Social Security is a U. S. federal program that provides recipients with benefits, including retirement and disability income, Medicare and Medicaid, and 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 benefits, such 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.
FAQs
Members of certain religious groups are often exempt. Most foreign academics and researchers are exempt if they are nonimmigrant and nonresident aliens. Self-employed workers who make less than $400 annually do not pay Social Security taxes.
Who is exempt from Social Security tax? ›
Foreign students and educational professionals in the U.S. on a temporary basis don't have to pay Social Security taxes. Nonresidents working in the U.S. for a foreign government are exempt from paying Social Security taxes on their salaries. Their families and domestic workers can also qualify for the exemption.
What income is not subject to Social Security tax? ›
Pension payments, annuities, and the interest or dividends from your savings and investments are not earnings for Social Security purposes. You may need to pay income tax, but you do not pay Social Security taxes.
What religious groups don't pay Social Security? ›
Problem: Members of certain religious sects, most notably the Amish, do not accept Social Security or Medicare benefits, and the law consequently exempts them from the requirement to pay Social Security and Medicare taxes if their employers are also members of recognized religious sects.
At what point do you stop paying Social Security taxes? ›
What Is the Social Security Tax Limit? You aren't required to pay the Social Security tax on any income beyond the Social Security wage base limit. In 2024, this limit rises to $168,600, up from the 2023 limit of $160,200. As a result, in 2024 you'll pay no more than $10,453 ($168,600 x 6.2%) in Social Security taxes.
Is paying Social Security tax mandatory? ›
If you work as an employee in the United States, you must pay social security and Medicare taxes in most cases. Your payments of these taxes contribute to your coverage under the U.S. social security system.
Who is excluded from Social Security? ›
Some government and railroad employees are not eligible for Social Security. American expatriates retiring in certain countries—and some retired immigrants to the U.S.—can't collect Social Security benefits. Divorced spouses married for fewer than 10 years cannot claim benefits based on the earnings of their ex-spouse.
How do I opt out of paying Social Security? ›
To request an exemption from Social Security taxes, get Form 4029—Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits from the Internal Revenue Service (IRS). Then, file the form with the Social Security Administration (address is on the form).
Who has to pay income tax on Social Security? ›
If you're single and your combined income is between $25,000 and $34,000 a year — or if you're married and file jointly and your combined income is between $32,000 and $44,000 a year — up to 50% of your Social Security benefits will be taxable.
What earnings are excluded from Social Security tax? ›
The types of earnings (or compensation payments) that are excluded from Social Security wages include: Tips (if they total less than $20 per month) Reimbursed business travel expenses. Employer-paid health or accident insurance premiums.
This means that they cannot claim social security or Medicare. The reason behind this is that the Amish view insurance as a lack of faith in their community. They believe that their community will come together to look after each other if something goes wrong, and therefore that there's no need for insurance.
Do pastors have to pay social security tax? ›
Clergy pay social security tax under the Self-Employment Contributions Act (SECA), not under the Federal Insurance Contributions Act (FICA). Clergy engaged in the exercise of ministry are always treated as self-employed for social security tax purposes.
At what age is Social Security no longer taxed? ›
Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age. There is some variation at the state level, though, so make sure to check the laws for the state where you live.
How do I get the $16728 Social Security bonus? ›
There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
Why am I not paying Social Security tax? ›
High Earners
After their income hits a certain level, their Social Security withholding stops for the year. Officially known as the wage base limit, the threshold changes every year. The 2023 limit for paying FICA taxes is $160,200, and the 2024 limit for paying FICA taxes is $168,600.
How much money can seniors make and not file taxes? ›
Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a return for tax year 2023 (which is due in 2024) if your gross income is $15,700 or higher. If you're married filing jointly and both 65 or older, that amount is $30,700.
How to stop tax withholding from Social Security? ›
To start, change, or stop federal income tax withholding from their Social Security benefits, your clients can sign and submit IRS form W-4V directly to their local Social Security office. Taxes will be paid directly to the IRS and will be shown on their form SSA-1099 the following tax season.
Why am I not paying social security tax? ›
High Earners
After their income hits a certain level, their Social Security withholding stops for the year. Officially known as the wage base limit, the threshold changes every year. The 2023 limit for paying FICA taxes is $160,200, and the 2024 limit for paying FICA taxes is $168,600.
