Most employees and self-employed individuals must pay Social Security tax, including the president and members of Congress. The few taxpayers who do not have to pay the tax must meet Internal Revenue Service requirements. Social Security tax is one part of the Federal Insurance Contributions Act tax, with Medicare tax comprising the other half. People who are exempt from Social Security tax are also excluded from Medicare tax.
Students who work at the same school, college or university they are attending are exempt from Social Security tax. The student and the educational institution must satisfy IRS criteria. For example, the organization's main function must be the presentation of formal teaching. It must also have a regular curriculum and staff plus students who regularly attend the institution. Full-time employees normally do not qualify for Social Security tax exemption. However, during semester breaks, a student is exempt from the tax if he works more than 40 hours per week, provided the break does not exceed five weeks.
Churches and associations or conventions of churches are exempt from Social Security tax if they meet Internal Revenue Code 501(c)3. For example, the organization must be established and operated solely for religious purposes. It should also not interfere with or partake in political campaigns. Churches do not have to apply for tax-exempt status from the IRS. Some choose to as a way of gaining recognition as a tax-exempt establishment. Religious organizations that are not churches must usually apply for tax-exempt status through the IRS; an exception applies to organizations with annual gross receipts of up to $5,000.
Religious Sect Members
Members of a recognized religious organization that opposes accepting Social Security benefits might be exempt. The exemption does not apply if the member was ever eligible to receive Social Security benefits, even if he never actually got the benefit. To obtain the exemption, members must complete and file Form 4029 with the IRS.
Generally, nonresident aliens must pay Social Security tax on wages received for services rendered in the U.S. Depending on their nonimmigrant status, there might be an exception. The following classes of nonimmigrants are exempt from Social Security tax: A visas, D visas, F visas, J visas, M visas, Q visas, G visas and H visas. For example, educational professionals and foreign students who are in the U.S. temporarily or nonresidents performing services in the U.S. for a foreign government are exempt.
- IRS.gov: Social Security and Medicare Withholding Rates
- IRS.gov: Internal Revenue Bulletin: 2005-2
- Washington University in St. Louis: Tax Department -- Student FICA Exemption
- ClergyTaxes: Church Questions
- IRS.gov: Tax Guide for Churches and Religious Organizations
- IRS.gov: Social Security/Medicare and Self-Employment Tax Liability of Foreign Students, Scholars, Teachers, Researchers, and Trainees
- Intuit TurboTax: Who Is Exempt From Paying Social Security Tax?