FICA Tax Explained for Nonresident Aliens

FICA tax exemption

What is FICA tax?

The Federal Insurance Contributions Act (FICA) is the means by which social security and medicare are funded in the US.

FICA also provides benefits to children who have lost their working parents, widows and widowers, and disabled workers who qualify for benefits.

For self-employed people, there is an equivalent law called SECA (Self-employed Contributions Act).

Contributions to FICA are deducted from employee income. Many workers in the US will notice FICA being deducted from their income each time they receive their paycheck.

But do nonresidents have to pay FICA? And what should you do when FICA was deducted from your pay when it shouldn’t have been?

In this guide, we will cover everything a nonresident in the US needs to know about FICA.

Do nonresidents have to pay FICA?

If you’re a nonresident in the US you may be exempt from FICA.

International students, scholars, teachers, professors, researchers, trainees, physicians, au pairs, summer camp workers, and other non-students on F-1, J-1, M-1, Q-1 or Q-2 visas are entitled to a FICA exemption.

The exemption period covers your first five calendar years of physical presence in the US if you are a full-time student at a US educational institution. You are exempt for your first two years if you are not a full-time student.

After this period of time has passed, international students are classified as Resident Aliens for Tax Purposes and are subject to withholding of FICA tax.

However, if they remain students (primarily) they may be able to claim the Student Social Security and Medicare exemption.

The five-year exemption permitted to F-1, J-1, M-1 full-time students also applies to any period in which the international student is in ‘practical training’ allowed by the United States Citizenship and Immigration Services USCIS, as long as the foreign student is still classified as a nonresident alien for tax purposes.

Оnce the exemption period has passed, this group of nonresidents are classified as resident aliens for tax purposes and subject to FICA tax withholding.

FICA taxes also do not apply to payments received by students employed by a school, college, or university where the nonresident student is pursuing a course of study.

Are there any employment types which are exempt from FICA?

Yes. Nonresidents will not have to pay FICA if they are earning income from any of the below employment types:

  • On-campus student employment up to 20 hours a week (40 hrs during summer vacations)
  • Off-campus student employment allowed by USCIS
  • Practical Training student employment on or off-campus
  • Employment as professor, teacher or researcher (within 2-years exemption period)
  • Employment as a physician, au pair, or summer camp worker (within 2-years exemption period)

When do nonresidents have to pay FICA?

FICA exemption does not apply to:

  • Spouses and children in F-2, J-2, M-2, or Q-3 nonimmigrant status
  • Nonresidents in employment which is not allowed by USCIS or in employment which is not closely connected to the purpose for which the visa was issued
  • Nonresidents in the US on F-1, J-1, M-1, or Q-1/Q-2 visas who change to an immigration status which is not exempt or to a special protected status
  • Nonresidents in the US on F-1, J-1, M-1, or Q-1/Q-2 visas who become resident aliens
  • If the exempt period has passed – 2 years for J and Q visas and 5 years for F and M students
  • The employment should be closely connected to the purpose for which the visa was granted

FICA and residency status

Resident aliens for tax purposes have the same liability for Social Security/Medicare Taxes that US Citizens have.

You are considered a resident alien of the US for tax purposes if you meet either the Green Card Test or the Substantial Presence Test (SPT) for the calendar year. Find out more about US residency here.

Green Card Test

If you have a Green Card, you are considered a resident alien for tax purposes.

Substantial Presence Test (SPT)

You will be considered a resident alien for tax purposes if you have been present in the US for at least 31 days in the current year, and present in the US for 183 days over the three year period that includes the current year and the prior 2 years. The 183 days is calculated as follows:

• Count all the days present in the US in the current year, plus 1/3 of the days present in the US in the first preceding year, plus

• 1/6 of the days present in the US in the second preceding year. If the total is 183 days or more, you have met the SPT and are considered a resident alien.

You can complete the Substantial Presence Test for free with Sprintax.

FICA Tax Rates 2020

The FICA tax rate is 7.65% in 2020.

Only the first $137,700 of earnings will be subject to the Social Security Part of the tax. The maximum Social Security tax for 2020 is $8,537.

Medicare (hospital insurance) taxes don’t have a wage limit.

Does FICA tax get refunded? How do I get my FICA tax refund?

If you notice that FICA has been deducted from your pay by mistake, the good news is that you can apply for a refund and claim back your FICA deductions from the IRS.

The first thing you need to do is contact your employer and ask for a refund. If a W-2 form was already issued, you should ask for a corrected W-2c for the same year.

If your employer cannot refund you, you still can reclaim it from the IRS.

Claim your FICA tax refund with Sprintax

How long will it take to get my FICA tax refund?

It will generally take at least 12 weeks for the IRS to process your Social Security and Medicare tax refund, assuming your claim is accepted.

How do I track my FICA refund?

There is no option to check the status of your FICA refund online. You can call the NR department within the IRS: 267-941-1000 (best option is to call at 06:00 AM Eastern time when they open, so you will not be put on hold for a long time) to check the status.

Sprintax can help you with the preparation of the necessary forms.

The process is fast and simple. The software will ask you “Would you like Sprintax to prepare your social security and medicare (FICA) tax claim?”, and you should consent and proceed.

Apply for your FICA tax refund with Sprintax

If you have questions, chat live with our experienced tax agents.

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Kristina Valcheva

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