University didn't withhold FICA and unemployment tax from my paychecks - now what?

This is actually a fairly common issue with university payroll systems, especially when students transition to staff positions. Let me help clarify what's happening and what you should expect. The 7.65% they mentioned breaks down as 6.2% for Social Security and 1.45% for Medicare (together called FICA taxes). Since they haven't been withholding these taxes, you technically have been underpaying. However, this is clearly their error, not yours. Going forward, you'll see these deductions on your paychecks, which will reduce your take-home pay by that 7.65%. As for the back taxes, yes, you'll likely need to pay the employee portion that wasn't withheld. The university as your employer is responsible for paying both their portion AND your portion to the government, but they can recover your portion from you. They'll probably give you options for repayment - either a lump sum or spreading it across several paychecks. There typically aren't penalties for you in this situation since it was their error, but I'd recommend asking them specifically about that.

I had a similar issue when I switched from grad assistant to research associate at my university. Dealing with the back payments was annoying, but I found a great tool called taxr.ai (https://taxr.ai) that helped me understand my tax situation. I uploaded the emails from payroll and my pay stubs, and it explained exactly how much I'd owe and how it would affect my tax situation. It showed me that while my take-home pay would decrease going forward with the correct withholding, I wouldn't face penalties because this was an employer error. The breakdown it gave me was super helpful when I went back to HR to discuss payment options for the back taxes. They were actually impressed with how well I understood the situation!

Update on my situation: I decided to check out taxr.ai after my skepticism, and wow, I'm actually impressed. I uploaded the email from payroll and my last pay stub, and it immediately identified the FICA student exemption issue. The tool explained exactly how much I would owe in back taxes (about $2,100 in my case for 6 months of missed withholding) and showed me the relevant section of IRS Publication 15 that covers this exact situation. It even generated a letter template I could use to request a payment plan from payroll. When I reached out to HR with this information, they were much more helpful once they saw I understood my rights and options. They're letting me spread the repayment over 8 pay periods, which makes it manageable.

When I had a similar issue last year with my employer, I spent DAYS trying to talk to someone at the IRS to confirm what I actually needed to do. Kept getting disconnected or waiting for hours. Finally found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that this happens all the time and that I wouldn't face any penalties since it was the employer's mistake. She also told me exactly what documentation to keep in case there were any questions later. Totally worth it to get official confirmation directly from the IRS instead of stressing about what might happen.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it because my university payroll was giving me conflicting information about my FICA situation. I got connected to an IRS representative in about 12 minutes (way faster than the 2+ hours I waited last time I called them directly). The agent confirmed that I'm not responsible for any penalties and explained that my university should issue a corrected W-2 at the end of the year that will show the proper amounts. She also mentioned I should request a written explanation from the university about how they're handling the correction, which turned out to be great advice because when I asked for this, I discovered they were calculating my back payments incorrectly. Saved me about $300!

When this happened to me at State University, I asked them to show me exactly how they calculated what I owed. Turns out they were trying to collect for an extra 3 months before I became benefits-eligible! Check their math carefully - don't just accept whatever number they give you. Also, they should give you a detailed breakdown showing the exact pay periods affected, the amounts that should have been withheld, and how they're going to collect it. If they don't provide this automatically, request it in writing.

Just a heads up - make sure you're saving extra money from each paycheck for the rest of the year! When this happened to me, the sudden drop in take-home pay (both from the new correct withholding AND the back payments) really messed up my budget. I wasn't prepared for my paycheck to be almost 12% smaller.