FICA — Social Security and Medicare on your paycheck

FICA — the Federal Insurance Contributions Act — is a payroll tax that funds two critical programs: Social Security and Medicare. If you work for an employer in the United States, FICA is deducted directly from your paycheck. If you are self-employed, you pay both halves yourself. Either way, these taxes build credits toward retirement benefits, disability protection, family survivor benefits, and Medicare coverage later in life.

How FICA Works on Your Paycheck

When you receive a paycheck as a wage or salary employee, your employer automatically withholds FICA taxes. In 2026, the rate is 6.2% for Social Security and 1.45% for Medicare — a combined total of 7.65%. Your employer also pays a matching 7.65% that does not appear on your stub but is a real cost they bear. These are two separate programs funded by the same tax: Social Security is the retirement and disability system, while Medicare is health insurance for people 65 and older.

• Social Security tax: 6.2% of your gross wages, up to the annual wage cap
• Medicare tax: 1.45% of all your gross wages (no cap)
• Additional Medicare tax: 0.9% on wages above $200,000 (single filers) or $250,000 (married filing jointly)
• Employer match: 7.65% paid by your employer (same rates as employee portion)

The Social Security portion has a wage ceiling. In 2026, you only pay Social Security tax on the first $184,500 of earnings. Once you reach that amount in a calendar year, Social Security tax stops coming out of your paycheck for the rest of that year. Medicare, by contrast, applies to all wages with no upper limit — high earners pay 2.35% Medicare tax total (1.45% regular plus 0.9% additional) on earnings above the threshold.

You'll see FICA taxes itemized on your pay stub or paystub. Employers often label the Social Security portion as 'OASDI' (Old-Age, Survivors, and Disability Insurance) or simply 'Social Security', and the Medicare portion as 'Medicare'. Some paystubs also break out the additional Medicare tax if it applies.

Self-Employment Tax (SECA)

If you are self-employed — working as a freelancer, independent contractor, or business owner — you do not have an employer to withhold and match your FICA taxes. Instead, you pay both the employee and employer portions yourself. This is called self-employment tax, or SECA tax (Self-Employment Contributions Act).

The self-employment tax rate is 15.3%. It breaks down as 12.4% for Social Security (which is 6.2% employee + 6.2% employer) and 2.9% for Medicare (1.45% + 1.45%). This is higher than the 7.65% that employees see on their pay stub because you are paying both sides. If you have very high net self-employment income, you may also owe the 0.9% additional Medicare tax.

You owe self-employment tax if your net self-employment income is $400 or more in a calendar year. You calculate it using Schedule SE (Self-Employment Tax) on Form 1040 when you file your annual tax return. Self-employed individuals must also make quarterly estimated tax payments to the IRS using Form 1040-ES.

One significant advantage: you can deduct half of your self-employment tax when calculating your adjusted gross income (AGI). This reduces your overall tax burden. For example, if you owe $2,000 in self-employment tax, you deduct $1,000 from your income before applying income tax rates.

Social Security Credits and Building Toward Benefits

Every time you pay FICA taxes — whether as an employee or through self-employment — you earn Social Security work credits. These credits track your contributions and determine whether you qualify for benefits later. In 2026, you earn one credit for every $1,810 in covered wages or net self-employment income, up to a maximum of four credits per year.

To qualify for full retirement benefits, you need 40 credits, which typically takes about 10 years of work. Disability and survivor benefits have lower credit thresholds depending on your age. This system means that every dollar you earn and every FICA tax you pay is building your own safety net for the future.

Your Social Security Number (SSN) — a nine-digit number issued by the Social Security Administration — tracks all your earnings and credits. When you work, your employer reports your wages to the government using your SSN, and the Social Security Administration records those credits under your name. This is why having a valid SSN is crucial if you plan to work legally and benefit from Social Security later.

Who Qualifies for a Social Security Number

If you are a lawfully present worker — meaning you hold a green card, work visa (such as H-1B, L-1, or E-2), or other employment authorization — you are eligible to apply for a Social Security Number. Green card holders can apply as part of their immigration process or at a local Social Security office after arrival. Work visa holders can also obtain an SSN as long as their visa category permits employment.

To apply for an SSN at a Social Security office, bring your passport, your Machine-Readable Immigrant Visa (MRIV) or green card (Form I-551), your birth certificate, and proof of your current U.S. address. You should receive your card within about two weeks.

Individual Taxpayer Identification Number (ITIN) — If You Don't Have an SSN

If you do not have work authorization or a Social Security Number, you may still be able to file taxes and be employed by obtaining an Individual Taxpayer Identification Number (ITIN) from the IRS. An ITIN is a nine-digit tax ID used for federal tax purposes. However, it is crucial to understand what an ITIN does and does not do.

