FICA Withholding Obligation and Exemptions

Gillespie Neuroscience Research Facility

All employees must contribute to Federal Insurance Contribution Act (FICA) unless exempted by law. These exemptions available are as follows:

Student Exemptions

Internal Revenue Code Section 3121(b)(10) provides that a student who works for the school at which he or she is enrolled and regularly attends classes is exempt from the FICA tax. Students must enroll in at least 6 academic units in the quarter they are paid to qualify for this exemption.

F-1/J-1 Exemption

Under IRC Section 3121(b)(19), employees are exempt from FICA taxes if:

  • they are a nonresident for tax purposes
  • have an F-1 or J-1 visa and
  • work to further the purpose for which the visa was issued

When a foreign national stays in the United States beyond a specified period, they become a resident alien for U.S. Tax Purposes and are no longer exempted by law. Their wages are subject to two additional taxes imposed by the FICA: Social security and Medicare tax.  These taxes finance the old age/survivors/disability insurance and the Medicare insurance provided under the Social Security Act.

Employees with career designations will be required to contribute 6.2% of their covered wages to Social Security (up to the wage base, $118,500 in 2016) and 1.45% of their covered wages to Medicare.

Employees with non-career designations are required by University policy to contribute, on a pre-tax basis, 7.5% of their covered wages to a Defined Contribution Plan and 1.45% of their covered wages to Medicare. State Assembly Bill 906 authorizes the University to mandate employees to contribute to a Defined Contribution Plan in lieu of Social security.

UCI utilizes Glacier to determine the residency status of each foreign national.  For this reason, it is imperative that a foreign national currently receiving wages have a Glacier record. A foreign national is considered a nonresident until their residency change date.  However, when a foreign national remains in the United States past this date and they were previously exempted under IRC Section 3121(b)(19), their wages for the entire year will become subject to FICA taxes.  For administrative purposes, we are subjecting wages to FICA taxes at the start of the year. If a foreign national departs prior to their residency change date, please notify the accounting department two months in advance so the appropriate changes can be made.

FICA Withholding Responsibilities

Below is a summary of the responsibility of each party regarding this issue:

Foreign National Responsibilities
  • Ensure that they have an active Glacier record and keep their information updated
  • Notify Glacier Administration of their plans to leave the country two months before their current visa expires
Department Responsibilities
  • Assist foreign nationals with questions regarding their DCP contribution
  • Notify Glacier Administration of each foreign national’s plans to leave the country two months before their current visa expires
Glacier Administration
  • Notify each foreign national by email two months (approximately November of each year) ahead of time when their wages will be subject to FICA
  • For each nonresident, update PPS citizenship code from ‘N to R’ or ‘E to F’ on the EALN screen prior to the first paycheck of the new year
  • Notify the payroll department if a foreign student is leaving prior to their residency change date to reverse the FICA taxes collected
Payroll Office
  • Reverse payroll records if the foreign national does not remain in the United States past their residency date
  • Retroactively collect FICA taxes from foreign nationals for those who did not have their wages subject to FICA from the beginning of the year and stay past their residency change date