Some countries are eligible for varying amounts of income exemption from taxation under tax treaties between their home government and the United States. IRS Publication 901 lists current U.S. tax treaties. If a student or scholar needs to set up a tax treaty withholding exemption with an employer other than USC, they would use IRS Form 8233. Please note that tax treaties only pertain to federal and not state or local taxes.
FICA Taxes (Social Security & Medicare)
Federal Insurance Contributions Act (FICA) requires taxation on income earned to fund federal programs that provide benefits for U.S. citizens and permanent residents when they retire, are disabled, or are the children of deceased workers. Funds withheld for FICA are reflected on paycheck stubs and the Form W-2 (Boxes 4 and 6).
- F-1 and J-1 student visa holders are typically exempt from paying FICA taxes for their first five years in the U.S. and these taxes should not be deducted from paychecks
- J-1 scholars and researchers are typically only exempt for two years
- J-2 visa holders with work authorization are not exempt from FICA taxes
The mechanism for the exemptions are found under Internal Revenue Code 3121 (b)(19) and is available to persons in F-1, J-1, M-1 and Q immigration status. It is a blanket exemption and the only qualification is that the person is a non-resident for tax purposes and that the work is authorized (e.g. CPT, OPT, AT). Refer to IRS Publication 519 for additional information.
Obtaining Reimbursements of FICA Withholdings
If a student or scholars’ employer has mistakenly withheld FICA taxes, the student or scholar must work with their employer directly to request a reimbursement. If the employer will not assist this matter, the student or scholar must file IRS Form 843 and IRS Form 8316 to request reimbursement.
In the event an F-1 or J-1 student, scholar, or researcher is employed by USC and USC withheld FICA taxes in error, contact University Payroll Services at firstname.lastname@example.org.