Janice Lozano
If you are a student with a college job, you may be wondering about your tax obligations, specifically whether you need to pay Social Security taxes. In the United States, Social Security taxes, also known as FICA taxes, generally apply to wages earned by employees. However, there is an exception for students employed by a school, college, or university where they are pursuing their studies. This means that if you work for your college or university, you may be exempt from paying Social Security taxes on your wages. It's important to note that this exemption typically applies only during school breaks of a certain duration, and there are specific criteria to determine if an employee qualifies as a student for tax purposes. Additionally, if you receive Supplemental Security Income (SSI) due to a disability, you can continue to receive SSI benefits while working and attending college, although your earnings may impact your benefit amount. Understanding your tax obligations as a student worker is crucial, and it's always recommended to consult official sources or tax professionals for the most accurate and up-to-date information.
| Characteristics | Values |
|---|---|
| Do students pay social security on their college jobs? | FICA (Federal Insurance Contributions Act) taxes do not apply to service performed by students employed by a school, college, or university where the student is pursuing a course of study. |
| Who does FICA apply to? | Employers collect FICA and report earnings electronically. |
| What does FICA fund? | Social Security and Medicare programs, providing benefits for retirees, the disabled, wounded warriors, and children. |
| What is SSI? | SSI (Supplemental Security Income) is a monthly cash benefit for individuals with disabilities of any age or individuals aged 65 or older. |
| Who is eligible for SSI? | To qualify for SSI, a person's non-exempt resources must be less than $2,000 for an unmarried person or $3,000 for a married couple. |
| Can students receive SSI? | Yes, students can receive SSI while attending school. However, earned income from a job will generally reduce a person's monthly SSI benefit. |
| Are there any rules regarding students and SSI? | Yes, there are specific rules that apply to students, referred to as Student Earned Income Exclusions (SEIE), which are more generous than the rules for non-students. |
| How do earnings affect SSI benefits? | SSI excludes $65 plus one-half of the remaining earnings, along with an additional general income exclusion of $20. The remaining countable earnings will reduce the monthly SSI amount. |
| What if a student doesn't graduate on schedule? | They must complete a new SSA-1372-BK form, have a school official certify it, and return pages 2 and 3 to their local Social Security office. |
| What happens if a student changes schools? | They must complete a new SSA-1372-BK form, leave pages 4 and 5 with a school official at the new school, and return pages 2 and 3 to their local Social Security office. |
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What You'll Learn
- Students working for their school, college, or university may be exempt from FICA taxes
- Students must be enrolled full-time or half-time in their last semester
- The individual must be attending school predominantly for educational reasons
- Colleges and universities can determine if an employee is eligible for the FICA exception
- State and local government employees working for a public school system may or may not pay Social Security taxes
Students working for their school, college, or university may be exempt from FICA taxes
Students working for their school, college, or university may be exempt from paying Social Security and Medicare taxes (FICA taxes). This exemption applies to students who are enrolled and regularly attending classes at the institution. However, it is important to note that this exemption only applies if the student is not considered a professional, career, or full-time employee.
To determine if a student qualifies for the FICA tax exemption, the primary function of the organization needs to be considered. If the organization is a school, college, or university, and the student is pursuing a course of study, they may be exempt. Additionally, the nature of the employment relationship between the student and the institution is examined to determine if education or employment is predominant.
Half-time undergraduate or graduate students can qualify for the FICA tax exemption. A half-time undergraduate student is defined as an enrolled student carrying a half-time academic workload, as determined by the institution, amounting to at least half of the workload required for full-time status.
Post-qualifying Ph.D. candidates in TA, GA, or student employee positions who are working on their dissertations may also be exempt from FICA tax withholding. However, they must submit a FICA Exemption Request Form, signed by both the department and the student.
It is worth noting that students are not automatically exempt from paying all taxes. Their earnings remain subject to federal and state income taxes, and FICA taxes will be withheld if the student acquires professional, career, or full-time employee status.
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Students must be enrolled full-time or half-time in their last semester
Students who receive SSI (Supplemental Security Income) due to a disability can continue to receive their benefits while working a college job, provided they are enrolled full-time or half-time in their last semester. It is important to note that the earned income from a job will generally reduce the monthly SSI benefit.
The Social Security Administration (SSA) has specific rules regarding how a student's earnings affect their SSI benefit, known as Student Earned Income Exclusions (SEIE). These rules are more favourable for students than those for non-students. Under SEIE, if a student receives SSI and has earned income from employment or self-employment, SSI excludes $65 plus half of the remaining earnings, along with a $20 general income exclusion. Any remaining countable earnings will lead to a reduction in the monthly SSI amount. For example, if a student earns $615 in a month, their SSI benefit will be adjusted accordingly.
It is important to understand the impact of income on SSI benefits. In the case of Sally, who earned $1,500 in June and July and $2,200 in August while working a summer job, she was entitled to her full SSI benefit for the first two months because her earnings were below $1,780. However, in August, her earnings exceeded the threshold, resulting in exclusions and reductions in her SSI benefit.
