The Social Security and Medicare taxes that are withheld from your paychecks are collectively referred to as the Federal Insurance Contributions Act tax, or "FICA tax." You pay half of these taxes, and your employer pays half: 7.65% of your salary or wages each for a total of 15.3%.
Depending on your tax status and income, it is possible to accidentally overpay FICA taxes. If that happens, you may be able to claim a Social Security tax refund.
How Social Security and Medicare Tax Is Paid
If you are an employee, FICA taxes are withheld from your paycheck along with income tax.
The Social Security portion of the FICA tax is subject to a cap—$137,700 in 2020, and $142,800 in 2021. This is referred to as the "wage base." You do not owe Social Security tax on income you make over this amount.
If you work for yourself rather than an employer, FICA taxes are your self-employment tax. You must make quarterly estimated payments to the IRS for your FICA taxes if you are:
- An independent contractor
- A sole proprietor
- A member of a single-member LLC
- A partner in a business that has elected to be treated as a partnership for tax purposes
If you pay the self-employment tax, you must pay the full 15.3% to cover both the employee and the employer portions. However, you can claim an above-the-line tax deduction as an adjustment to income for half of this amount.
Who Is Exempt From FICA Taxes
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 U.S. Citizenship and Immigration Services (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 are 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.
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. Ships and aircraft in these situations must be foreign vessels owned by foreign employers.
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.
Who Can Get a Refund for FICA Overpayment
If you overpay your FICA taxes, you are entitled to a refund of the excess amount.
You might overpay if:
- You aren't subject to these taxes, but they were withheld from your pay.
- You didn't owe FICA taxes, but you made estimated tax payments.
- You calculated your estimated payments incorrectly.
- Your total income from two different employers is over the wage base, but both employers withheld FICA taxes.
While the percentages withheld for FICA tax might sound small, they can amount to a large payment. For example, if you are refunded 7.65% of a $50,000 salary, you will get $3,825 back.
If you have overpaid for any reason, you can submit a request to have those taxes refunded. You must first attempt to claim a Social Security tax refund from your employer. If you can't get a full refund from your employer, you can submit your refund claim to the Internal Revenue Service (IRS) on Form 843.
An Exempt Taxpayer Example
Consider this example. An international student in a master's program in the U.S. is on optional practical training from August of 2018 through August of 2019. The student shouldn't be subject to FICA taxes, which were withheld because the employer didn't realize this.
The student is in the U.S. on an F-1 visa and has never worked without Immigration and Naturalization Service (INS) authorization under a student visa. The student should be able to file for a Social Security and Medicare tax refund to recapture the taxes that were mistakenly withheld.
How to Claim a FICA Tax Refund
To claim a refund of Social Security and Medicare taxes, you will need to complete and submit IRS Form 843.
When you apply for a refund from the IRS, include either:
- A letter from your employer stating how much you were reimbursed
- A cover letter attesting that your employer has refused or failed to reimburse you
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 in Social Security and Medicare taxes was withheld.
If you are a non-resident foreign worker on a visa, include a copy of the page from your passport that displays your visa stamp, as well as INS Form I-94 and documentation showing you have permission to work in the United States. You might also have to submit INS Form I-538 and IRS Form 8316.
Submit your paperwork to the IRS office where your employer files Form 941. You should receive reimbursement if you're entitled to it. There is a three-year statute of limitations for claiming tax refunds, so you will not be able to receive a refund for a tax year more than three years ago.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the laws. For current tax or legal advice, please consult with an accountant or an attorney.