 Residents for tax purposes are also exempt from Social Security and Medicare taxes for income earned where the employer is the educational institution, subject to a number of caveats.Residents "do" need to pay Social Security and Medicare taxes on both on-campus employment not by their university, as well as off-campus employment such as that undertaken as part of Curricular Practical Training and Optional Practical Training.Tuition waivers that do not involve the student actually receiving money are not taxable and not reported as taxable.