This guide covers: set an employee's visa status, turn on the nonresident-alien exemption, and understand what it changes on their paychecks.
Set the citizenship / visa status
What it does: Records the employee's work-authorization status, which determines whether the payroll-tax exemptions below are available.
Where: Client → Employees → open the employee → Citizenship & Work Authorization → Citizenship Status.
Steps:
- Open the employee's profile.
- In Citizenship & Work Authorization, set Citizenship Status to the correct visa — F-1 Student, J-1 Exchange Visitor, M-1 Student, or Q-1 / Q-2.
- Enter Date First Entered U.S. in This Status (this drives the exemption-window reminder).
Turn on the nonresident-alien exemption
What it does: Exempts the employee from Social Security, Medicare, and FUTA on visa-authorized wages — the exemptions come from parallel provisions, IRC §3121(b)(19) for FICA and §3306(c)(19) for FUTA.
Where: Same section, once an eligible visa is selected.
Steps:
- With an F-1/J-1/M-1/Q status selected, check "Nonresident alien — exempt from Social Security, Medicare & FUTA."
- Click Save changes.
From then on, payroll runs zero out Social Security, Medicare, and FUTA for this employee automatically. State unemployment (SUTA) is not affected — it's set by state law and still applies.
What it does and doesn't change
- FICA (Social Security + Medicare): exempt.
- FUTA (federal unemployment): exempt. (Many payroll systems get this half wrong — they exempt FICA but still charge FUTA. Payrollix exempts both.)
- Federal & state income tax: still withheld. Nonresident aliens owe income tax; the amount can look higher than a resident's because of the IRS's nonresident withholding method.
- State unemployment/disability: still applies where the state requires it.
When to turn it off
The exemption is tied to nonresident-alien status. F-1/M-1 students are generally exempt for their first 5 calendar years; J-1 exchange visitors for roughly their first 2 years. Once the employee passes the substantial-presence test and becomes a resident alien — or changes to a non-exempt status such as H-1B — uncheck the box so Social Security, Medicare, and FUTA resume. Payrollix shows a reminder based on the entry date you set.
For the tax background, see our blog post Do F-1 and J-1 Students Pay Payroll Taxes?.