[pps-news] Revised Student FICA guidelines

[Gabe Nwandu]

January 23, 2006

 

To:     All Departments

Fr:      Payroll Office

Re:     Revised Student FICA guidelines

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In Revenue Procedure 2005-11 and related regulations, the Internal
Revenue Service (IRS) modified the student FICA exception rules.  As you
may know, the current regulation gives a student an exception from FICA
taxes if they're registered for 6 units or more in a quarter regardless
of appointment percentage.  The revised regulation as interpreted by
UCOP has modified the appointment percentage requirement. 

  

The Payroll/Personnel System (PPS) student FICA process has been
modified to look at active appointments for the month to determine
whether the student is working 80% or more for the entire month.  If the
student has an appointment for less than 80% for one day during the
month, then the student is eligible for the FICA exception assuming the
student meets the 6 units registered eligibility requirement.

 

We ran a one-time program to trigger the re-derivation of the
retirement/FICA codes, DCP plan code, and UI coverage code for all
student employees due to this change in procedure.  Out of 2500 active
student employees on PPS in January 19, 2006, 38 student employees in 26
departments had appointment percentages that exceeded 80 percent for the
month of January 2006.   The Payroll office has mailed a list of these
student employees to the departments affected.  PPS has re-derived the
Retirement Code, FICA code and the Unemployment code for these employees
whereby they are no longer exempt from FICA taxes.  Please review the
report ASAP and make changes to the student's appointment line(s) if
necessary.  The student's appointment percentage(s) may have been set up
incorrectly. 

 

All other aspects of the student FICA regulations did not change.  For
example, students on F1 and J1 visa are still exempt from FICA
withholding.  For more information about the revised student FICA
guidelines, please refer to our web site:
http://www.accounting.ucr.edu/forms/studentfica.pdf. 

 

The new procedures are effective with the February 1, 2006 pay date.  If
you have any questions, please contact the Payroll office at x2-3307.

 

 

 

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