Janice Lozano
Students often have part-time jobs while they are studying. This raises the question of whether they have to pay social security taxes on their earnings. In the United States, the answer depends on several factors, including the student's immigration status, the type of employment, and whether they receive financial aid or benefits. Foreign students with F-1, J-1, or M-1 visas are generally considered non-resident aliens and are exempt from social security and Medicare taxes if they have been in the country for less than five years. On the other hand, resident aliens and US citizens may be subject to social security taxes on their earnings, depending on the nature of their employment and their enrolment status. Students with disabilities who receive SSI benefits may continue to do so while attending school, but their benefits may be affected by their income and attendance.
| Characteristics | Values |
|---|---|
| Do students have to pay social security? | Foreign students in the US on F-1, J-1, or M-1 non-immigrant status are exempt from social security tax and Medicare tax if they have been in the country for less than 5 calendar years. |
| Students who have been in the US for more than 5 calendar years become resident aliens and are liable for social security and Medicare taxes. | |
| Students who are US citizens and are working while enrolled at a school, college, or university are exempt from FICA (Social Security and Medicare) taxes. | |
| Students receiving SSI (Supplemental Security Income) due to a disability can continue to receive SSI while a student. | |
| Students receiving SSI cannot have income exceeding a certain threshold and must notify the SSA if their estimated earnings change. |
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What You'll Learn
Foreign students and social security
In the United States, foreign students with F-1, J-1, or M-1 nonimmigrant status are generally exempt from Social Security and Medicare taxes on wages paid to them for services performed within the country if they have been present for less than five calendar years. These students are considered nonresident aliens under the residency rules of IRC section 7701(b). To qualify for this exemption, the services performed must be allowed by USCIS for these nonimmigrant statuses and must align with the purposes for which such visas were issued.
On the other hand, foreign students in the United States with F-1, J-1, or M-1 nonimmigrant status who have been in the country for more than five calendar years may become resident aliens for tax purposes if they meet the "Substantial Presence Test." As resident aliens, they generally become liable for Social Security and Medicare taxes. However, they may still be eligible for exemption under the "student FICA exemption."
The "student FICA exemption" applies to all students, regardless of their US tax residency status. Under this exemption, Social Security and Medicare taxes do not apply to services performed by students employed by a school, college, or university where the student is enrolled at least half-time. The student's on-campus employment must be incidental to and for the purpose of pursuing their course of study.
It is important to note that simply having a Social Security Number does not authorize an individual to work in the United States. However, if a foreign student has been granted legal authorization to work and is employed, they are required to apply for and obtain a Social Security Number. The process may involve providing valid immigration documents, such as a passport, I-20 or DS-2019 form, and an I-94 card or its electronic equivalent. Additionally, F-1 students must provide evidence of lawful F-1 employment, such as on-campus job offers or authorization for practical training. J-1 students, on the other hand, must show evidence of employment and maintain valid J-1 status while being registered for a full course of study.
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Student employment and FICA exemption
Students who are employed by a school, college, or university where they are pursuing a course of study are exempt from paying FICA (Federal Insurance Contributions Act) taxes on their wages. This exemption applies only if the student is enrolled and regularly attending classes at the educational institution, and their primary purpose for being there is to pursue an educational credential. The student must also not be a full-time or professional employee of the institution.
To qualify for the FICA exemption, the student employee must meet the following criteria:
- Be at least a half-time undergraduate or graduate student
- Not be a full-time employee
- Not be a professional employee
- Not be a career employee
The educational institution must also be a school, college, or university as its primary function. The Internal Revenue Service (IRS) has issued guidelines, known as Revenue Procedure 2005-11, to help employers determine if a student employee is eligible for the FICA exemption. These guidelines include safe harbor tests that, if met, automatically exempt the student from FICA taxes. If a student employee does not meet these safe harbor tests, the employer must review all relevant information and IRS regulations to make a determination.
It's important to note that not all student employees qualify for the FICA tax exemption. Payments to certain positions, such as clinical fellows, medical residents, and postdoctoral research associates, are not eligible for the exemption. Additionally, students who are enrolled in online schools or alternative education programs may still qualify for benefits if they are in full-time attendance. Students must report any changes in their enrollment status or employment to the Social Security Administration (SSA) to ensure they continue to receive their benefits.
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SSI rules for college students
Students in the US do not have to pay Social Security taxes on income earned while working for a school, college, or university where they are pursuing a course of study. However, they may be eligible for Social Security benefits under certain conditions.
SSI (Supplemental Security Income) is a monthly income program for individuals with disabilities of any age or those aged 65 or older. The federal SSI monthly benefit amount was $733 in 2016, with some states providing additional supplements. For 2018, the maximum federal benefit increased to $750 per month.
- Earned Income Exclusion (SEIE): Under the SEIE rules, the first $1,780 of monthly earnings, up to an annual amount of $7,180, is excluded from SSI calculations for students. If a student earns more than $1,780 per month, the excess amount is subject to the general SSI rules for earned income. To qualify for SEIE, the student must be under 22 years old and "regularly attending school," defined as twelve hours per week for high school, eight hours per week for college, and twelve hours per week for vocational training.
