The Social Security Administration announced the 2020 Social Security wage base. It is increased by $4,800 from $132,900 to $137,700 for 2020. The Medicare tax, on the other hand, remains the same and all covered wages above $200,000 are still subjected to an additional 0.9% Medicate tax.
Both the Social Security tax and the Medicare tax make up what we call the FICA Tax which stands for Federal Insurance Contributions Act tax. While Medicare tax remains the same, employers must match what their employees are paying in Social Security tax as part of the FICA tax.
This isn’t the case with the Social Security tax. Employers and employees will pay a maximum of $8,537 Social Security tax in 2020.
FICA Tax Refund and Rate
All students on CPT, STEM OPT, and OPT are exempt from the FICA taxes. If a student is on an F1 Visa working on OPT, their employers can deduct the FICA Tax for them. If not, the student must contact the IRS and request a refund for the FICA taxes that have been taken from his or her paycheck.
This applies to students that are in the United States for less than five years. Foreign students who are here for over five years and work part-time on or off campus must pay FICA taxes. If the employer payroll team is still taking out of the FICA tax, you can claim it when you’re filing your taxes.
The FICA tax for 2020 is 7.65%, the same as last year. It is a combination of Social Security tax (6.2%) and Medicare tax (1.45%).