Justices hear case on taxing of students

“How do you draw the line,” Justice Sonia Sotomayor asked at a Supreme Court argument on Monday, “between a student who is working and a worker who is studying?” reports the New York Times. The case concerned medical residents, who work long hours as part of their studies, providing care to hospital patients. They are often paid more than $50,000 a year. Under a 2005 Treasury Department regulation, residents are subject to Social Security taxes, notwithstanding a statutory exemption for work performed by students who regularly attend classes, as residents do. The regulation says that students who would otherwise qualify for the exemption lose it if they work more than 40 hour per week, even if they learn from what they do. According to a brief filed by residency programs that are seeking tax refunds, there are about 100,000 residents in 8,000 programs nationwide. According to a government brief, medical residents are subject to about $700 million in Social Security taxes each year…

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