Payments received from MIT may be subject to withholding tax in accordance with regulations governed by U.S. federal and state tax authorities.
Federal Withholding Tax
Most payments are subject to a 30 percent withholding tax, with some exceptions. Withholding tax on compensation (wages/salary) is applied at federal graduated rates as indicated in tax tables published by the IRS. This means that as your compensation increases, it is subject to a higher withholding tax rate.
The applicability and amount of withholding depends on the following criteria:
- your U.S. tax residency status
- whether the income is considered U.S. or foreign-sourced
- the type of income
- your eligibility for tax treaty benefits
IRS Publication 515 will help you understand MIT’s federal withholding tax requirements. The IRS website provides additional information regarding employer withholding on foreign students and scholars.
If you received taxable income that was not subject to federal tax withholding, consider making estimated payments throughout the tax year. Use IRS 1040-ES (NR) to make estimated payments.
State Withholding Tax
State withholding tax on compensation (wages/salary) is dependent on the state in which the work is performed. Withholding tax rates vary by state. The current Massachusetts income tax is a flat rate of 5.05 percent.
If you are working in a state outside of Massachusetts, contact VPF HR/Payroll.
Social Security and Medicare Tax
Individuals employed in the U.S. are required to pay Social Security and Medicare payroll taxes under the Federal Insurance Contributions Act (FICA), which is often referred to as FICA tax. This program is administered by the U.S. Social Security Administration.
MIT collects the FICA payroll tax by withholding it from employee paychecks. The current FICA rate is 7.65 percent of taxable income.
Non-student U.S. citizens, lawful permanent residents, and resident aliens are subject to FICA on dependent service income (salary and wages earned as an employee). Nonresident aliens performing services in the U.S. as employees may also be subject to FICA.
Income tax treaties provide some exemptions from U.S. federal income taxes, but generally do not include the FICA payroll tax. However, the U.S. has entered into several totalization agreements with foreign countries to avoid double taxation of income with respect to Social Security.
The content in this website is provided for informational purposes only. MIT does not offer legal, accounting, or tax advice and services. This information should not be used as a substitute for consultation with a professional accounting, tax, or legal advisor. MIT recommends that students consult a tax advisor for individual tax advice.