Social Security, Medicare, and Federal Unemployment Taxes for Nonresident Aliens FEDERAL UNEMPLOYMENT TAX In general, federal unemployment (FUTA) tax applies to all wages paid for work performed in the U.S., regardless of the citizenship or residency status of the employee or the employer.11 Nonresident aliens are subject to FUTA even if they are exempt from federal income tax under the IRC. The exemptions from FUTA for wages received and work performed by nonresident aliens in the U.S. are generally the same as the exemptions from social security and Medicare taxes (see page 3-1). However, there are no international agreements, such as totalization agreements, exempting temporary employment by a nonresident alien in the U.S. from FUTA tax. The FUTA exemptions apply to: * Nonresident alien students and exchange visitors12 * Employees on foreign ships or planes13 * Employees of foreign governments14 * Employees of international organizations15 Wages earned by nonresident alien agricultural workers temporarily admitted to the U.S. under "H" visas are exempt from FUTA.16 11. 12. 13. 14. 15. 16. IRC IRC IRC IRC IRC IRC §3306(c); IRS Reg. §31.3306(c)-2. §3306(c)(19); IRS Reg. §31.3306(c)(18)-1. §3306(c)(4); IRS Reg. §31.3306(c)(4)-1. §3306(c)(11); IRS Reg. §31.3306(c)(11)-1. §3306(c)(12); IRS Reg. §31.3306(c)(12)-1. §3306(c)(1)(B). 3-5