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FICA Information

Historical Information

Prior to 1951 Social Security coverage for state and local government employees was not available.  On January 1, 1951, federal law allowed voluntary Social Security coverage for the employees of state governments and their political subdivisions through an agreement between the federal government and each state.  As the legal provisions for such an agreement is included in Section 218 of the Social Security Act, it is referred to as a "Section 218 Agreement".

In the beginning, Social Security for public employees was limited to those employed in positions not covered by a retirement system.   This was changed when the Social Security Act was amended in 1954 to allow Social Security coverage for public employees in positions covered by a retirement system.  The employer had only to negotiate a Section 218 Agreement with the Commonwealth to provide Social Security coverage.

Social Security coverage may not be terminated once coverage is enacted under a Section 218 Agreement.  However, there are a couple of areas that can be excluded.  Payments to students for services performed while they are enrolled and attending classes at the school for which the student is working is exempt from paying Social Security.  The key is "currently enrolled and attending classes."  Thus, services performed while school is not in session (summer break) are covered for FICA purposes, therefore, resulting in FICA deductions.

Withholding under the Federal Insurance Contribution Act (FICA) fall into two categories – Social Security and Medicare.  Initially, withholding was for Social Security purposes only until Medicare was added in 1965.  In a fundamental policy shift of historic proportion regarding voluntary participation by the states, Medicare was made mandatory for all employees hired after March 31, 1986, who do not have full-FICA coverage (both Social Security and Medicare) under a Section 218 Agreement.

Commonly Asked Questions

What does FICA mean and why are Social Security taxes called FICA contributions?

Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA).  The payroll taxes are sometimes even called "FICA taxes."  In the original 1935 law, the benefit provisions were in Title II of the Act and the taxing provisions were in a separate title known as Title VIII.  As part of the 1939 amendments, the Title VIII taxing provisions were taken out of the Social Security Act and placed in the Internal Revenue Code.  Since it wouldn't make any sense to call this new section of the Internal Revenue Code "Title VIII," it was renamed the "Federal Insurance Contributions Act."  So FICA is nothing more than the tax provisions of the Social Security Act, as they appear in the Internal Revenue Code.

My check stub says OASDI.  What is that?

Old Age Survivors Disability Insurance.  This is the 6.2% portion of FICA.

Am I required to participate in the Social Security program?

Participation in the Social Security program is mandatory with respect to the payment of Social Security taxes.  Unless specifically exempt by law, everyone working in the United State is required to pay Social Security taxes on earnings from employment.  These earnings are subject to Social Security tax without regard to the citizenship or place of residence of either the employer or the employee.

The authority for the collection of taxes, including Social Security taxes, is found in the Internal Revenue Code, not the Social Security Act.

What is the Social Security tax (aka FICA) rate?

The FICA tax rate is 7.65% for employees and the employer match.  Self-employed individuals pay the full 15.30%.  The rates are broken out as follows:

  • 6.2% (Social Security portion) on earnings up to the maximum taxable amount ($102,000 in 2008)
  • 1.45% (Medicare portion) on all earnings.

Set by law, these rates haven't changed since 1990. 

Maximum Earnings Taxable

Program

2005

2006

2007

2008

Social Security

$90,000

$94,200

$97,500

$102,000

Medicare

*

*

*

 *

*No limit for any year after 1993

Are wages earned by a foreign student taxable for Social Security purposes?

If a student has an F-1, J-1, or M-1 Visa and is not working on campus or by special arrangement with the school, the wages are generally taxable for Social Security purposes.  You may want to access the Internal Revenue Services' (IRS) publications 515 and 519 for details about employment taxes payable on the earnings of aliens.  These publications are available on the Internet at:  www.irs.gov/formspubs

IRS is the authority on all tax matters including the collection and refund of Social Security taxes.  All matters pertaining to proper filing are under the jurisdiction of the IRS.  You can direct your questions to the IRS by:

  • Calling their toll-free telephone number, 1-800-829-1040; or
  • Calling or visiting any local IRS office; or
  • Writing to the national address of the IRS which is:

Internal Revenue Service
1111 Constitution Avenue, NW
Washington, D.C. 20024; or

THE PRECEDING INFORMATION WAS OBTAINED FROM THE IRS AND SOCIAL SECURITY WEB SITE.