J-1 FICA Refund: How to Get Social Security and Medicare Tax Back

Social Security and Medicare tax can show up on a pay stub when it should not. The fix follows a set order: you ask the employer, then you go to the IRS. The money hub covers the rest of your finances, and the taxes page explains the full tax picture for a season.

The short version

1. Check your first pay stub for Social Security or Medicare tax.
2. Ask your employer to stop the withholding and refund the tax.
3. File Form 843 with Form 8316 if your employer will not refund it in full.
4. Mail the claim package to the IRS service center for nonresidents.

Do J-1 participants pay Social Security and Medicare tax?

A J-1 student who is a nonresident alien for tax is exempt from Social Security and Medicare tax on wages for work in the US. The IRS rule for foreign students applies to students in F-1, J-1 or M-1 status who have been in the US for less than 5 calendar years, because they are generally nonresident aliens under the residency rules.

The IRS J-1 page puts the exemption in the Internal Revenue Code, Section 3121(b)(19). It holds as long as USCIS authorizes the employment and the work carries out the purposes of the J-1 visa. An exchange visitor with permission to work and a letter of authorization from the sponsor is not withheld on, unless the exchange visitor is a resident alien.

A Summer Work and Travel season lasts up to four months. That is far shorter than the 5 calendar years after which a student generally becomes a resident alien and owes the taxes. Resident aliens, in general, have the same liability for these taxes that US citizens have.

Your employer should be able to tell you whether Social Security and Medicare tax applies to your wages. You cannot make voluntary payments if no tax is due.

When the exemption stops

Services of a J-2 spouse or minor child are covered under Social Security. A separate exemption exists for students employed by their own school, college or university while enrolled at least half-time. Off-campus jobs and other employers do not qualify for that one, so a summer job at a restaurant or hotel does not use it.

Check your pay stub and W-2

Look at the first pay stub of the season. In InterExchange’s guide for its J-1 participants, a deduction labelled FICA, FUTA, S.S. or Social Security is the signal to tell the employer and ask for a refund. The same guide lists federal income tax, state income tax and local or city income among the usual lines. Those are different taxes: your employer withholds federal income tax from a nonresident J-1’s wages under the IRS special rules.

The W-2 shows the same tax in boxes. Box 4 is Social Security tax withheld, and box 6 is Medicare tax withheld. Box 2 is federal income tax withheld. A nonresident J-1’s wages are exempt from federal unemployment tax (FUTA) too, and wages paid to a J-1 are reported on Form W-2 in the usual way.

At the end of your program, give your employer a home-country mailing address that works. In InterExchange’s program the employer mails the W-2 by January 31. Keep a copy of your W-2 and keep access to your email and US bank account if you expect a refund.

Request a refund of taxes withheld in error, step by step

1. Contact the employer who withheld the tax and ask for a refund.
2. Ask the employer to stop the withholding and refund what was already taken. The University of Cincinnati’s tax office asks for proof of visa status and proof of work permission when an employee claims the exemption.
3. If you cannot get a full refund from the employer, file a claim with the IRS on Form 843, with Form 8316.
4. Attach the documents in the table below.
5. Mail the package to the IRS service center for nonresidents.

The sequence is written into the form. Form 8316 states that you must first try to get a refund from your employer before filing a claim with the IRS. Form 8316 is then attached to your claim Form 843. The IRS Form 843 page describes the form as the one to claim a refund or request an abatement of certain taxes, interest, penalties, fees and additions to tax.

Documents to attach to Form 843

If you cannot obtain the employer statement, attach a statement with the same information to the best of your knowledge and belief, and explain why you could not obtain one. The University of Cincinnati’s tax office asks for a letter in which the employer commits not to refund the tax and not to file for a refund itself. Keep copies of everything with your tax records.

Send Form 843 for a nonresident to Internal Revenue Service Center, Ogden, UT 84201-0038. Publication 519 has the address and the list of documents, and the Form 843 instructions point nonresident aliens to it.

What Form 8316 asks

Form 8316 is titled Information Regarding Request for Refund of Social Security Tax Erroneously Withheld on Wages Received by a Nonresident Alien on an F, J, or M Type Visa. The revision on IRS.gov is dated January 2006.

It starts with one question: whether the income was directly related to your course of studies as identified by your entry visa. If the answer is No, the taxes were correctly withheld and you are not entitled to a refund.

If the answer is Yes, it asks whether your employer has paid you back any part of the tax. It asks whether your employer has claimed any part of the tax as a credit or refund. It also asks whether you have claimed any part of the tax as a credit against your federal income tax. If you cannot get a statement from your employer, the form has space to explain why. The estimated average time to complete it is 15 minutes.

Form 843 itself can be filed by you or by an authorized representative, who must attach Form 2848. File a separate Form 843 for each tax period or type of tax.

Deadline and waiting time

Generally, you must file a claim for refund within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. If you do not file within this period, you may no longer be entitled to a refund. Do not wait for the next season.

After mailing, expect a wait. The University of Cincinnati’s tax office tells its students to wait at least 60 days before phoning the IRS about the status of a refund request.

Medicare tax and Additional Medicare Tax

Form 843 is the route for ordinary Social Security and Medicare tax withheld in error. It is not the route for Additional Medicare Tax. Do not use Form 843 for that tax. A credit for Additional Medicare Tax withheld in error is claimed by filing Form 8959 with Form 1040, 1040-SR or 1040-NR. The University of Cincinnati’s tax office adds that nonresidents may not request a refund of Medicare tax on their annual income tax return. The tax return page covers the return itself.

Totalization agreements and self-employment tax

Totalization agreements are agreements between the US and several nations that avoid double taxation of income for Social Security purposes. They must be taken into account when deciding whether anyone owes US Social Security and Medicare tax. A J-1 from a country with such an agreement may claim an exemption by getting a Certificate of Coverage from the home country’s social security agency and giving it to the US employer.

Self-employment tax is a separate case. A nonresident alien is not liable for it. Once an alien becomes a resident alien, the person is liable under the same conditions as a US citizen. A nonresident could still be liable under the terms of a totalization agreement. As a general rule, US immigration law does not permit nonimmigrants to earn self-employment income.

Know the deductions before you arrive

Pre-arrival information from the sponsor must list wages and deductions, including deductions for housing and transport. Pre-arrival information from the sponsor can include how and when to apply for a Social Security number, if applicable. Read the pay and wages page for the pay rules, and the Social Security number page for the number itself.