Payroll for U.S. Employees Abroad and Aliens in the U.S. 14 APA's Top Payroll Questions & Answers for 2019 Exemptions applicable to F-1 visa holder Q. What exemptions from federal taxes apply to employees holding an F-1 visa? A. The answer to this question depends on a variety of factors. Here is an overview of what you need to consider. The F-1 visa is one of several nonimmigrant visas. It is used by fulltime students at an approved U.S. educational institution. The students can work in work-study programs that further their academic program. Their earnings in such work is exempt from social security, Medicare, and FUTA taxes if they are nonresident aliens and their work meets the requirements for exemption (see https://www.irs.gov/individuals/ international-taxpayers/foreign-student-liability-for-social-security-andmedicare-taxes). The holder of an F-1 visa is not automatically exempt from federal employment and income taxes. You also need to determine if the visa holder is a resident or a nonresident alien, based on the substantial presence test (see The Payroll Source®, §14.2-1). This test has nothing to do with an alien's intent to remain in the U.S. or whether the alien holds an immigrant or nonimmigrant visa. A resident alien under the substantial presence test, even with F-1 visa status, is subject to FICA tax and is subject to federal and state income tax withholding to the same extent wages paid to U.S. citizens are. Employers must also pay FUTA and SUTA taxes for resident aliens. If there is an applicable tax treaty that applies to the student (see IRS Publication 901, U.S. Tax Treaties) the employee may be exempt from federal taxes on that basis. 98https://www.irs.gov/individuals/international-taxpayers/foreign-student-liability-for-social-security-and-medicare-taxes https://www.irs.gov/individuals/international-taxpayers/foreign-student-liability-for-social-security-and-medicare-taxes https://www.irs.gov/individuals/international-taxpayers/foreign-student-liability-for-social-security-and-medicare-taxes https://bookshelf.americanpayroll.org/payroll_source/ https://www.irs.gov/pub/irs-pdf/p901.pdf