Is a public university a corporation?

[ryanf1475]

Hello, I can't believe it is so hard to find an answer to this question, so if you could help, I would be so thankful. I am currently working in China and the IRS publication 54 says that if I qualify for the FEIE and don't work for an American partnership, trust, or corporation, I should be exempt from Medicare taxes. But I believe my employer (an American public university) is a non-profit organization, which is a type of corporation--is this correct? Many thanks!!

 

[LdiJ]

Hello, I can't believe it is so hard to find an answer to this question, so if you could help, I would be so thankful. I am currently working in China and the IRS publication 54 says that if I qualify for the FEIE and don't work for an American partnership, trust, or corporation, I should be exempt from Medicare taxes. But I believe my employer (an American public university) is a non-profit organization, which is a type of corporation--is this correct? Many thanks!!

Please don't use initials for something FEIE could mean any number of things. Spell it out.

 

[ryanf1475]

OK, sorry, FEIE means foreign earned income exclusion - thanks!

 

[Taxing Matters]

Hello, I can't believe it is so hard to find an answer to this question, so if you could help, I would be so thankful. I am currently working in China and the IRS publication 54 says that if I qualify for the FEIE and don't work for an American partnership, trust, or corporation, I should be exempt from Medicare taxes. But I believe my employer (an American public university) is a non-profit organization, which is a type of corporation--is this correct? Many thanks!!

If you specified the particular university in question that may help. However, for federal tax purposes, all organizations are classified as either a partnership, trust, or corporation. Purely governmental organizations, like the U.S. Congress are not taxed and thus have no need for tax classification. Colleges and Universities, though, are not purely governmental organizations, i.e. they do not carry out purely governmental activities like making and enforcing the law. They are instead organizations that compete with private universities that do the same thing. For that reason, they are subject to U.S. tax unless they qualify for tax exemption, usually under Internal Revenue Code (IRC) § 501(c)(3). And in general to get that exemption, they must be a corporation for federal tax purposes. For example, the University of Colorado (CU) is a state university officially organized as the Regents of the University of Colorado, a corporation exempt under § 501(c)(3). So an employee of CU working in China would not be exempt from Medicare taxes. This will be the case for pretty much every state university. But like I said, the details of the particular university in question matters.

 

[LdiJ]

OK, sorry, FEIE means foreign earned income exclusion - thanks!

I figured that it meant that, but there was every possibility that it didn't so thank you for spelling it out. See Taxing Matter's response.

 

[ryanf1475]

If you specified the particular university in question that may help. However, for federal tax purposes, all organizations are classified as either a partnership, trust, or corporation. Purely governmental organizations, like the U.S. Congress are not taxed and thus have no need for tax classification. Colleges and Universities, though, are not purely governmental organizations, i.e. they do not carry out purely governmental activities like making and enforcing the law. They are instead organizations that compete with private universities that do the same thing. For that reason, they are subject to U.S. tax unless they qualify for tax exemption, usually under Internal Revenue Code (IRC) § 501(c)(3). And in general to get that exemption, they must be a corporation for federal tax purposes. For example, the University of Colorado (CU) is a state university officially organized as the Regents of the University of Colorado, a corporation exempt under § 501(c)(3). So an employee of CU working in China would not be exempt from Medicare taxes. This will be the case for pretty much every state university. But like I said, the details of the particular university in question matters.

OK, thank you so much! I work for University of Illinois, so a state school yes.

 

[Taxing Matters]

OK, thank you so much! I work for University of Illinois, so a state school yes.

The University of Illinois is officially organized as the Board of Trustees of the University of Illinois, a corporation that is tax exempt under IRC § 501(c)(3). That information comes from the Form 990 filed by the University, which is a public record. So like CU, it is for federal tax purposes a U.S. corporation and you'll be subject to Medicare tax as a result.