UTSA students who work on campus may now be eligible for an exemption from Federal Insurance Contribution Act (FICA) taxes on wages earned after June 30, 2000. Thanks to Senators Gramm and Hutchinson and Congressmen Sam Johnson and Bill Archer, Washington agreed to allow modifications to our Section 218 agreement with the Social Security Administration. Those modifications now allow Texas to exclude qualified student employees at public universities from FICA taxation for social security coverage.
For a UTSA student to qualify for the exemption, the student must be
 |
Enrolled at least half time (unless it is the student’s last semester and the student is enrolled in the number of credit hours needed to complete the requirements for obtaining a degree. The student must notify payroll for the exemption to be available.) |
|
Be a non-career employee (not eligible for retirement benefits), and |
|
Work less than 20 hours per week or not more than 4 ½ months per year (except 50% time Graduate Student Titles) |
| Half time requirements | Spring/Fall Semester | Summer Semester ** |
| Undergraduate | 6 | 3 |
| Graduate | 4.5 | 3 |
(Ph.D. candidates working on their dissertation are considered half time students.)
**Note: To be exempt from OASI tax for the entire summer, you must be a qualified student for the entire summer. See example below.
The determination of the student’s enrollment status will be confirmed twice each semester: once on the 12th class day and once on the last day of finals.
The payroll program will search the student database for social security number and date of birth matches. If the employee’s student identification number is not his/her social security number, the match will NOT occur, and FICA taxes will be withheld.
Wages paid for services performed by a student-employee are eligible for the FICA exemption for all payroll periods of a month or less that fall wholly or partially within the academic term.
If the student qualifies on the 12th class day, the exemption will remain in place until the end of the semester. For the student to qualify during a school break of five weeks or less the student must still be enrolled at least half-time on the last day of finals.
If the student qualifies for the exemption, no FICA taxes will be deducted. An exception will occur if there is a payroll period ending prior to the 12th class day, which follows a break of five weeks or more. (The payroll system will not know if the student qualifies for the exemption until the 12th class day.) However, the tax withheld will be refunded on the next payroll.
For school breaks of more than five weeks, the FICA exemption is not available for wages earned during that period.
Here is an example:
Neil Diamond registers for 12 hours in the Fall semester, which begins August 30, 2000. Music Department hired him as part-time guitar tuner (less than 20 hours per week) on August 16, 2000. He is exempt from FICA taxes on his wages earned from August 16 through August 31. The exemption applies to payroll periods of one month or less that fall wholly or partially within the academic term.
However, his pay on September 6th will have FICA taxes deducted, because the payroll system will not know he is exempt until the 12th class day, which falls after the payroll cut off date for that pay period. These taxes will be refunded on his next check.
Neil drops all of his classes on October 27, 2000. There is no change to his exemption until December 15, 2000, the last day of finals. However, he will be exempt from FICA taxes on wages earned through December 31, 2000, because UTSA has an established payroll period of one month. The December payroll period encompasses December 1 through 31, and the academic term falls within this payroll period.
Neil registers for 6 hours in the Spring. His January wages are exempt from FICA, because the academic period, which begins on January 16, 2001 falls within UTSA's established payroll period of one month. Neil completes his classes. His exemption from FICA taxes will be effective through the end of the payroll period that includes the last day of finals. The last day of finals falls on May 11, so he is exempt until May 31, 2001.
Neil does not register for summer I. He is not exempt from FICA taxes on wages earned in June. However, he does register for one hour for the Summer II session. He will not be exempt from FICA taxes, unless he needs only one hour to finish his degree. If this is the case, he will be exempt from FICA taxes through the end of August, as long as he provides documentation to Payroll indicating that he needs only one hour to complete his degree.