The Federal Insurance Contributions Act (FICA) has two components:
- Old-Age, Survivors, and Disability Insurance (OASDI)
FICA is the social security and medicare taxes that are withheld from an employee's wages/earnings. Employers match the amount withheld and submit the money, of which there is an employee and an employers share, to the federal government. The federal government then deposits the funds into the Social Security trust fund. The trust fund monies are used to provide retirement income, disability insurance, Medicare and survivor benefits.
An automatic exemption from FICA is applied to all eligible full and part-time students who are also employees of Cornell. The exemption from paying FICA taxes will remain in effect during breaks that are five weeks or less, and is applicable during the summer break if the student is enrolled at least half-time. Some foreign nationals who are considered nonresident aliens for tax purposes (based on the "Substantial Presence Test" - see IRS Publication 519) are also exempt from FICA taxes (see IRS Alien Liability for Social Security and Medicare Taxes).