Change in Residency Status and FICA Exemption

Change in Residency Status and FICA Exemption

The University is not required to withhold Federal Insurance Contribution Act (FICA) tax (i.e., social security and Medicare tax) from salary, wages and other W-2 reportable payments paid to a nonresident alien in F-1, J-1, M-1 or Q-1 status performing services to carry out the purpose of his/her visa. If you are currently receiving a fellowship or if you are a full-time student receiving wages, the University will not withhold FICA tax from your pay during the academic year.

Based on the information you provided on the Foreign National Information System (FNIS) application, and a review of university records, your tax status will change from that of a U.S. nonresident alien to a U.S. resident alien during the calendar year 2023. As a result of your change in tax status, salary and wages paid to you after December 31, 2022, will be subject to FICA tax withholding.

FICA Tax Withholding

For the calendar year 2023, a combined FICA tax rate of 7.65% (6.2% for old age, survivors, and disability insurance (OASDI) and 1.45% for hospital insurance (Medicare)) is imposed on both the employer and employee. The OASDI rate (6.2%) applies to wages within the OASDI wage base, which is $160,200 for the calendar year 2023. There is no wage base limit for the Medicare portion of the FICA tax.

Although income tax treaties generally do not provide an exemption from FICA tax withholding, the United States has entered into international social security “totalization” agreements with certain countries. A totalization agreement does not provide an exemption from social security tax in both countries; however, it enables an individual to pay the tax to only one country. For questions on benefits under these agreements contact the Social Security Administration’s Office of International Programs at (410) 965-3322 or (410) 965-7306 or the Social Security Administration (SSA) at 1-800-772-1213, the Social Security Administration website or the Social Security Administration International Agreements web page.

In addition, IRS Publication 519, U.S. Tax Guide for Aliens, provides information regarding the FICA exemption you can find this publication at the Internal Revenue Service (IRS) website.

Please consult with your tax advisor with respect to your personal tax situation.

If you have any questions regarding this notice, please contact the University International Tax Department at internationaltax@yale.edu.