What if my employer doesn't pay social security tax because they are exempt. How do i get exempt?

[xmasbaby0]

Not sure what you mean by the employer being "exempt" or how you expect to become exempt from paying Social Security or Medicare.

Are you working as an independent contractor for a person or business that is not withholding tax, Social Security or Medicare?    If so, you have to file as self-employed and pay self-employment tax to pay your own Social Security and Medicare.    

What kind of document is your income being reported on?   Did you receive a 1099NEC or 1099Misc?    Or a W-2?

https://ttlc.intuit.com/questions/2584365-am-i-an-employee-or-an-independent-contractor

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

[vyuryev1013]

I received W2, and I am trying to find out if should also get 1099NEC or 1099Misc.

The job is a non-profit and they contribute to some other Retirement for me.

[Opus 17]

Let's make sure we know what we are talking about.

Generally, religious groups must withhold social security and medicare tax from their employees' wages even if the organization is exempt.  There are some exceptions.  See this article.

https://finance.zacks.com/groups-not-pay-social-security-system-8212.html

Certain religious organizations are morally opposed to accepting anything in the way of benefits from the government – the concept goes against their faith. They take the position that they provide perfectly well for their members without assistance, and that’s okay under federal law – as long as they do so.

This isn’t to say that you can just tell the Social Security Administration that your congregation will take care of you in the event of trouble and skip Social Security tax withholding from your paychecks – several rules apply.

First, the religious organization you belong to must make the short list of those that are officially recognized by the federal government for taking care of their own. The organization must have been in existence since Dec. 31, 1950, and it must have consistently provided for its members during that time. Mennonites and the Amish are good examples. You are not able to just launch a new faith and say you’re opposed to accepting help from the government so you can claim a Social Security exemption.

The organizations themselves must apply for this exemption by filing Form 4029 with the government, and even then, some of their members might not be exempt if they ever qualified for any type of Social Security benefits, even if they never collected them. Members must file Form 4029 as well to claim the exemption and doing so acts as a forever waiver of ever receiving any type of Social Security benefits in the future.

So what if you’re not a member of one of these faiths but you work for a qualifying religious organization? You’ll have to pay Social Security tax on your earnings over $100 a year, and you have to pay both halves just as you would if you were self-employed because the organization is exempt.

1. Is this describing your situation?
2. Are you saying that you have a W-2 with no withholding in box 4 and 6?
3. Do you want to be exempt from Social Security?  You need to file form 4029?
4. Do you want to pay the social security tax?

You don't need a 1099-NEC or 1099-MISC.  If you are a common law employee (they set your schedule and tell you what to do) then you only receive a W-2.  What you need to do is include a schedule SE with your tax return to pay self-employment tax on your wages, which is the equivalent of your Social Security and Medicare taxes.

Turbotax has a procedure for this situation.  After entering your W-2, check the box for "Religious Employment" on the page listing uncommon situations.  Next, indicated that you earned these wages for non-clergy religious employment, and then "pay self-employment tax on this W-2 income."

[vyuryev1013]

Thank you for detailed explanation. 

However this doesn't not describe me. Its not a religious institution, but is a medical institution, and is associated with a public university. 

The W2 has a no withholding for box 4, but it does have withholding for box 6.

Thanks

[Opus 17]

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@vyuryev1013 wrote:

Thank you for detailed explanation. 

However this doesn't not describe me. Its not a religious institution, but is a medical institution, and is associated with a public university. 

The W2 has a no withholding for box 4, but it does have withholding for box 6.

Thanks

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Are you a student?  (Including graduate student, postdoctoral fellow or medical fellow?)

[VolvoGirl]

Your employer may be exempt for SS but you are not exempt from paying income tax.  When I worked at a hospital they opted out of SS and paid into their own plan.  Just don't enter boxes 3&4.  Is it giving you a problem?  You just won't get SS credit for those wages.  

[vyuryev1013]

Graduate Student.

[vyuryev1013]

@VolvoGirl  no its not giving me a problem when trying to enter but since this job i started always owing more in taxes. I wanted to make sure that I am not overpaying if don't need to.

Thanks

[Opus 17]

Ok.  I think @VolvoGirl is slightly incorrect, in that, while an organization may be exempt from social security tax, its employees rarely are.  There are exceptions; for example, in NY, police, corrections workers and other peace officers are covered by a state pension instead of social security.  If this applied to you, your employer would be able to provide all the details needed.

However, students are entirely different.  Students are exempt from social security if they are employed by their university in connection with their studies.  For example, a student employed as a TA in their degree field would be exempt from Social Security on their TA wages; a student employed in the cafeteria would generally not be exempt from social security.  Graduate students who are paid a stipend (usually in the various sciences) are also exempt from social security.  You don't need any extra paperwork or to pay any extra tax.  Just enter your W-2 and go on to the next topic.

Now, the (slight) downside to this is that you don't get social security credits toward retirement or disability.  I spent 6 years as a graduate student and 6 years as a post-doc and was exempt from social security for that time.  When I retire, my benefits are based on my 35 highest-earning years over my lifetime.  Because I spent so much time exempt, some of those zero years end up in my 35 year look-back and drag down my average earnings and therefore my social security benefit -- of course that's assuming that social security is even solvent when I retire.  If your university allows you to contribute to some other kind of retirement plan, such as a 403(b), you should take the opportunity to invest at least something for your future.