What are the Different Types of FICA Refunds?

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  • Written By: Larry Ray Palmer
  • Edited By: C. Wilborn
  • Last Modified Date: 27 August 2019
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As of 1939, the Federal Insurance Contributions Act (FICA) has been responsible for imposing a tax on a portion of every employed U.S. citizens' earnings. This tax is designed to fund the U.S. Social Security and Medicare programs. In some cases, individuals have been charged too much FICA tax or were exempt from this tax. In those cases, the tax-payer is eligible to receive FICA refunds to reimburse them for the monies that have been paid in to the system plus applicable interest on the amount. FICA refunds are available in several different forms, including refunds from Social Security, student financial aid, and Medicare.

Social Security refunds are one of the many forms of FICA refunds. FICA collects payroll taxes from employee earnings, setting a maximum tax amount each year. This is a payroll deduction that is matched by the employer and deposited in the Social Security Administration budget. If an employee worked more than one job during the year, he may have paid in more than the maximum tax and may be eligible for FICA refunds to recoup his losses.


Financial aid refunds are FICA refunds which can benefit college students. If a college student receives a federal grant or funding that exceeds the amount of money that is due the college, then she is eligible for a refund of the excess amount. It is important to note, however, that if the student decides to drop a course or withdraw from the college, then the student's federal funding may be affected, resulting in a negative balance that must be paid back.

In addition to financial aid refunds, certain college students have been granted FICA refunds and exemptions in the past. The most notable case is that of undergraduate medical residents in the 1990s. Medical residents who worked for an educational facility were granted an exemption from FICA taxation for years prior to 1995 and monies already paid in were returned.

Medicare refunds are FICA refunds used to fix a mistake made by the Internal Revenue Service (IRS). In 2006, over 600,000 Medicare recipients had the premiums for their Medicare benefits mistakenly deducted from their Social Security benefits. These Medicare premiums cost an average of $88.00 US Dollars (USD) per month and were withdrawn directly from the Social Security benefits of many recipients. The FICA refunds for this mistake offered a refund of the monies paid in, up to $1,062.00 USD per person.


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