University Payroll Office
Exemption From Social Security Withholding Tax

A. Purpose

This Statement outlines the requirements and procedures for University employees to be eligible to claim exemption from the social security withholding tax.

B. General Guidelines/Applicable Policies

1. Generally, wages of all University employees are subject to social security withholding tax. This tax is calculated as a percent of gross pay and has an annual wage ceiling. The percent and wage ceilings change periodically.

2. Students who are enrolled full time at NC State University or have an official graduate appointment paid on the monthly payroll are exempt automatically from social security tax. Full time enrollment for undergraduate students is 12 hours per regular semester and 6 hours per summer session. Full time enrollment for graduate students is 9 hours per regular semester and 3 hours per summer session.

3. Nonresident alien students on F-1 and J-1 visas are exempt automatically from social security tax for 5 and 2 years respectively from their date of entry to the US. H-1 and J-2 visa holders are subject to social security tax withholding unless exemption can be made based upon student status.

4. Form PYRL02, NC State University Exceptions for Non-Full Time Students for Social Security Exemption, will be used for students who are not exempted automatically. The following is an explanation of the eligibility exceptions for non-full time students:

a) Undergraduate students:
1) Enrolled full time and regularly attending class at a school within the UNC or community college system. The full time requirement is the same as for NC State University students; however, the student must submit official proof of enrollment in addition to Form PYRL02. A copy of the applicable semester's class schedule will suffice. Form PYRL02 must have Supervisor's Certification.

2) Enrolled for less than full time because it is the student's FINAL semester towards degree certification. This exception is only allowed one semester. Must have Supervisor's Certification and Advisor's Certification.

b) Graduate students:
1) Enrolled full time and regularly attending class at a school within the UNC or community college system. The full time requirement is the same as for NC State University students; however, the student must submit official proof of enrollment in addition to Form PYRL02. A copy of the applicable semester's class schedule will suffice. PYRL02 must have Supervisor's Certification.

2) Student is enrolled in GR697, Doctoral Dissertation Research. Form PYRL02 must have the Supervisor's Certification.

3) Enrolled for less than full time because it is the student's FINAL semester towards degree certification. This exception is only allowed one semester. Form PYRL02 must have the Supervisor's Certification and the Advisor's Certification.

C. Procedures

1. Form PYRL02 must be completed by each eligible non-full time student. The completed form should be submitted by the established monthly and biweekly payroll cutoff dates. (University Payroll Office cannot refund social security withholding tax.)

2. A new Form PYRL02 must be completed each semester.

3. Certain Agricultural Extension employees, who have Federal appointments and who are covered by Federal Civil Service Retirement, are eligible for the Medicare tax deduction only. These employees will continue to be certified through the Agricultural Extension Service Personnel Office.

4. Detailed instructions on the completion of the Form PYRL02 are provided in paragraph E of this statement.

D. Forms

Departments should keep on hand a supply of blank copies of the Form PYRL02. For a copy of this form, please email Wendy Griffin.

E. Instructions on Completion of Form PYRL02

ITEM AND DESCRIPTION

1 Semester for Exception
Indicate the semester and year for the exception.

2 Employee Name
The employee's name must be printed.

3 Social Security Number
The employee's Social Security Number must be entered.

4 Student's Signature
The student employee must sign.

5 Exceptions
The student must mark the applicable exception box.

6 Certifications
The student must have the required certifications applicable to the exception box marked.

Any questions concerning the procedures outlined in this Statement should be directed to the University Payroll Office, extension 5-4370 or 5-4369.

Return to PAYROLL Table of Contents