Every two weeks or every week, when you check your pay stub, there are deductions that seem inevitable. It doesn't matter if you earn little or a lot. They're there. Among them is one that often raises questions: FICA. Understanding what FICA is and why you pay it in your taxes is key to understanding how the tax and benefits system works in the United States, especially if you are part of the Latino community that works and contributes to the country. FICA stands for the Federal Insurance Contributions Act. This tax is deducted directly from your gross pay. Its purpose isn't immediate, but it is fundamental for millions of people. Currently, the total FICA percentage deducted from an employee's gross pay is 7.65%. This amount is divided into two very specific parts. 6.2% goes to Social Security. The remaining 1.45% goes to Medicare. Your employer contributes exactly the same percentage, effectively doubling the total contribution to the system. As their name suggests, these funds support two of the most popular and essential programs in the United States. Social Security covers retirement, disability, survivor, and child benefits. Medicare, for its part, helps cover medical expenses for seniors and certain beneficiaries with disabilities. It's important to clarify that FICA is not the same as Social Security. Although they are related, they are not identical. Social Security is only one part of FICA. The term FICA encompasses both the Social Security tax and the Medicare tax under a single tax concept. There is an income threshold for the Social Security tax. For 2025, this threshold is $184,500. This means that income above that amount no longer pays the 6.2% that goes to Social Security. However, the Medicare tax does not have a maximum threshold. In addition, high-income earners must pay an extra charge. Those who earn more than $200,000 a year, or $250,000 if filing jointly, pay an extra 0.9% for Medicare.Not all workers are required to pay FICA. Some wages are exempt. For example, students employed by educational institutions may not pay this tax if their employment is primarily educational. Regarding Latino workers, the Internal Revenue Service (IRS) is clear:“Nonresidents are generally subject to Social Security and Medicare taxes.” However, there are specific exceptions for certain visa types, such as A, D, F, J, M, Q, and G, provided particular conditions related to the type of employment and immigration status are met. Certain payments are also exempt. These include the income of duly ordained ministers, some work performed by children under 18 for their parents, and student nurses under specific conditions. Self-employed workers are not exempt. In their case, they pay the so-called independent work tax. The total rate is 15.3%. This percentage covers both the employee's and the employer's portions, as there is no matching contribution.

If you ever notice that FICA was incorrectly withheld, it's important to take action. First, you should request a refund from your employer. If that's not possible, you can file a claim directly with the IRS to recover the money withheld in error.

When we receive our paychecks, we take it for granted that we know everything about our money. Now, by learning about FICA, you're closer to having greater control over your finances. Carefully review your pay stubs and confirm that the deductions are being made correctly.

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