To ensure compliance and maintain SSI benefits, students must notify the SSA of any changes in their school attendance, such as transferring to another school or not graduating on schedule. This can be done by calling, visiting, or mailing a completed form SSA-1383 to the local Social Security office. Additionally, students must complete and submit form SSA-1372-BK, "Student's Statement Regarding School Attendance," with certification from a school official.
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The individual must be attending school predominantly for educational reasons
In the United States, individuals who receive SSI (Supplemental Security Income) due to a disability can continue to receive SSI while they are students. However, there are specific rules, referred to as Student Earned Income Exclusions (SEIE), that apply to students regarding how earnings from a job affect their SSI benefit amount. These rules are more generous than those for non-students.
According to the SEIE rules, if an SSI recipient has earned income from employment or self-employment, SSI excludes $65 plus one-half of the remaining earnings, along with an additional general income exclusion of $20. The remaining countable earnings will then reduce the monthly SSI amount. For example, if an SSI recipient earns $615 in a month, their SSI benefit will be calculated as follows: $65 plus one-half of the remaining earnings ($275) will be excluded, resulting in a total exclusion of $340. This exclusion amount will then be subtracted from the earned income of $615, leaving $275 as countable earnings. This amount will reduce the individual's monthly SSI benefit.
It is important to note that there is an annual earnings exclusion limit for students. For 2015, the maximum annual earnings exclusion for students was $7,180, as illustrated in the example of Sally, who earned a total of $5,200 in 2015 and did not exceed this limit.
Additionally, students can receive benefits during the summer months if they were in full-time attendance immediately before the break and intend to return to elementary or secondary school immediately after, as long as the break does not exceed four months. Benefits may also stop if the student marries, reduces their attendance below full-time, changes schools, receives income from their employer to attend school, or is convicted of a crime.
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Colleges and universities can determine if an employee is eligible for the FICA exception
Students often take up jobs to help with their school expenses, either during summer breaks or part-time during the school term. In the United States, FICA (Federal Insurance Contributions Act) taxes are imposed on all wages paid or received with respect to employment. However, there is a FICA exception for students who work at their college or university.
- The individual must be enrolled and regularly attending classes at the institution where they are employed.
- The individual must be pursuing an educational credential as their primary purpose for being at the institution.
- The individual must be at least a half-time student, which typically means enrolling in a number of credit or unit hours that amount to at least half of the workload of a full-time student.
- The individual must not be a full-time or professional employee.
- The individual must not be a career employee eligible to receive certain employment benefits, such as vacation, sick leave, or reduced tuition.
It is important to note that the FICA exception does not apply to all student employees. For example, postdoctoral students, medical residents, and individuals working during school breaks of more than 5 weeks may not be eligible for the exception. Colleges and universities can refer to the Revenue Procedure 2005-11 safe harbor guidelines to determine if an employee is eligible for the FICA exception.
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State and local government employees working for a public school system may or may not pay Social Security taxes
Whether or not state and local government employees working for a public school system must pay Social Security taxes depends on several factors. Firstly, it is important to distinguish between common-law employees and independent contractors. Common-law employees are typically subject to Social Security and Medicare withholding, whereas independent contractors are considered self-employed and are therefore not subject to the same withholding. An official who receives a salary is generally considered a common-law employee, even if their remuneration is called "fees."
Secondly, the type of position held by the government employee matters. For example, election workers who earn less than a specified amount per calendar year may be exempt from paying Social Security taxes under the Federal Insurance Contributions Act (FICA). Similarly, enrolled students who work part-time and for whom education is the primary purpose of their employment may also be exempt from FICA.
Additionally, the date of employment is relevant. State and local government employees hired before April 1, 1986, may be exempt from mandatory Medicare tax if they meet certain requirements, such as performing regular and substantial services for remuneration before the specified date. On the other hand, employees hired or rehired after March 31, 1986, are generally covered for Medicare unless a specific exclusion applies.
Full Social Security coverage, including mandatory Social Security tax, was mandated beginning July 2, 1991, for state and local government employees who are not members of a qualifying public retirement system (FICA replacement plan) or covered under a Section 218 Agreement, unless a specific legal exclusion applies. A Section 218 Agreement is a contract between a state or local government entity and the Social Security Administration that coordinates Social Security and Medicare coverage for state and local government employees.
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Frequently asked questions
It depends. If you work part-time at your school, college, or university, you may qualify for an exemption from social security tax. Your employment is contingent on your full-time enrollment, and your primary relationship with the institution must be as a student.
In that case, you will likely be required to pay social security tax. This is a mandatory tax in the United States, and most workers are mandated to contribute to the Social Security system.
If you have multiple jobs and overpay your social security tax, you may receive a refund when you file your federal income tax return.
Yes, there are a few exceptions to the social security tax. For example, civilian employees of the federal government hired before 1984 are covered under the Civil Service Retirement System (CSRS) and are not required to pay social security taxes. However, they will not receive social security benefits either.
