Summer Student Employee FICA Status Verification

Contents:
Overview
    Special Exemption for International Students
    FICA Exemption Grace Period
Summer FICA Status Verification
    Determining Total Enrollment Hours
    Loss of FICA Exemption
      Summer Session Example Matrix
      Example 1
      Example 2
      Example 3
Terms and Definitions

Overview
During the fall and spring semesters, student employees who work on campus are exempt from Federal Insurance Contribution Act (FICA) taxes on wages earned.

However, during the summer term, student employees must be enrolled in at least half time (3 or more hours taken towards career progress) to qualify for exemption from FICA taxes.

Student employees that are not enrolled in a summer session(s) or who are enrolled in less than half time (less than 3 hours taken towards career progress) may have FICA taxes withheld from their paycheck.

Special Exemption for International Students
International student employees are exempt from FICA taxes during all three terms – fall, spring and summer.

FICA Exemption Grace Period
Students who work during the summer term and who are not enrolled during the summer session(s) will continue to be exempt from FICA taxes as long as the break in enrollment is five weeks or less, and provided that the student qualified for the exemption on the last day of classes preceding the summer term and is eligible to enroll in classes for the academic term that follows the summer.

The initial five week FICA exemption grace period is determined by the session end date of the prior spring term plus five weeks (35 days). For example, spring term 2006 ended on May 12. The exemption period for all student employees enrolled in this term will be from May 12 through June 17.

After the initial five week grace period, all student employees will undergo FICA status verification.

Summer FICA Status Verification
The FICA status is verified as of the beginning date of each pay period. For example, if a student employee is exempt from FICA taxes as of the first day of the pay period they are deemed to be exempt for that entire pay period even if their FICA status actually changed during the pay period and vice versa.

To assess a student’s FICA status, each student’s enrollment hours taken towards career progress must be verified.

Determining Total Enrollment Hours
Total Enrollment Hours are based on current session(s) enrollment. A session is considered to be current when the pay period begin date falls within the exemption period. The exemption period is from the first day of the session to 35 days after the last day of the session. For example, the highlighted exemption periods below are current for the payroll beginning 7/1/2006.

Biweekly Pay Calendar Excerpt

 

Summer Session Matrix

For each student employee the Total Enrollment Hours are determined by summing the hours taken toward career progress for all current session enrollments.

It is important to note that due to the possibility of multiple enrollments, various session end dates, and overlapping sessions each student’s FICA status is independently verified based on data variables specific to that student.

Loss of FICA Exemption
After the initial FICA exemption grace period, if a student employee does NOT meet the half-time enrollment hours (3 or more hours taken towards career progress) required to maintain an exempt FICA tax status, the student will now be subject to FICA taxes. The FICA status verification is assessed as of the first day of the pay period.

It is important to understand that session begin and end dates that are used to determine the FICA exemption periods are specific to each student’s academic career and session setup parameters.

Summer Session Example Matrix

 

Example 1
Robert, student employee, was exempt form FICA taxes in the spring term. Robert continues to work on campus during the summer although he will not enroll in any summer sessions. Based on Robert’s last enrollment, his exemption period is from 5/12/2006 to 6/16/2006.

• For the first summer payroll beginning 6/17/2006 (date of FICA verification), Robert will be subject to FICA taxes as he will not meet the Total Enrollment Hours needed to keep his FICA exempt status.

Example 2
Jill, student employee, was exempt from FICA taxes in the spring term. Jill continues to work on campus during the summer and is enrolled in the 3WK summer session for 3 hours taken toward career progress. Based on Jill’s last enrollment after the initial exemption grace period, her exemption period will be from 5/15/2006 to 7/7/2006. See Summer Session Example Matrix.

• For the first summer payroll beginning 6/17/2006 (date of FICA verification), Jill will be exempt from FICA taxes as she will meet the Total Enrollment Hours needed to keep her FICA exempt status.
• For the second summer payroll beginning on 7/1/2006 (date of FICA verification), Jill will also keep her FICA exempt status as she is still within her exemption period with 3 or more hours taken toward career progress.
• However, on the third summer payroll beginning on 7/15/2006 (date of FICA verification), Jill will be subject to FICA taxes since she lost her FICA exempt status on 7/8/2006.

Example 3
Susan, student employee, was exempt from FICA taxes in the spring term. Susan continues to work on campus during the summer and is enrolled in the 5WK2 summer session for 3 hours taken toward career progress. Based on Susan’s last enrollment after the initial exemption grace period, her exemption period will be from 7/10/2006 to 9/15/2006. See Summer Session Example Matrix

• For the first summer payroll beginning 6/17/2006 (date of FICA verification), Susan will be subject to FICA taxes as she will NOT meet the Total Enrollment Hours needed to keep her FICA exempt status.
• For the second summer payroll beginning on 7/1/2006, Susan will also keep her FICA exempt status as she is still within her exemption period with 3 or more hours taken toward career progress.

      

Terms and Definitions
Session Begin Date – Date session begins.

Exemption Period End Date – Session end date plus five weeks (35 days).

Exemption Period – Session Begin Date through Exemption Period End Date.

Pay Period Begin Date - The first day of the pay period (see Biweekly Pay Calendar).