FICA Tax Refunds: The “Silver Lining” for H-1B Holders Stranded Abroad
You can’t get back to the U.S. yet because your visa appointment was canceled, but did you know you might be eligible for a substantial refund of your Social Security and Medicare taxes?
The crisis of canceled visa appointments in 2026 has caused immense hardship for H-1B workers globally. However, amid the stress, there is a silver lining in the U.S. tax code regarding FICA (Federal Insurance Contributions Act) taxes.
Typically, H-1B visa holders working in the U.S. are required to pay approximately 7.65% of their gross salary in FICA taxes. But if you are currently working remotely from a foreign country due to these unforeseen delays, the rules change significantly. The team at KKCA is here to help you reclaim what is rightfully yours.
What Are FICA Taxes, and Why Might You Be Exempt in 2026?
FICA taxes fund the U.S. Social Security and Medicare programs. By law, these taxes must generally be withheld from wages paid for services performed “within the United States.”
If you are physically stranded abroad (e.g., in India, the Philippines, or the UK) and performing work exclusively in that location for your U.S. employer, that income is typically considered foreign-sourced.
Here is why you might be exempt:
- Source of Service Rule: The key determinant is the physical location where the work is performed. Work done outside the U.S. generally falls outside the scope of mandatory FICA withholding.
- Totalization Agreements: The U.S. has agreements with several countries (known as Totalization Agreements) designed to prevent workers from having to pay into two different social security systems simultaneously. If you are covered by your home country’s system while working there, you are likely exempt from the U.S. FICA requirement.
The Impact of the 2026 Tax Base
For 2026, the maximum earnings subject to Social Security tax has increased to $184,500. This means that if you are a high-earning H-1B worker and your employer is incorrectly continuing to withhold FICA while you are abroad, the amount of money being held can quickly add up to thousands of dollars annually.
How to Claim Your FICA Refund (IRS Form 843)
If you discover that your paychecks are still showing FICA deductions while you are working remotely from outside the U.S., you have a couple of options:
- Approach Your Employer First: The cleanest and fastest route is to ask your U.S. employer to correct their payroll records, stop the withholding, and refund the incorrectly withheld amounts directly to you.
- File Directly with the IRS: If your employer is unwilling or unable to process the refund, you can apply directly to the IRS using Form 843 (Claim for Refund and Request for Abatement). This method requires careful documentation and proof of your physical location during the work period.
Why Expert Guidance from KKCA Matters
The process of claiming FICA refunds involves complex interactions between U.S. tax law, international treaties, and payroll compliance. Proving your status and ensuring proper documentation for IRS Form 843 is crucial. Mistakes can lead to processing delays or even audits.
At KKCA, we specialize in the unique tax situations faced by H-1B visa holders and employers. We can audit your current payroll situation, verify your eligibility for FICA exemption, and manage the meticulous process of filing Form 843 to recover your funds while you await your return to the States.
Looking for personalized tax services about your specific tax situation, please contact us. We are here to help you with your specific tax matters.
Disclaimer
This blog is intended for informational purposes only and does not constitute legal or tax advice. Please consult a qualified U.S. CPA or tax attorney for guidance specific to your situation.