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.).