• An ITIN allows you to file tax returns and pay federal income tax
• An ITIN does NOT provide work authorization
• An ITIN does NOT qualify you for Social Security benefits or the Earned Income Tax Credit (EITC)
• An ITIN does NOT prove legal immigration status
• FICA taxes and Medicare taxes paid with an ITIN do not build Social Security credits

If you later become eligible for a Social Security Number — for example, by obtaining a work visa or green card — any earnings you reported with an ITIN may potentially be transferred to your SSN record, and some of those years may count toward Social Security benefits. However, this is not automatic and requires coordination with the Social Security Administration. The key point is: ITIN-based work does not build Social Security credits at the time of work.

Totalization Agreements — Combining Work Credits from Another Country

If you worked in another country before coming to the United States, some of those years might not be lost. The U.S. Social Security Administration has negotiated bilateral agreements — called totalization agreements — with more than 30 countries. These agreements allow you to combine work credits earned in both countries to qualify for benefits.

Totalization agreements serve two main purposes. First, they eliminate dual taxation: if you work temporarily in a country with a totalization agreement, you may be exempt from paying Social Security taxes to both countries on the same earnings. For example, if your employer temporarily assigns you to the U.S. for five years or less, you may remain covered under your home country's social security system instead of the U.S. system. Second, they allow you to combine, or 'totalize', your work credits to reach the minimum required for retirement, disability, or survivor benefits.

Countries with totalization agreements with the U.S. include Australia, Austria, Belgium, Brazil, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia, South Korea, Spain, Sweden, Switzerland, United Kingdom, and Uruguay. If you worked in one of these countries before immigrating to the U.S., you may be eligible to combine credits.

For example, if you worked 8 years in your home country and then 5 years in the U.S., you might combine those 13 years toward the 10-year (40-credit) threshold for retirement benefits. The specific rules depend on the agreement with your country and your circumstances, so contact the Social Security Administration at 1-800-772-1213 or visit ssa.gov/international/agreements for details about your situation.

W-2 vs. 1099: How Your Employment Status Affects FICA

The type of employment relationship you have determines whether FICA taxes are withheld by your employer or paid by you. This distinction is documented on different tax forms at year end.

• W-2 (Wage and Tax Statement): issued by an employer to a regular employee; shows gross wages, FICA withheld, and other taxes; employer withholds and matches FICA automatically
• 1099 (Independent Contractor): issued to freelancers, contractors, and self-employed workers; shows total income paid but no FICA withholding; you are responsible for calculating and paying self-employment tax yourself, usually quarterly

If you receive a W-2, your employer has already withheld your share of FICA and paid their matching share. Your responsibility is limited to verifying the amounts on your return. If you receive a 1099, you must calculate your own self-employment tax on Schedule SE and make estimated quarterly payments. Misclassifying a worker as 1099 when they should be W-2 is illegal and can leave workers underpaying taxes or losing benefits.

How to Verify Your Social Security Earnings Record

The Social Security Administration maintains a record of all earnings reported under your SSN. This record is used to calculate your future benefits. Errors in your earnings record — such as wages credited to the wrong SSN or missing years of work — can significantly reduce your benefits.

You can check your earnings record online by visiting ssa.gov and creating a 'my Social Security' account. You can also request a paper copy of your earnings record. Review it every few years, especially if you have worked for multiple employers, changed your name, or worked under different visa statuses. If you spot an error, contact the Social Security Administration promptly with pay stubs, W-2s, or other evidence to correct it.

For immigrants who have worked under both an ITIN and an SSN, or who have worked in multiple countries, ensuring an accurate and complete earnings record is especially important. If your record is missing years or shows errors, your future benefits will be calculated incorrectly.

Key Takeaways

• FICA taxes (6.2% Social Security + 1.45% Medicare) are deducted automatically from your paycheck if you are an employee; your employer pays an equal amount
• If you are self-employed, you pay both halves (15.3% total) yourself through self-employment tax, but you can deduct half
• Every dollar you pay in FICA taxes builds Social Security work credits toward future retirement, disability, survivor, and Medicare benefits
• You need a Social Security Number (SSN) to earn credits; if you don't have one but are authorized to work, apply at a local Social Security office
• If you don't have work authorization, you may use an ITIN to file taxes, but ITIN-based earnings do not build Social Security credits
• If you worked in a country with a U.S. totalization agreement, you may be able to combine credits from both countries to qualify for benefits
• Review your Social Security earnings record regularly to catch and correct any errors before they affect your benefits