The Federal Insurance Contributions Act (FICA) mandates that U.S. resident taxpayers must fund (in the form of a federal payroll tax) the following programs:
- Social Security- old-age, survivors, and disability insurance taxes
- Medicare- hospital insurance taxes
These taxes are usually deducted or withheld automatically by the employer. Nonresidents for U.S. tax purposes are exempt from these taxes. This includes students on Optional Practical Training (OPT) who are still nonresidents for U.S. tax purposes. Tax residents have to pay these taxes unless other exemptions apply to them. If you are unsure about your tax residency, please review these Resources for Determining Tax Residency
The U-M Payroll Office and the Internal Revenue Service (IRS) have posted explanations of who is and who is not required to pay the FICA taxes.
- FICA Exemption Criteria for Student Employees
- Foreign Student Liability for Social Security and Medicare Taxes
If these taxes were withheld from your paycheck in error, you should request a refund.
Reviewed and updated April, 2023