Social Security is a U. S. federal program that provides recipients with benefits, including retirement and disability income, Medicare and Medicaidand death and survivorship. Social Security taxes are collected and used to disburse these benefits.
Key Takeaways
- Certain religious groups qualify for Social Security tax exemption if they are recognized as being officially opposed to Social Security benefits.
- Non-resident aliens may qualify for exemption based on the type of visa they have been issued.
- Current students who acquire a job at their university are eligible for Social Security tax exemption on the income earned from those positions.
- Individuals who work for a foreign government may be exempt from Social Security taxes while working in an official capacity on official business.
Most taxpayers have to pay Social Security taxes on their income, regardless of whether they work for an employer or are self-employed. However, there are some groups of American taxpayers that are exempt from paying Social Security tax.
Qualifying Religious Social Security Tax Exemption
Certain religious groups qualify for Social Security tax exemption if they are recognized as being officially opposed to Social Security benefitssuch as retirement, disability, and death benefits. Requirements for exemption include that the religious organization has been in existence since Dec. 31, 1950, and can illustrate that it has continuously offered its members a fair standard of living since then.
Religious organizations desiring exemption must apply for it by completing Form 4029. Individuals who have ever qualified for Social Security benefits (even if these benefits were never utilized) will not be exempt.
Non-resident Alien Social Security Tax Exemption
Non-resident aliens (individuals who are not U.S. residents or citizens) may qualify for exemption based on the type of visa they have been issued. Examples of non-resident aliens who may be exempt include international students, educational professionals, and non-residents who work for a foreign government official.
Temporary Student Social Security Tax Exemption
Current students who acquire a job at their university are eligible for Social Security tax exemption on the income earned from those positions (as long as they are still enrolled at the university). University employees who use their employee benefits to enroll at the university do not qualify.
Foreign Government Employees
Individuals who work for a foreign government may be exempt from Social Security taxes while working in an official capacity on official business. Its employees, spouses, and children only qualify if they are also employees of a foreign government.
Advisor Insight
Chris Chen, CFP®, CDFA®
Insight Financial Strategists LLC, Waltham, Mass.
Just to elaborate on the categories above: “Non-resident aliens” include foreign students on J visas or on their CPT and OPT extensions and foreign teachers and professors on Q visas.
Foreigners who work for their governments in the U.S. or for international organizations, such as the World Bank, do not pay Social Security taxes either (United States citizens who work for a foreign government or global organizations located in the U.S. do, however).
Also exempt are public-sector employees who participate in a state government pension plan that provides benefits in replacement of Social Security. For instance, Massachusetts state and municipal workers have such a plan; they contribute to it through payroll withholding.