergraduate Students |
Graduate Students |
Law Students |
|---|---|---|---|
|
Long Semester (Fall or Spring) |
6 hours |
5 hours |
5 hours |
|
9- or 12- Week Summer* |
6 hours |
2 hours |
3 hours |
|
6 Week Summer (1st or 2nd)* |
3 hours |
2 hours |
3 hours |
*To determine hours enrolled for both a 6- week and a 9- or 12- week summer semester:
- Divide the hours enrolled in the 9- or 12- week session between the two 6- week sessions.
- Add that number to the hours enrolled in each of the 6- week sessions.
Exemption for Semesters and Break Periods
Long Semesters
The exemption covers any pay period that falls wholly or partially within the semester, and the pay period is always defined as a full month.
Example: Fall classes begin in late August. A student who meets the enrollment criteria on the census date will be eligible for the exemption for all work performed during the month of August.
The exemption may also apply to break periods during which the university does not offer classes, when the break is five weeks or less, such as winter break. If the student is still enrolled half-time as of the last day of the semester, the student will be eligible for the break period that follows.
Example: If a student is eligible for the exemption during the fall semester and remains in half-time status at the end of the semester, the student can remain eligible for the exemption through the break period between semesters, until Jan. 31, if working in an eligible job, and even if not re-enrolled in the spring semester. However, if the student drops below half-time status during the fall semester, the exemption will be removed and the student will not be eligible for the break period exemption.
Summer Semesters
To meet the eligibility requirements for exemption during the summer, the employee must continue working in an eligible position and be enrolled in summer classes. The months of exemption will vary based on the circumstances of the student and the begin and end dates of the semesters. Some common scenarios are described below, when a student is working in an eligible job.
Example: An undergraduate student enrolled in three hours, or a graduate student enrolled in two hours for the first 6-week session, will usually be exempt in June and July, since the first 6-week session usually begins in June and ends in July.
Example: An undergraduate student enrolled in three hours, or a graduate student enrolled in two hours for the second 6-week session, will usually be exempt in July and August, since the second 6-week session usually begins in July and ends in August.
Example: An undergraduate student enrolled in six hours, or a graduate student enrolled in two hours for the 9- or 12-week session, will usually be exempt in June, July, and August, since the 9- and 12-week sessions usually begin in June and end in August.
Example: An undergraduate student enrolled in two hours for the first 6-week session and two hours for the 12-week session, will usually be exempt in June and July, but not August. The half-time status is calculated by dividing the two hours from the 12-week session by two and adding the resulting one hour to the two hours of the first 6-week session. The total of three hours qualifies the student for the exemption in June and July. A graduate student similarly enrolled would also be exempt in June, July, and August. The half-time status is sufficiently met for June, July and August by applying just the two hours enrolled in the 12-week session.
For additional information on the university’s enrollment requirements, please see the catalog for Academic Policies and Procedures. The Student FICA exemption regulations can be found in the Internal Revenue Service procedure Rev. Proc. 2005-11.
Last updated 06/03/2020