Fellowship or traineeship stipends, scholarships and grants International students who are nonresident aliens are always exempt from Student FICA. Student Income Not Subject to Student FICAĪs explained in items A and B below, there are certain types of student income which are exempt from Student FICA. The body of the receipt will contain the explanation under “Deduction” that an amount has been withheld for “DCP CAS SAV R” or DCP Casual Savings Reduction. Undergraduate student: 6 units (any session per Department of Education standards) 8.95% Total Deduction (7.5% for DCP and 1.45% for Medicare)Ī student who loses exemption status will contribute on a pre-tax basis 7.5% of gross wages to the Defined Contribution Plan and 1.45% of earnings to Medicare. Graduate student: 6 units (10-week Summer Session) Graduate student: 3 units (5-week Summer Session) citizen, permanent resident or resident alien must be registered in the minimum number of units given below during at least one day of the pay period and have an appointment percent or combined appointments of less than 80% for at least one day of the month. ![]() In order to remain exempt from DCP/Medicare deductions, a student employee (non-career) who is a U.S. The unit default for a graduate student who has advanced to Ph.D. Registration units are interfaced with the Payroll system at the end of the 3 rd and 5 th weeks each quarter. ![]() candidacy is not subject to the unit requirement but is subject to the less than 80% requirement. citizen, permanent resident or resident alien must be registered (enrolled and fees paid) by the third week of the quarter in a minimum of half-time (6 units at UCSD) and employed less than 80% to remain exempt from DCP/Medicare deductions.ĭuring the academic year, a registered graduate student who has advanced to Ph.D. Academic Year (September – June: monthly checks issued 10/1-7/1)Ī student employee (non-career) who is a U.S. Federal and State taxes on the student’s DCP funds and any earnings are deferred until the money is withdrawn (which can occur when UC employment is terminated) and is subject to penalties if withdrawn prior to age 59 ½. (Medicare, a Federal health insurance program administered by the Social Security Administration, is designed for individuals entitled to Social Security who are age 65 or older). In the UC system, graduate and undergraduate students who do not meet the student FICA exemption criteria contribute on a pre-tax basis 7.5% of their gross wages to the DCP, and 1.45% of their earnings to Medicare. The DCP is a qualified retirement plan administered by the University of California Employee Benefits Office in the Office of the President. In the 1990’s, California State Assembly Bill 906 authorized the University to mandate that employees who are not members of the University of California Retirement Plan become “safe harbor” participants in the Defined Contribution Plan (DCP), in lieu of contributing to Social Security. Note: The IRS requirements for FICA exemption should not be confused with UCSD graduate student support guidelines requiring full-time registration (minimum 12 units) for funding on fellowships, traineeships, scholarships and academic appointments greater than 25% time. ![]() Revised IRS regulations published in Internal Revenue Procedure 2005-11 state that a student employee (non-career) will be exempt from FICA taxes if the student is enrolled at least half-time (6 units at UCSD), in accordance with the regulations issued by the Department of Education, and employed less than 80% time for the month* (The previous rules allowed students to be exempt from FICA if they were enrolled at least half-time with no limitation on the number of hours worked). ![]() Under Section 3121(b) (10) of the Internal Revenue Code, services performed by a student at a college or university are generally exempt from Social Security (OASDI) and Medicare (the two components of the FICA tax) provided that the student is “enrolled and regularly attending classes.” Student FICA, Defined Contribution Plan (DCP), and Medicare Background
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