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Student FICA Tax Exemption

Many student employees qualify for an exemption from FICA taxes. To be eligible for exemption from FICA taxes, a student must be a U.S. citizen or permanent resident employed by USF, enrolled at least half time as a USF student (or enrolled for thesis credits or have received graduation verification), whose employment is incidental to their pursuit of a degree and who works no more than 32 hours per week. Full time employees are not eligible for the FICA exemption. Student employees who are non-resident aliens holding J-1 or F-1 visas are exempt from FICA taxes. Residents in the medical professions are subject to FICA taxes.

Student employees may work more than 32 hours per week during regular school breaks of 5 weeks or less and still remain eligible for the FICA tax exemption, as long as the student is otherwise eligible on the last day of classes before the break and eligible to enroll in classes in the semester following the break.

When is a student employee subject to FICA taxes?
Any student employee with one or more appointments totaling more than 0.80 FTE or working over 32 hours per week is subject to FICA taxes.

At USF, Temporary employees subject to FICA taxes participate in the Temporary Employee Retirement Plan (TERP). Participants in TERP have Medicare taxes, but not Social Security taxes withheld. Instead, TERP participants contribute 7.5% of their wages into a retirement investment account in their name. Student employees working over 32 hours per week fall into this category and are automatically enrolled in TERP. Departments are charged only for the corresponding Medicare tax matching expense.

Multiple Appointments
For students holding multiple appointments in different departments, each department is responsible for determining if the student’s combined appointments will exceed 0.80 FTE or 32 hours per week, in which case the student will no longer be eligible for the FICA tax exemption and will be enrolled automatically in TERP. The departments will be charged for the corresponding Medicare tax matching expense.

University Payroll audits all records on a bi-weekly basis to determine actual hours worked. If a student exceeds 32 hours worked per week for 2 or more consecutive pay periods (unless during an eligible break), the student will no longer be eligible to receive the FICA exemption for the remainder of the semester and will be enrolled in TERP.

For additional information, review the guidelines, procedure and FAQs below. For questions contact Payroll.

• Student FICA Guidelines

• Student FICA Tax Exemption Procedure

• Frequently Asked Questions about Student FICA Guidelines