- Financial Aid: Any financial aid that is not immediately used to pay for tuition, fees, or necessary educational expenses is excluded from the student's income in the month of receipt and up to nine months after. If the financial aid is not used for educational expenses and is spent on non-education expenses, it is treated as income in the month it is spent.
- On-Campus Residence: If a student resides on campus and their room and board are covered by their parents or financial aid, their living arrangements are considered temporary. In such cases, the student is expected to return to their permanent address during holidays, vacations, or after graduation, and they must have lived at their permanent address for at least one month before attending school.
- Veterans' Benefits: SSI regulations also address how educational benefits for veterans affect SSI eligibility. These benefits may be treated as income or a resource that influences SSI eligibility.
- Benefits Cessation: SSI benefits may stop if the recipient marries, stops attending school, reduces their attendance below full-time, changes schools, receives employment compensation for attending school, or is convicted of a crime. Benefits also typically cease the month before the recipient turns 19.
It is important to note that these rules are subject to change and may have been updated since the publication of the sources cited. For the most up-to-date information, it is recommended to refer to the official website of the Social Security Administration (SSA) and consult with relevant authorities or experts in this field.
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Student benefits and summer months
Students employed by a school, college, or university where they are pursuing a course of study are exempt from FICA (Social Security and Medicare) taxes. However, this exemption depends on whether employment or education is predominant in the individual's relationship with the institution.
Regarding student benefits and summer months, students can continue to receive benefits during the summer even if they are not attending school, provided that the break does not exceed four months, they were in full-time attendance immediately before, and they intend to return to elementary or secondary school immediately after. Benefits may also stop if the student turns 19 during the summer break, in which case the last month of payment will be the month before their 19th birthday.
Students may also consider taking advantage of student accommodation during the summer. Universities typically offer flexible rental terms and discounted rates for student housing over the summer, making it a cost-effective option. Student accommodation is often fully furnished, equipped with essential appliances, and conveniently located near city centres, which is ideal for those attending summer courses or internships.
It is important to note that, in general, student benefits from the Social Security Administration (SSA) in the United States are only paid to students taking courses at grade 12 or below. Students enrolled in full-time attendance at a home school, alternative school, online school, or General Education Development (GED) program may also qualify for benefits.
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Student benefits and disability
Students with disabilities can access a range of benefits and support services to assist with their educational and living needs. The availability and eligibility criteria for these benefits vary depending on the student's location, age, course level, disability duration, the impact of the disability, and other sources of income. Here is an overview of some benefits available for students with disabilities:
Disabled Students' Allowance (DSA)
The DSA is a benefit available in the UK to support students with disabilities, mental health problems, or long-term illnesses. It covers study-related costs associated with the student's condition and can be claimed in addition to other student finance. The type and amount of support received through DSA are determined by the individual's needs rather than household income. This can include funding for specialized equipment, assistive technology, and related training.
Personal Independence Payment (PIP)
PIP is a benefit available to students with disabilities in England, Wales, and Northern Ireland. It provides support for individuals who need help with personal care or mobility due to their disability. PIP is not means-tested, so student grants, loans, or savings do not affect eligibility. However, improvements in health or course activities suggesting improved health may lead to a review or discontinuation of PIP.
Adult Disability Payment (ADP)
ADP is a benefit available to full-time students in Scotland who require assistance with personal care or mobility. Similar to PIP, it is not means-tested, and students can receive it regardless of their income or savings.
Supplemental Security Income (SSI)
In the United States, students with disabilities who receive SSI can continue to receive their benefits while attending school. However, there are special rules that apply to SSI recipients who are students, and these rules can impact the benefit amount.
Universal Credit (UC)
UC is a benefit that replaces older means-tested benefits in the UK. Full-time students with disabilities may be eligible for UC if they are assessed as having a "limited capability for work" before their course starts. This means that due to their mental or physical condition, it is unreasonable to require them to work.
Income-Related Employment and Support Allowance (ESA)
ESA is another benefit available to students with disabilities in the UK. It can be claimed by students who are assessed as having a "limited capability for work" and receive benefits such as ADP, PIP, or DLA. ESA includes an extra amount for those with a limited capability for work-related activity, known as the "support component."
It is important to note that the eligibility criteria and application processes for these benefits may differ based on the specific country, region, or local regulations. Students with disabilities should refer to their local or national government websites or seek advice from relevant organizations to understand the full range of benefits available and the specific requirements for each.
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Frequently asked questions
It depends on the student's situation. Foreign students in the US on F-1, J-1, or M-1 non-immigrant status are exempt from social security taxes if they have been in the country for less than 5 years. However, if they become a resident alien, they may be subject to social security taxes. Students employed by a school, college, or university where they are pursuing a course of study are also exempt from social security taxes.
Yes, students with disabilities who receive SSI (Supplemental Security Income) can continue to receive SSI while attending school.
Students below grade 12 may qualify for benefits if they are in full-time attendance. Students can also receive benefits during the summer months if they are not in school for less than 4 months and intend to return to elementary or secondary school immediately after.
If a student changes schools, they must complete a new SSA-1372-BK form and have a school official certify it. They must then return the completed form to their local Social Security office.
Students must report any changes in their estimated earnings from work to the SSA. Benefits may stop if a student marries, stops attending school, reduces their attendance, changes schools, or is convicted of a crime.
