OPT Students Tax Benefits

International students, nonresident aliens for tax purposes, are not subject to Social Security and Medicare taxes also known as FICA taxes.

What is FICA Tax?

Payroll taxes for Social Security benefits are collected under the authority of the Federal Insurance Contributions Act, or FICA. This tax had its origins back in 1935, when it was introduced as part of the Social Security program.  Both employees and employers are required to contribute to FICA taxes through regular payroll deductions and there is a limit, or maximum contribution employees are required to pay each year towards Social Security.

FICA Tax rate?

Generally, FICA taxes are collected at a rate of 7.65% on gross earnings, which are earnings before any deductions are taken. The breakdown of FICA is 6.2% for Social Security (Old-Age, Survivors, and Disability Insurance or OASDI) and 1.45% for Medicare.

OPT Students are not subjected to FICA Taxes

If you are an international student on Optional Practical Training - OPT, nonresident alien for tax purposes, and your employer has deducted Social Security and Medicare taxes in error, you must first ask your employer for a refund. If you are unable to obtain a refund from your employer, you must file Form 843 and Form 8316 to obtain a refund from the IRS for the Social Security and Medicare taxes withheld in error by your employer. International students present in United States for less than 5 calendar years are considered nonresident aliens for tax purposes.