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The Treasury Department's regulation, 26 C.F.R §31.3121(b)(10)– 2(d)(3)(iii), providing that student employees working at least full-time are categorically ineligible for the student exemption from Social Security taxes codified at 26 U.S.C. §3121(b)(10), is a reasonable construction of that statute. Eighth Circuit affirmed.
In order to be exempt from FICA payroll taxes, a student's work must be "incident to" the pursuit of a course of study, which is rarely the case with full-time employment. [18] However full-time college students are never exempt from FICA taxes on work performed off-campus. [18]
The Social Security tax rate is 12.4% of your paycheck, and another 2.9% goes to Medicare, for a total FICA tax rate of 15.3%. If that seems steep, it’s because you aren’t paying the entirety.
All told, with the Federal Insurance Contributions Act, 12.4% of your paycheck is paid to the government for Social Security taxes and another 2.9% for Medicare, for a total FICA tax rate of 15.3% ...
Starting in January 2020, there’s a new design for Form W-4.The IRS explained that the redesign will reduce confusion for filers and enhance the transparency of the tax withholding system.
J-1 visa holders are exempt from paying Federal Insurance Contributions Act (FICA) taxes (for Social Security and Medicare) when they are nonresident aliens for tax purposes, which is usually the first five calendar years if they are categorized as students, or the first two calendar years if they are categorized as teachers or trainees.
So before filing, make sure your dependent student has confirmed that all tax forms are in for all jobs worked, and they’ve checked with the college for any additional tax forms.
For tax purposes, the Internal Revenue Service considers the compensation of graduate student employees to be wages. When graduate students receive payment for teaching, it is not taxed on a 1042-S form (for scholarships), but on a W-2 (which is the form for employment income).