Student FICA Exemption

Are Student Employees Exempt from FICA (OASDI and Medicare)?

UTSA students who work on campus may be eligible for an exemption from Federal Insurance Contribution Act (FICA) taxes on wages earned after June 30, 2000. Those modifications now allow Texas to exempt qualified student employees at public universities from FICA taxation for social security coverage.

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 Management Services for the exemption if student is qualified and exemption is not in their paycheck.
• Be a non-career employee (not eligible for retirement benefits)
• Work less than 20 hours per week or not more than 4 1/2 months per year (except 50 percent time graduate student titles)

The determination of the student's enrollment status is determined as of Census Day each semester. After Census Day, the Student FICA Refund Process is run to cross-reference employee records with student records. If information is incomplete, the records will not match up and FICA tax will be withheld.

Wages paid for services performed by a student employee are eligible for the FICA exemption for all payroll periods that fall fully or partially within the academic term.

Automatic Refund Process

Student FICA exemption status is set after Census Day for each academic period. Census Day is usually at least 12 class days into an academic term. 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. As a result, there may be pay periods prior to the student exemption determination in which a student may be paid and taxed. However, the tax withheld will be refunded on the next pay day.

Every semester, refunds will process through the payroll system and, in most cases, refunds will be processed on the next available pay day following Census Day and every payroll afterward. If employees are not included in the automatic process, then employees will have to contact Payroll Management Services, and will be dealt with on a case-by-case basis.