FICA

Under the Federal Insurance Contributions Act (FICA), 12.4 percent of earned income up to an annual limit must be paid into Social Security, and 2.9 (plus an additional 0.9% for all wages in excess of $200,000 per individual in a calendar year) percent must be paid into Medicare.

The payroll taxes collected for Social Security are of course taxes, but they can also be described as contributions to the social insurance system that is Social Security. Hence the name "Federal Insurance Contributions Act."

FICA is nothing more than the tax provisions of the Social Security Act, as they appear in the Internal Revenue Code.

OASDI (Social Security)

Status employees at the University of Illinois are not subject to Old Age, Survivors and Disability Insurance (OASDI), better known as Social Security. Most University employees contribute to the State Universities Retirement System (SURS). University employees that contribute to SURS are exempt from OASDI withholding. Extra help, Academic Hourly and employees with contracts for less than 4 months do not contribute to SURS and are therefore subject to OASDI withholding. OASDI withholding is calculated by taking 6.2% of the earnings subject to OASDI. The employer (University of Illinois) pays 6.2% therefore totaling the 12.4 percent contribution. The earnings subject to OASDI are defined as gross pay minus some non-taxable benefit deductions. OASDI withholding and earnings subject to OASDI are reported to the Social Security Administration on the Form W-2.

Medicare

Employees hired by the University after April 1, 1986 are subject to Medicare withholdings. Medicare withholdings are calculated by taking 1.45% (plus an additional 0.9% for wages in excess of $200,000 in a calendar year) times the earnings subject to Medicare withholdings. The employer (University of Illinois) is required to match the 1.45% contributions by the employee therefore totaling the 2.9 (plus the additional 0.9% for all wages in excess of $200,000 per individual in a calendar year) percent contribution. Earnings subject to Medicare withholdings are defined as gross pay minus any health insurance premium deductions that are taken from the gross pay. The Medicare withholdings and the Earnings subject to Medicare are reported to the Social Security Administration on the W-2 form.

Student FICA

Under Internal Revenue Code §3121(b)(10), a student who is registered for at least a half time (defined by the University as a minimum of three credit hours for the summer term and six credit hours for fall and spring terms) who is not a career employee qualifies for the Student FICA exemption on earnings from the institutions of higher education in which they are enrolled.

The exemption covers students enrolled during school breaks of five weeks or less providing the student was eligible for the exemption on the last day of classes prior to the break and is eligible for enrollment for the first academic period following the break. The exemption does not include student employees who are not enrolled in classes during school breaks of more than five weeks.

Under this criterion, foreign students who are resident aliens for tax purposes also qualify for the FICA tax exception.

Additional information can be found on Student Employee FICA Exception page.

Last Updated: January 2, 2019