How to Get a Refund of Social Security and Medicare Taxes
Are you entitled to a Social Security tax refund?
Mistakes happen. You might overpay into the Federal Insurance Contributions Act, familiarly known as FICA, for any number of reasons. FICA is comprised of the Social Security and Medicare taxes normally withheld from your paychecks. You pay half and your employer pays half. If you're self-employed, these taxes represent your self-employment tax which you should pay quarterly, and you must pay 100 percent.
But what if you pay too much in either scenario? What if you're not subject to these taxes for one reason or another but they were withheld anyway? You can potentially get the money back.
Here's an Example
Ronnie in New York wants to know about claiming a Social Security tax refund for taxes withheld from his paychecks.
"I was wondering if you would be able to help me find the answer to my question. I did my undergrad here in the U.S. and I am a current student in a master's program as an international student, also in the U.S. I was on my OPT (optional practical training) from August of the first year through August of the second year. I have researched quite a bit and I also called the tax refund number listed on the IRS website to confirm if I am eligible for a refund of my Social Security and Medicare taxes. So far, all my research points to yes. I am on an F-1 visa and have never worked without INS authorization under a student visa, so all the articles I have read state that I am allowed to file for a Social Security/Medicare tax refund. I did not know this while I was on my OPT. Do you think I can still file for my refund for Social Security and Medicare taxes since my OPT has ended?"
Here Are the Rules
- Non-immigrant scholars on F-1, J-1, M-1, or Q-1 visas are exempt from Social Security and Medicare taxes. They can claim refunds for their share of these taxes withheld from their paychecks.
- You must first attempt to claim a Social Security tax refund from your employer. If that fails, you can submit your refund claim to the Internal Revenue Service.
The clearest explanation of this issue can be found in an IRS training manual for volunteer tax preparers, Publication 678-FS. This manual is no longer published, but the information still stands.
"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 U.S. 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. Such persons are exempt from Social Security and Medicare taxes as long as they remain non-resident aliens for tax purposes. Those who become resident aliens must start paying Social Security and Medicare taxes."
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'll have to include a cover letter attesting that your employer has refused or failed to reimburse you. Attach a copy of your W-2 for the tax year in question to substantiate how much was withheld from your pay. You might also have to submit IRS Form 843. But rest assured that if you're entitled to reimbursement, you should receive it.
This topic is also discussed in Chapter 8 of Publication 519, the U.S. Tax Guide for Aliens.
There is a three-year statute of limitations for claiming tax refunds.
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.