Exempt Employees and Employment

The classification of a worker as an employee does not, of itself, create an obligation on the part of an employer to withhold and / or pay federal employment taxes. Certain payments made to the employee may not constitute taxable wages and certain services may be specifically exempt from coverage under the employment tax laws.

Special classes of employment or employees that are considered exempt under one or more of the federal payroll tax laws or regulations (FIT, FICA, FUTA) include:

(1) agricultural labor,

(2) aliens,

(3) casual labor,

(4) clergy,

(5) corporate directors,

(6) domestic service,

(7) family employment,

(8) federal government employment,

(9) fishing industry,

(10) foreign government employees,

(11) hospital patients as employees,

(12) international organization employees,

(13) military service,

(14) newspaper carriers and news vendors,

(15) non-profit organizations,

(16) nurses and interns,

(17) public transportation,

(18) railroad employees,

(19) state and local government employees,

(20) students,

(21) US citizens and residents working outside the US, and

(22) volunteer service.

Specific questions about the taxability of employment in the above categories should be directed to the appropriate taxing authority.

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