What is “FICA” and why is it making my paycheck smaller?
“FICA” (which
stands for "Federal Insurance Contributions Act") refers to the
payroll taxes withheld from your salary that fund both the US Social Security
and Medicare programs. Employees who are full-time students, nonresident alien
students (F-1s/J-1s) and nonresident alien scholars (J-1s in the first two
years of their program) do not have to pay FICA taxes.
If you are
required to pay FICA taxes, the Medicare contribution is identified as “Fed MED/EE”
and the Social Security contribution is identified as “Fed OASDI/EE” on your
paycheck. The Medicare contribution is 1.45% of your taxable income. In January
2013, the employee’s share of the Social Security payroll tax was increased to
6.2% of your taxable income due to the expiration of payroll tax cuts which had
been in place for the past two years. Previously, the contribution was 4.2%. The
result is smaller paychecks for all FICA-eligible wage earners regardless of
citizenship or treaty status as no tax treaty will exempt employees’ FICA
taxes.
Note: Some of
you may have been exempt in 2012 because of your nonresident tax status, but
that status may have changed in 2013 and you are paying FICA for the first
time. If you are unsure, check your GLACIER tax summary for information
on when you can expect to start paying FICA taxes.
