Court ruling on salaries could cost teaching hospitals, residents
The Eighth Circuit U.S. Court of Appeals found that residents’ salaries may be subject to Social Security taxes, according to an article in The Wall Street Journal.
Although most U.S. employees must pay Social Security taxes, students whose work is part of their studies have been excluded. Residents fell into this group, but over the past decade, medical schools and the IRS have been fighting over this exclusion, says The WSJ.
The appellate court’s ruling overturned those of two district courts, which had sided with the medical schools. The judges said medical residents are subject to payroll taxes, but says the tax law does not define whether residents are students or employees. According to the WSJ, this means the IRS can adopt its own guidelines around resident tax collection.
What do you think about this latest ruling? Leave your comments in the box below.
For more information on the resident tax issue, also see:
The Chronicle of Higher Education
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Julie McCoy
Julie McCoy is the associate editor for the residency market at HCPro, Inc.
Julie has written 192 posts.
Comments
I thought that only residents in the U.S. on J-1 visas were not subject to the FICA’s. All others have all the withholdings from their salaries.
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