FICA Medical Student Exemption

IRC Sec. 3121(b)(10) authorizes a FICA exemption for students employed by and regularly attending classes at a school or university. However, Reg. 31.3121(b)(10)-2 states that medical residents normally working 40 or more hours per week are not eligible for the exemption. In a unanimous decision, the Supreme Court found that Congress had not directly addressed the FICA taxation of medical residents, since IRC Sec. 3121(b)(10) does not define "student" or otherwise determine whether medical residents are subject to FICA. The regulation was a permissible interpretation of the statute because focusing on the hours spent working and those spent studying is a sensible way to distinguish between workers who study and students who work. Since the medical residents worked more than 40 hours per week, their compensation for patient care was subject to FICA taxation. Mayo Foundation for Medical Education and Research v. U.S. , 107 AFTR 2d 2011-XXXX (Sup. Ct.).

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Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.