How to Get a FICA Refund of Social Security and Medicare Taxes
Are you entitled to a Social Security tax refund?
The Social Security and Medicare taxes that are withheld from each of your paychecks are collectively referred to as the FICA tax—shorthand for the Federal Insurance Contributions Act tax. You pay half and your employer pays half: 7.65% of your salary or wages each for a total of 15.3%.
These taxes are your self-employment tax if you're an independent contractor, a sole proprietor, a member of a single-member LLC, or a partner in a partnership that's elected to be treated as a partnership for tax purposes. You should remit your estimated FICA payments to the IRS quarterly in this case. You must pay the full 15.3%, or both halves, but you can claim an above-the-line tax deduction as an adjustment to income for one half of this amount.
In either case, you can accidentally overpay into FICA for any number of reasons, but you might be able to claim a Social Security tax refund.
You might overpay if you're not subject to these taxes for some reason, but they were withheld from your pay or you made estimated tax payments anyway. You might have calculated your estimated payments wrong.
The Social Security portion of the tax is additionally subject to a cap—$137,700 in 2020, up from $132,900 in 2019. You don't have to pay the Social Security tax on income over this amount, referred to as the "wage base." You could easily overpay if you work for two or more employers and they don't realize that collectively your income has topped the wage base so no more is required to be withheld.
You can potentially get the money back, and that's a good thing because although these percentages might sound relatively small, they can amount to a fair bit of change. For example, 7.65% of a $50,000 salary works out to $3,825.
Exempt Taxpayers—An Example
Let's assume that Joe Taxpayer is an international student in a master's program in the U.S. He was on optional practical training from August of 2018 through August of 2019. As such, he wouldn't be subject to FICA taxes, but they were mistakenly withheld from his pay anyway because his employer didn't realize this.
He's in the U.S. on an F-1 visa and he's never worked without INS authorization under a student visa, so he should be able to file for a Social Security and Medicare tax refund to recapture the taxes he should not have had to pay in the first place.
Rules for Exemption: Non-Immigrant Students and Teachers
The IRS says that an exemption from Social Security and Medicare taxes applies to non-immigrant students, scholars, teachers, researchers and trainees (including medical interns) who are temporarily present in the United States in F-1, J-1, M-1 or Q-1 status, as long as they remain non-residents for federal income tax purposes.
The exemption also applies to any period in which a foreign student is in "practical training" or other off-campus employment allowed by the USCIS.
Non-immigrants on F-1, J-1, M-1, or Q-1 visas can claim refunds for their share of these taxes withheld from their paychecks as long as they qualify as non-resident alien taxpayers and they're in "substantial compliance" with their visas. They can't have been physically present in the U.S. for more than five years. Those who become resident aliens must start paying Social Security and Medicare taxes.
You must first attempt to claim a Social Security tax refund from your employer. You can submit your refund claim to the Internal Revenue Service if that fails.
Other Qualifying Visas
Employees of foreign governments who hold A-visas are also exempt from FICA withholding, as are crew members of ships or aircraft who are present in the country on D-visas, but it must be a foreign vessel owned by a foreign employer.
Employees of international organizations are exempt as well. They typically hold G-visas. Non-residents present in the U.S. on H-visas don't have to pay FICA taxes, either. These are often temporary agricultural workers.
How to Claim a Refund
The IRS briefly lists the steps for claiming a refund of Social Security and Medicare taxes on its website. You must submit IRS Form 843, the "Claim for a Refund and Request for Reimbursement."
Ideally, you should include a letter from your employer stating how much he reimbursed you, if anything, but you can include a cover letter instead, attesting that your employer has refused or failed to reimburse you if you can't get such a statement.
Attach a copy of your Form W-2 for the tax year in question to substantiate how much was withheld from your pay. Boxes 4 and 6 on the W-2 show how much Social Security and Medicare taxes were withheld.
Submit your paperwork to the IRS office where your employer files his 941 Forms. You should receive reimbursement if you're entitled to it. Keep in mind, however, that there's a three-year statute of limitations for claiming tax refunds.
This topic is also discussed in Chapter 8 of Publication 519, the U.S. Tax Guide for Aliens.
NOTE: Tax laws change frequently and the above information may not reflect the most recent changes. Please consult with a tax professional for the most up-to-date advice. The information contained in this article is not tax advice and it is not a substitute for tax advice.
Social Security Administration. "Social Security & Medicare Tax Rates." Accessed March 30, 2020.
IRS. "Topic No. 554 Self-Employment Tax." Accessed March 31, 2020.
Social Security Administration. "Contribution And Benefit Base." Accessed March 30, 2020.
IRS. "Social Security/Medicare and Self-Employment Tax Liability of Foreign Students, Scholars, Teachers, Researchers, and Trainees." Accessed March 30, 2020.