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Payroll Accounting
Frequently Asked Questions
Will FICA taxes be withheld from resident and clinical fellow paychecks going forward?
Yes. The IRS has not accepted the position that medical residents are excepted from FICA taxes based on the student exception for tax periods ending after April 1, 2005. In response to the litigation regarding the eligibility of medical residents to qualify for the student FICA exception, the IRS amended its regulations in 2004 (effective April 1, 2005) so that medical residents could not qualify for the student FICA exception - based on the application of the "full-time employee" limitation. On June 12, 2009, the U.S. Court of Appeals for the Eighth Circuit, in Mayo Foundation for Medical Education and Research v. United States, upheld the "full-time employee" limitation in the final amended regulations effective April 1, 2005 under the student FICA exception. Based on the application of the "full-time employee limitation," medical residents are generally unable to qualify for the student FICA exception. This issue is still being litigated. Most recently, on June 1, 2010, the U.S. Supreme Court decided that it would review the issue of whether the "full-time employee" limitation is valid. Accordingly, FICA taxes will continue to be withheld from any residency, internship and/or clinical fellowship earnings. Further questions about FICA withholding on future earnings should be directed to the administrator of your residency, internship and/or clinical fellowship program.

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Last date changed: January 26, 2015 3:11 PM

University of South Alabama