Tax season is upon us, but the road ahead doesn’t have to feel daunting. We’re breaking down the terms, forms and deadlines you need to know to responsibly file your taxes in 2023 – starting with FICA. 

Confused or confounded about the money taken out of your paycheck every week? Wondering what Social Security and Medicare taxes have to do with you? Here’s what to know about the U.S. federal tax. 

What is FICA?

FICA stands for Federal Insurance Contributions Act; it’s the federal payroll tax. 

A total of 7.65% of your gross wages goes to federal taxes. Your employer matches these percentages:

  • 6.2% to Social Security
  • 1.45% to Medicare 

Individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly) pay an additional 0.9% in Medicare taxes. 

These taxes from your paycheck fund Social Security and Medicare programs, including retirement, disability, survivors’ and children’s benefits.

Is FICA tax the same as Social Security?

No, FICA and Social Security taxes are not the same, but they’re related. Social Security taxes are the 6.2% taken out of your paycheck each month (up to $168,600, the 2024 taxable maximum) while FICA refers to the combination of Social Security and Medicare taxes. 

Who is exempt from FICA?

Certain wages are exempt from FICA taxes. For example, FICA taxes do not apply to services performed by employed students, the Internal Revenue Service says. Organizations are deemed a “school, college or university” if their function and the student’s relationship with the employer are primarily educational.

According to the IRS, nonresidents are generally liable for Social Security and Medicare taxes. But these groups of people are exempt from FICA taxes:

  • A-visa holders: Employees whose salaries are paid in their official capacity as foreign government employees.
  • D-visa holders: Crew members of a ship or aircraft whose employer or vessel is foreign or if the services are performed outside of the U.S.
  • F-visa, J-visa, M-visa, Q-visa holders: Employees who perform services in the U.S. allowed by the United States Citizenship and Immigration Services, like on-campus student employment, certain off-campus student employment, on-campus employment or practical training student employment
  • G-visa holders: Employees of international organizations who are paid in their official capacity in an international organization
  • H-visas: Nonimmigrant residents of the Philippines who perform services in Guam or nonimmigrants performing temporary agricultural labor

Other paid wages exempt from Social Security and Medicare taxes include compensation to:

  • Duly ordained, commissioned or licensed ministers of churches
  • Children under the age of 18 employed by their parents
  • Student nurses if paid under certain conditions

Self-employed individuals are not exempt from Social Security and Medicare taxes, but they do have a different, higher rate known as “self-employment tax” because there is no employer match. The total tax rate is 15.3%, broken down into two parts:

  • 12.4% to Social Security 
  • 2.9% to Medicare 

Do I get my FICA tax back?

You can get a refund if your Social Security taxes were withheld in error from exempt pay. You should get a refund in full from your employer, otherwise, you can file a claim with the IRS.

More of your 2024 tax season questions answered

  • What does OASDI mean?:Here's why you and your employer pay this tax
  • Filing taxes: Not everyone has to do it. Here's what to know.
  • 1099, W-4, W-2, W-9, 1040: What are these forms used for when filing your taxes?
  • Federal tax brackets: Numbers for 2023 and 2024 to know
  • What is income tax?: How it works, different types and more
  • Tax season for new parents: Your guide to Child Tax Credit, EITC and more
  • Do I report crypto on taxes?: Here's what you should know about form 8949
  • What is a 1098-E form?: What to know about student loan interest statement
  • IRS mileage rate: How to claim mileage deductions this year

Clare Mulroy is a trending and SEO reporter who covers a range of evergreen topics.

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