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13.10 / Student Employee Payroll

To state University policy with regard to the payment of employer Federal Insurance Contributions Act (FICA) taxes and Federal Unemployment Tax Act (FUTA) taxes incurred on student wages.

Internal Revenue Code Section 3121(b)(10), in what is known as the "student FICA exception," provides that wages paid to a "student who is enrolled and regularly attending classes" at a college or university are not subject to FICA taxes. Internal Revenue Service Revenue Procedure 98-16, issued in January 1998, clarifies that to qualify for the exemption, the student must be enrolled at least half-time as an undergraduate or graduate student. The clarification also applies to FUTA taxes.

Policy Statement:

1.  In order to take advantage of the exemption on paying FICA taxes and FUTA taxes on wages paid to student employees, University departments should employ students enrolled at least half-time or more. To qualify for the student FICA and FUTA exemption, a student's enrolled hours must equal or exceed 50 percent of full-time status.1 In addition, the following students also qualify for the student FICA and FUTA exemption: (a) a graduate student that needs five hours or less to graduate, and (b) a graduate student with a one hour thesis enrollment.

2.  Departments employing students that do not qualify for the student FICA and FUTA exemption are required to reallocate their budget to fund the additional employer FICA and FUTA taxes incurred by the University.

3.  Departmental staff can use the WSU Student Employment Pre-Approval screen (STUE) on CICS2 on the mainframe computer to verify a student's enrolled hours. The table below is a guide for interpreting STUE:  

Enrollment and
Employment Status
 Enrollment Status
Minimum Enrolled Hours
To Exempt From
Object Codes: 1200, 1210
Fall/Spring 12 6
Summer Session 6 3
Object Codes: 
1130, 1140, 1200, 1210 
Fall/Spring 9 5
Summer Session 6 3
Graduate Teaching
Object Code: 1120
Fall/Spring 6 3
Summer Session  3 2

1 The Undergraduate Catalog defines full-time student as follows:

  1. an undergraduate student taking at least 12 hours in the fall or spring semester;
  2. a graduate student taking at least nine graduate credit hours;
  3. a  half-time graduate teaching assistant taking at least six hours;
  4. during the Summer Session, six hours is full-time for both undergraduate and graduate students, while graduate teaching assistants are considered full-time with three hours.
This policy shall be included in the WSU Policies and Procedures Manual and shared with appropriate constituencies of the University.

The Vice President for Administration and Finance shall have primary responsibility for publication and distribution of this University policy.

Effective Date:
August 9, 1998

(Note: The reader may also find it helpful to refer to the Student Employment Policy at Section 8.01 of this manual and Regular Student Employment at Section 8.02.)

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