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Policies and Procedures

Policy 1111 – Student Employee FICA Exemption

January 9, 2004
Last Updated
October 13, 2017
Responsible University Officer
Director of Payroll Services
Responsible Unit
Payroll Services

Policy Statement

Under the Federal Insurance Contributions Act(FICA), as described by the Internal Revenue Service and the Social Security Administration, students enrolled at UNC-Chapel Hill who receive payment for non-employment activities, including scholarships, fellowships, traineeships, or services as an independent contractor, are exempt from statutory FICA deductions. These positions cannot be held in conjunction with other EPA or SPA appointments or positions.

In addition, student employees deemed as having a predominantly educational relationship with the school (prevailing over any relationship the student has as a University employee), are eligible for FICA exemption.

In making determinations on eligibility for FICA exemption, the University will utilize the federal “safe harbor” tests set forth in IRS Revenue Procedure 2005-11 in conjunction with consideration of the facts and circumstances surrounding the student's employment.

Payroll Services utilizes the Student Information System (SIS) to determine if a student is accurately classified. A “student” is defined by his/her eligibility according to the SIS file, which may vary from other definitions of a “student” for employment or other purposes.

Reason for Policy

This policy presents the federal guidelines by which the University will abide in determining which student employees are eligible for exemption from the FICA tax.

Internal Revenue Bulletin: 2005 - 2 contains excellent, detailed information for determining exemption eligibility.


Postdoctoral students, postdoctoral fellows, medical residents, medical interns, clinical fellows, residents and postdoctoral research associates are not exempt from FICA because services performed by these employees cannot be assumed to be for the purpose of pursuing a course of study.

Student employees who receive benefits are not eligible.

Special Situations



  • None.

Additional Information

Frequently Asked Questions


Related Data

1111.1rd - Criteria for Student FICA Tax Exemption under the Safe Harbor Tests

Internal Revenue Bulletin: 2005 - 2 contains excellent, detailed information for determining exemption eligibility.


Student FICA Payroll Services 919-962-0047



October 13, 2017: Updated main Payroll phone number.
May 1, 2015
September 8, 2009
May 29, 2007
May 26, 2005