Do Nonresident Aliens Pay FICA Taxes? What You Need to Know

Understanding tax obligations in the U.S. can be confusing, especially for nonresident aliens who may not know whether they owe Social Security and Medicare taxes, commonly known as FICA taxes. These taxes fund federal programs, but not everyone working in the U.S. is required to contribute.

Rules determine when a nonresident alien must pay FICA taxes, including exemptions based on visa type and relief through tax treaties. Employers also have responsibilities in ensuring proper withholding.

Determining Residency Classification

The IRS classifies foreign individuals as either resident or nonresident aliens for tax purposes based on the green card test and the substantial presence test. This classification determines whether a person is subject to FICA taxes.

The green card test applies to individuals granted lawful permanent resident status. If someone holds a valid green card at any point during the tax year, they are considered a resident alien for tax purposes and are generally subject to FICA taxes.

The substantial presence test is based on the number of days an individual has been physically present in the U.S. over a three-year period. To meet this test, a person must be in the U.S. for at least 31 days in the current year and 183 days over the past three years, using a weighted formula: all days in the current year, one-third of the days in the previous year, and one-sixth of the days from two years prior. Meeting this threshold classifies the individual as a resident alien for tax purposes.

Types of Nonresident Aliens Subject to FICA

Nonresident aliens working in the U.S. may be required to pay FICA taxes depending on their visa status and employment type. Some visa holders are exempt, but others must contribute.

Foreign employees working under H-1B, L-1, and O-1 visas are generally subject to FICA taxes. These workers contribute to Social Security and Medicare and may qualify for benefits if they meet the required number of work credits.

International students and scholars employed outside their educational institutions may also face FICA tax obligations. For example, an F-1 visa holder working for a private employer after completing their studies and entering Optional Practical Training (OPT) may be subject to these taxes once they no longer qualify for the student exemption. Similarly, J-1 researchers or trainees working outside their sponsoring program could be required to pay FICA taxes if their employment does not meet exemption criteria.

Exemptions for Specific Visa Categories

Certain nonresident aliens are exempt from FICA taxes based on visa classification and the nature of their stay in the U.S.

Foreign students, scholars, and trainees on F-1, J-1, M-1, or Q visas are generally exempt as long as they maintain nonresident status under the substantial presence test. Wages earned from authorized on-campus employment, practical training, or work directly related to their academic program are not subject to Social Security and Medicare taxes. However, if they transition to a different visa type or remain in the U.S. beyond the allowed period, their exemption status may change.

Government-related visa holders, such as employees of foreign governments and international organizations with A or G visas, are also excluded from FICA taxation. These individuals work in diplomatic or official capacities recognized under U.S. tax law as exempt. Similarly, foreign agricultural workers on H-2A visas are not subject to FICA withholding because their employment is classified as seasonal and does not establish eligibility for Social Security benefits.

Impact of Tax Treaties

Bilateral tax treaties between the U.S. and other countries can affect whether a nonresident alien is liable for FICA taxes. These agreements prevent double taxation and can override domestic tax laws in specific cases. While most tax treaties focus on income tax, some exempt workers from Social Security and Medicare contributions if their home country has a comparable social insurance program.

Totalization agreements, a subset of tax treaties, help avoid duplicate contributions for individuals working temporarily across borders. The U.S. has agreements with over 25 countries, including the United Kingdom, Germany, South Korea, and Canada. Under these agreements, workers generally pay into their home country’s social security system instead of the U.S., provided they meet specific criteria, such as a limited duration of stay (typically five years or less). Employers must obtain a Certificate of Coverage from the relevant foreign authority to document the exemption.

Employer Withholding Responsibilities

Employers must ensure proper FICA tax compliance for nonresident aliens. U.S. businesses hiring foreign workers must determine whether FICA taxes apply and withhold them accordingly. Failure to do so can result in penalties and back taxes.

To determine withholding obligations, employers must verify an employee’s visa status and residency classification by reviewing Form I-9, visa documentation, and applying the substantial presence test when necessary. If a worker is subject to FICA taxes, employers must withhold Social Security tax at 6.2% and Medicare tax at 1.45% from wages while also contributing an equal amount. These amounts are reported on Form 941 (Employer’s Quarterly Federal Tax Return) and reflected on the employee’s Form W-2.

For those eligible for exemptions, employers must maintain proper documentation, such as Form 8233 (Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien) or a Certificate of Coverage under a totalization agreement. Misclassification or failure to apply exemptions correctly can lead to IRS audits and financial liabilities.

Potential Consequences of Improper Compliance

Noncompliance with FICA tax rules can lead to financial and legal consequences for both employers and employees. Errors in withholding, misapplying exemptions, or failing to recognize when a worker becomes subject to FICA taxes can trigger IRS scrutiny and penalties.

If an employer fails to withhold and remit FICA taxes when required, they may be held liable for the unpaid amounts, along with interest and penalties. The IRS can impose a Trust Fund Recovery Penalty (TFRP), which holds responsible individuals—such as business owners or payroll managers—personally accountable for unpaid payroll taxes.

If FICA taxes were withheld incorrectly from exempt individuals, obtaining a refund can be complex. Employees must file Form 843 (Claim for Refund and Request for Abatement) with supporting documents. If the employer does not cooperate, the process can take longer. Employers who repeatedly fail to comply with FICA tax regulations may also face increased IRS audits and reputational damage.