Comments (scroll down to add your own):

1. Very thorough and informative explanation, especially pointing out the student/university employment relationship-I don’t think it is something that is widely known. One thing to add: cafeteria/Sec 125 plans are one way of reducing the tax liability since contributions to these plans are made pre-tax.

   Comment by Eric J. Nisall — Jan 6th 2009 @ 9:24 am

2. Another exception to FICA is working for the government. Not all government workers mind you, but some. I work for the state of Illinois, and I pay 8% of my wage into a retirement plan set up for state workers. This is not optional, but is in lieu of FICA and is a better deal (IMO).

   Regards,
   Erich

   Comment by Erich — Jan 6th 2009 @ 9:56 am

3. Thanks for the explanation, I was attending and working at a university and saw that it was charged on one paycheck for some reason, but then never again so I did not worry about it. I just knew that generally I never paid all of it and my check was a little better each week.

   I actually thought that it was all university employees, not just ones that are students also, now I won’t sound like an idiot when talking to someone else about this.

   Comment by philip — Jan 6th 2009 @ 11:51 am

4. philip: If you work over the summer and don’t take classes, you’re not exempt during that time period. Maybe your one aberrant check happened during a period when you weren’t taking classes?

   Comment by nickel — Jan 6th 2009 @ 12:19 pm

5. I believe I paid FICA when in the military. That’s a gov’t job.

   I never noticed the designation OASDIA until I saw it on my wife’s pay stub (she’s a teacher).

   Wouldn’t it be great to check a box that said “no thanks” and get to keep that money to invest on your own?

   Comment by thomas — Jan 6th 2009 @ 12:51 pm

6. I always just look at it every pay check and see how much money is being taken out. Never had a real understanding behind it. Thanks for clarifying that in a simple manner for me and everyone.

   Comment by Craig — Jan 6th 2009 @ 3:12 pm

7. ‘These taxes are levied on both the employee and employer so, for every dollar taken from your paycheck, your employer is also paying a dollar. ‘

   :::

   No, the employee pays ALL that payroll tax (15.3%).

   Employer pays none of it, but merely with-holds that 15.3% from the workers paycheck… and hands it directly to the government taxman.

   An employer hiring an employee always calculates how much that new employee is gonna cost in total compensation. If the taxman demands 7.65% from the employer for each employee, the employer simply reduces the direct pay offered to the employee in hiring & promotions … by 7.65%. The worker never sees that money/tax — and is deceived in believing his employer is generously paying half his FICA/Medicare taxes.

   It’s pure FlimFlam.

   This issue comes up here periodically… thought we brought the truth to light previously ??

   Comment by doug — Jan 6th 2009 @ 4:08 pm

8. doug: Tomato, tomahto. It’s part of your total compensation, the same as the employer contribution to things like health benefits. In fact, you could further argue that the employee is paying their own share of the electric bill, rent, etc., since those sorts expenses arguably keep the employer from paying the employee a higher salary. If it makes you feel better to say it your way then, by all means, do so. The point here is that there’s an “invisible” contribution that doesn’t come out of your stated salary (or wages, as the case may be), but… If you’re self-employed, then you need to explicitly account for that additional amount out of the money that you’re taking in.

   Comment by nickel — Jan 6th 2009 @ 4:40 pm

9. Thanks for this information. My son just happens to be a full-time college student working at his college. I’ve passed the tip on to him.

   Unfortunately, as a self-employed person, I am aware of how much I pay, but I’m glad he’s getting a break!

   Comment by SimplyForties — Jan 6th 2009 @ 7:17 pm

10. Also remember that even though you may be self-employed, the same limits apply to you as well.

    Comment by Eric J. Nisall — Jan 6th 2009 @ 9:29 pm

11. You can also avoid that by using your health spending acccount and/or dependant care. So on top of your tax rate, you’re saving an additional 7.65% off your taxes. Please use your spending account if you have it, especially the dependant care if you haev kids in day care!!!

    Comment by Tung — Jan 8th 2009 @ 10:58 am

12. What if you decide to take reduced benefits at 62 but continue to work… do you still pay into FICA-OASDI? It would seem nuts since you would get a rebate on those payments when you do you taxes!

    Comment by BillMcg — Jun 4th 2009 @ 4:11 pm

13. I have a question about FICA and FICA-OASDI taxes. I am a graduate student, but working as an intern for a county (government). I am wondering if I am excempted for the above two tax deds. They always show up in my paycheck ?

    Comment by samantha — Jul 31st 2009 @ 11:43 am

14. My son attended a state college in MA. and also worked for the same college for two semesters, they did not take out these taxes and when I did his taxes I was unaware of this exemption and figured he owed taxes because they did not take them out, can he file an amendment to get his money back????

    Comment by Diana — Aug 15th 2009 @ 8:59 pm

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