Government employees:
- United States employees after 1983 are generally subject to FICA, however, certain service is excluded from coverage if exempt from tax before 1984;
- employees of a state, political subdivision, or any instrumentality which is wholly owned by the government entity.
- Application of FICA generally depends on:
- the nature of the service,
- the commencement date of the service, and
- whether or not the individual performing the service is covered by another retirement program maintained by the state, subdivision, or instrumentality.
- Services after July 1, 1991 are generally subject to FICA unless they actively participate in a retirement program maintained for state and local government employees, but are nonetheless subject to the Medicare portion of the FICA tax if employment commenced, or recommenced, after March 31, 1986.
- Exceptions to the preceding FICA coverage requirements apply, however, with respect to services performed, e.g.:
- by an individual employed by a state or local government to relieve such individual from unemployment;
- in a hospital or home by a patient or inmate;
- on a temporary basis due to a fire, storm, earthquake, flood, or similar disaster;
- by an election worker receiving less than $1000 during the year; and
- by individuals compensated on a fee basis.
- State employees are entirely exempt from FUTA. Employees of an instrumentality of one or more states or state political subdivisions are also exempt from FUTA if the instrumentality is wholly owned by one or more of the foregoing. Otherwise, the employees are only exempt from FUTA to the extent that such service is immune under the Constitution of the United States from the tax imposed by § 3301. Although exempt from FUTA, most services performed for state and local governments are covered under the state's unemployment insurance program.
- Foreign government employees are generally exempt from FICA and FUTA coverage:
- citizenship or residence of the employee is immaterial.
- whether the foreign government grants a similar exemption with respect to services performed in the foreign country by United States citizens is immaterial.
- Employees of instrumentalities of foreign governments are also generally exempt from FICA and FUTA if the instrumentality is wholly owned by the foreign government.
- Note: US citizen employees of foreign governments or instrumentalities in the United States which are exempt from FICA are subject to SECA.
- Services performed by an individual in the employ of an international organization are generally exempt from FICA and FUTA.
