Video: Social Security Tax—Who Is Exempt?

Video transcript:

Hello, I’m Tammy from TurboTax with some important information about exemptions to the Social Security tax.

You may be wondering whether you qualify for an exemption from the Social Security tax. If you are eligible, you stand to save a good amount of money.

But remember, if you are exempt—you may not be able to take advantage of the benefits offered by the Social Security program.

One exemption that the federal government allows is to members of certain religious organizations who oppose accepting benefits similar to the type that Social Security provides for, such as the payments you receive at retirement. However, qualifying under the religious exemption isn’t automatic—you must file an application with the Social Security Administration on IRS Form 4029. You should realize that your application can be rejected if you’ve ever received or been entitled to any benefit that’s payable through Social Security.

Nonresident aliens are another group of people who can be exempt from paying Social Security taxes on the income they earn while in the United States. A nonresident alien’s eligibility for the exemption generally relates to the type of U.S. visa they possess. Commonly—the exemption is available to employees of foreign governments, such as those who work in foreign embassies on U.S. soil.

Also often eligible are nonresident alien students, scholars, professors and physicians who remain in the U.S. on a temporary basis, and employees of international organizations that have offices or other activities in the U.S. And although only a temporary exemption to the Social Security tax—students who are working at the same school where they are enrolled in a course of study are also exempt. Keep in mind, however, that this doesn’t apply to ordinary employees of a university who take courses there—the exemption is only available for students whose main purpose for being at the school is to study—not to work.

Even if you don’t fall under one of the exemption categories, you’ll be happy to know that there is a limit to the amount of Social Security tax that you will pay in a given year. This is because the government doesn’t impose the tax on your wages above a certain amount.

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