Posted by Karen Munoz, EA

Is Social Security Tax Compulsory for Everyone?

Is Social Security Tax Compulsory for Everyone?

There is no dodging of social security taxes for many people for their employment and self-employment taxes. However, there are exceptions to these groups of people.

You cannot dodge social security tax payments, like income tax from your employment or self-employment income. However, a few exceptions exist for special groups of taxpayers. People in this group can save a tremendous amount of money. The downside, however, is that you will not qualify for any benefit that comes from Social Security.


Religious Exception that Qualifies 

Some members of a particular religious group are eligible for this exception. However, such religious institutes need to be recognized and be openly opposed to Social Security benefits. Such benefits are payments when retired or payments at death or for disability. 

Also, such a religious group needs to exist in 1950 while providing its members with a reasonable living standard. 

Such exemption doesn’t come automatically, as the group needs to complete Form 4029. However, they cannot have access to such an exemption if they had received Social Security benefits from the program before, no matter if they believed it or not. 

Nonresident Aliens 

People who are not citizens of the US or are not residing legally are considered nonresident aliens. Such a class of people will also have to pay Social Security tax for whatever income they made in the United States, even if the company is foreign. 

This, however, comes with a couple of exceptions. Educational professionals and international students in the US temporarily do not need to pay Social security taxes. Nonresident aliens working in the United States for a foreign institution do not need to pay social security taxes on their income. 

Their domestic workers and families might also be eligible for such exemption. A Series of categories of nonresidents also qualify for the exemption. In all cases, however, the type of visa that the nonresident alien possesses determines it.

Temporary Exemption for Students

As a student, if you work at a school where you are currently enrolled, you may not need to pay social security taxes. Qualification, however, is tied to enrollment in a school; hence you need to be enrolled in the school to qualify. This means that if you work full time in the school or benefit from tuition-free enrolment in a university, you are not eligible. 

On the other hand, a full-time student who got a part-time job from the university due to enrollment is eligible. However, the exemption only applies to wages earned from the school, not from other outside employers.

Foreign Government Employees

Foreign government employees in the US do not need to pay Social Security taxes on whatever they are paid due to their official duties. This applies provided the employee in question is working officially, in a capacity related to the business, and does not pay social security on their pay. 

Such exemption does not apply to domestic workers of such foreign government workers, their kids and their spouses except if they are employed by such foreign government.


Limitations in Income

Taxpayers that do not qualify for exemptions on Social Security will be delighted to know that such tax only applies to a selected income amount per year. While this might not be categorized as an exemption, any income you earn above the applied maximum for the specific year will not apply to social security tax. 



Karen Munoz, EA
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