Information provided on this site is for general
guidance only and is often simplified. Actual
IRS procedures are complex, and taxpayers should
obtain professional assistance or use IRS sources
for complete information.
Social
Security And Medicare Taxes
Resident
aliens, in general, have the same liability for
Social Security/Medicare Taxes as US citizens.
Non-resident aliens, in general, are also liable
for Social Security/Medicare Taxes on wages paid
to them for services performed by them in the
United States, with certain exceptions based on
their non-immigrant status. The following classes
of non-immigrants and nonresident aliens are,
at the time of writing, exempt from Social Security
and Medicare taxes:
-
A-Visas. Employees of foreign governments are
exempt on salaries paid to them in their official
capacities as foreign government employees.
The exemption does not automatically apply to
servants of employees of such foreign governments,
not does it apply to spouses and children unless
they are employed by a foreign government.
-
D-visas. Crew members of a ship or aircraft
may be exempt if the vessel is a foreign vessel
and the employer is a foreign employer, or if
the services are performed outside of the United
States
Crew members of an American vessel or aircraft
who perform services within the United States
are subject to Social Security and Medicare
taxes. Crew members of an American vessel or
aircraft who perform services outside the United
States are subject to Social Security and Medicare
taxes if the employee signed on the vessel or
aircraft in the United States, or the employee
signed on the vessel or vessel outside the United
States but the vessel or aircraft touches a
US port while he is employed thereon.
-
F-visas, J-visas, M-visas, Q-visas. Non-resident
alien students, scholars, professors, teachers,
trainees, researchers, physicians, au pairs,
summer camp workers, and other aliens temporarily
present in the United States in F-1,J-1,M-1,
or Q-1/Q-2 nonimmigrant status are exempt on
wages paid to them for services performed within
the United States as long as such services are
allowed by USCIS for these nonimmigrant statuses,
and such services are performed to carry out
the purposes for which such visas were issued
to them.
-
G-visas. Employees of international organizations
are exempt on wages paid to them for services
performed within the United States by employees
of such organizations. The exemption does not
automatically apply to servants of employees
of such international organizations, and does
not to spouses and children unless they are
employed by an international organization.
-
H-visas. Exemptions apply to H-2 non-immigrants
who are residents of the Philippines and who
perform services in Guam; and to H-2A nonimmigrants
admitted into United States temporarily to do
agricultural labor.
However,
foreign scholars, teachers, researchers, trainees,
physicians, au pairs, summer camp workers, and
other non-students in J-1, Q-1 or Q-2 nonimmigrant
status who have been in the United States more
than two calendar years are resident aliens and
are liable for social security/Medicare taxes.
When measuring an alien’s date of entry
for the purposes of determining the five calendar
years or the two calendar years mentioned above,
the actual date of entry is not important. It
is the calendar year of entry which is counted
toward the two or five calendar years respectively.
Thus, for example, a foreign student who enters
the United States on December 31, 2009 counts
2009 as the first of his two years as an "exempt
individual."
Further
information on the tax treatment of special categories
of alien workers can be found here.
The
Tax Code
provides a further exemption from social security/Medicare
taxes for all students, American and foreign,
known as the "student FICA exemption",
under Revenue
Procedure 2005-11.
The
Heroes Earnings Assistance and Relief Tax (HEART)
Act 2008 was directed at serving military personnel,
but contained a provision that requires US employers
doing federal contract work for the US government,
and using foreign subsidiaries to compensate their
US employees working abroad, to begin paying Social
Security and Medicare taxes on behalf of these
employees. The provision is designed to make sure
that defense contractors in Iraq, Afghanistan
and elsewhere meet their legal obligation to pay
payroll taxes on behalf of the people who work
for them.
“For
the sake of transparency and fairness in our tax
system, we cannot allow Federal contractors to
set up shell corporations in tax shelters and
shirk their responsibility to pay payroll taxes
for their American employees," Obama commented
following approval of the legislation by the House
of Representatives on 21st May.
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