HR-222 Payroll Deductions Q&As
1. Is FICA exemption for student employees limited to those working and enrolled at the University of Missouri?
Yes. The exemption from FICA for students is specifically limited to those students working at the institution where they are enrolled and attending classes. Therefore, students enrolled at an institution other than the University of Missouri (including high school students) but working for the University of Missouri, are not FICA exempt.
2. What process is in place to insure compliance with laws and regulations related to FICA exemption?
For any student claiming the FICA exemption, a department must complete the “Student Employee FICA Checklist” if the paperwork is claiming the exemption for the first time or changing the FICA status to exempt. In addition, edit reports will be generated to monitor whether the student is enrolled at least half-time, regularly attending classes, classified as a career employee or regularly working 40 or more hours per week.
3. When is a department required to complete the “Student Employee FICA Checklist”?
A checklist must be completed for all Hires and Rehires where the student is claiming exemption from FICA. In addition, a checklist must be completed any time a department is changing an employee’s FICA status to “exempt” due to the employee’s student status.
4. What constitutes half-time status?
Undergraduate Students: Department of Education mandates that half-time status for an undergraduate student meet or exceed minimum requirements. At the University of Missouri, six (6) hours per standard semester equates to half-time status. The Registrar maintains the certified enrollment indicators for each currently enrolled student. The Department of Education does not address the summer semester. The Registrar has determined that 3 hours equates to half-time status during the summer. If the break between sessions is more than 5 weeks or 35 days, the student loses eligibility for FICA exemption if the student does not meet the enrollment criteria.
Graduate and Professional Students: Regular, full-time status is established by Department of Education regulations. The law allows each school to determine what constitutes half-time status for graduate and professional students. The Registrar maintains the certified enrollment indicator for each currently enrolled student.
5. Is there any situation where a student who is enrolled less than half-time can continue to be exempt from FICA withholding?
Yes. If the student is enrolled for his/her last semester and taking the number of hours needed to complete his/her degree, the student is still considered eligible for FICA exemption.
6. Must an employee be in a student title to qualify for the FICA exemption?
No. Eligibility for FICA exemption is not dependent on the student working in a student employee title.
7. Does a student, who is otherwise FICA exempt, lose the exemption during winter or summer breaks?
The answer depends on the length of the break. If the break is 5 weeks (35 calendar days) or less, the student remains in FICA exempt status. If the break is greater than 5 weeks (35 calendar days), the FICA exemption is lost during the break if the student does not meet the enrollment criteria. The length of the break is counted from the campus’ published date for semester closing.
8. Does a student lose the exemption if he/she works 40 hours or more a week over breaks of less than 35 days?
Hours worked during academic breaks of less than 35 days are not considered when determining whether the employee is regularly working 40 or more hours per week.
9. If a student earns over a specific dollar amount, does he/she lose the FICA exemption?
No. The FICA exemption is not dependent on amount of earnings. There is no limitation on the amount of earnings.
10. Is a student considered to be regularly attending classes if he/she is taking independent study or correspondence courses?
A student may satisfy the requirement of “regularly attending classes” if all of his / her coursework is independent study or correspondence courses as long as there is a meaningful component of face to face instruction. If the student’s entire enrollment for a semester is independent study or correspondence courses, and all of that instruction is on-line, the student cannot qualify for exemption from FICA.
11. How often is the University required to assess whether a student continues to be enrolled at least half-time?
The criteria will be checked once each semester as of the end of the drop/add period for that semester.
12. If the student is no longer enrolled at least half-time as of the end of the drop/add period, should FICA be retroactively charged?
No. The regulations permit the University to determine “student status” as of the end of the drop/add period. If, at that time, the student is no longer eligible for exemption, FICA should be withheld from the first pay period begin date after the edit report is run.
13. Should students be informed before a change in FICA eligibility is processed?
There is no regulatory requirement to do so, but communication is always desirable. There is an edit report that should help departments monitor eligibility and enable them to communicate to students.
14. Under what circumstances is a student entitled to a refund of FICA that was previously withheld?
If FICA was erroneously withheld due to an administrative error on the part of the University (e.g., a department did not process FICA exemption even though the student met the criteria), the student is eligible for a refund. The University will file a claim for the refund on behalf of the student. There is a 3-year period to file for a FICA refund.
15. When is the end of the drop/add period for each campus?
The end of the drop/add period is defined as the last day to drop a course without receiving a grade for that course. This date may vary by campus. For purposes of determining FICA exemption, each campus will apply the end of the drop/add period as specified in its academic calendar.
16. Are medical and veterinary residents eligible for an exemption from the Federal Insurance Contributions Act (FICA)?
No. Medical residents and veterinary residents are subject to FICA withholding. Employees in these positions are considered career employees.
17. Can a student opt to have FICA withheld even though the student meets the criteria for exemption?
No. An individual cannot voluntarily opt to have FICA withheld. If there is an error in the withholding status of a student, there is a 3-year period to collect or refund FICA as appropriate.
Date Created: 1/1/2001
Last Updated: 04/01/11