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 US 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) is a taxation on income earned where the funds are used for federal programs that provide benefits for US 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 also in boxes 4 and 6 on the W-2.
- F-1 and J-1 student visa holders are typically exempt from paying FICA taxes for their first five years in the US and these taxes should not be deducted from paychecks
- J-1 scholars and researchers are typically only exempt for two years
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 (CPT, OPT, AT). IRS Publication 519 is a good resource, specifically pages 44 and 45. More information is available here.
Obtaining Reimbursements of FICA Withholdings If your employer has mistakenly withheld FICA taxes, you must work with the employer directly to request a reimbursement. If the employer will not assist you, file Internal Revenue Service (IRS) forms 843 AND supplemental form 8316 to request reimbursement.
Please note that J-2s with work authorization are not exempt from FICA taxes. If USC withheld FICA taxes in error, please contact University Payroll Services at firstname.lastname@example.org.