What is a FICA tax?
If you've ever worked in the United States and checked your salary slip, you might notice some taxes (Medicare and Social Security) being deducted from your pay. When you ask around, people would just tell you that those are FICA taxes. But what exactly is FICA? We explain it in this Guide.
Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes.
The current tax rate for social security is 6.2% for the employer and 6.2% for the employee.
The current rate for Medicare is 1.45% for the employer and 1.45% for the employee.
There’s an additional 0.9% tax on incomes over:
$250K – married filing jointly
$125K – married filing separately
$200K – Single
FICA Taxes for Non-Residents
Even non-residents in the country are supposed to pay these taxes. There’s only one category that is exempt from paying the FICA taxes i.e., those with single intent (i.e. expected to return back to their home country post their intended purpose in the US), or non-immigrant status (or F1 visa holders) are exempt from FICA taxes.
The guidelines from IRS confirms that F-visas, J-visas, M-visas, Q-visas, Nonresident Alien students, scholars, professors, teachers, trainees, researchers, physicians, au pairs, summer camp workers, and other aliens temporarily present in the United States in F-1, J-1, M-1, or Q-1/Q-2 nonimmigrant status are exempt from FICA taxes on wages paid to them for services performed within the United States as long as such services are allowed by USCIS for these nonimmigrant statuses, and such services are performed to carry out the purposes for which such visas were issued to them.
FICA tax exempt employment includes:
On-campus student employment up to 20 hours a week (or 40 hours during summer vacations).
Off-campus student employment allowed by USCIS.
Practical Training student employment on or off campus (F1 CPT4 or F1 OPT4).
Employment as professor, teacher or researcher.
Employment as a physician, au pair, or summer camp worker.
What if your Employer has deducted these taxes even though I’m on F1?
If this happens, then you can talk to your employer about a refund. However, if you are not able to get a full refund, you can file a claim for refund with the IRS on form 843.
Attach the following items to Form 843:
A copy of your Form W-2 to prove the amount of social security and Medicare taxes withheld,
A copy of the page from your passport showing the visa stamp,
INS Form I-94,
If applicable INS Form I-538, Certification by Designated School Official, and
A statement from your employer indicating the amount of the reimbursement your employer provided and the amount of the credit or refund your employer claimed or that you authorized your employer to claim. If you cannot obtain this statement from your employer, you must provide this information on your own statement and explain why you are not attaching a statement from your employer.
If applicable, Form 8316, Information Regarding Request for Refund of Social Security Tax Erroneously Withheld on Wages Received by a Nonresident Alien on an F, J, or M Type Visa
We hope this information was helpful to all of you. Please spread this information in the student community so that they do not lose their hard-earned money.