I am a US citizen or resident working abroad for a US company. Do I have to pay into social security for both countries?
The answer actually depends on whether or not the country where you are working has a totalization agreement with the United States.
If you receive wages for employment from an American employer, regardless of whether the services are performed in the US or in a foreign country, you are generally subject to pay into the US Social Security system. Additionally, many foreign affiliates of American companies provide Social Security coverage for US citizens and residents employed by them. Most countries also require workers who perform services in their countries to pay a social tax.
Dual social tax liabilities do occur because most countries impose social taxes on persons performing services within their territory and you are generally liable to pay social taxes to both countries. However, if the country in which you work has totalization agreement with the US, an exception is provided. Under the totalization agreement, a worker who would be eligible for coverage under both the U.S. and a foreign social system will be subject only to the coverage laws of the country where he or she is working.
What if I am sent on a temporary assignment to a country with a totalization agreement?
If you are sent to a foreign country on a temporary assignment (generally five years or less) to work for the same employer, you would remain covered by the country from which you were sent (Italy is the exception here, so please contact us if you are sent temporarily sent to Italy). This means that a U.S. citizen or resident who is temporarily transferred by an American employer to work in one of the 23 countries that have entered into agreements (excluding Italy) continues to be covered by U.S. Social Security and is exempt from coverage under the host country’s system.
I am self-employed? To which country do I pay social security tax?
If you reside in a country with a totalization agreement, you are generally subject to social security taxation in your country of residence. Exceptions do apply for Belgium, France, Germany, Italy and Japan. These country agreements do not use the residence rule as the main determinant of self-employment coverage but they include a provision to ensure workers are covered and taxed in only one country.
What is a totalization agreement?
The United States has entered into international social security agreements with 24 nations for the purpose of avoiding double taxation of income with respect to social security taxes. If you received wages from an American employer while working in one of these 24 countries, you would be subject exclusively to the laws applicable to the social security system of the foreign country in which you are working (see exception for temporary assignments above). These agreements also provide assistance to workers who have worked in both the US and a foreign country. If you do not meet the minimum eligibility requirements for one or both of the countries, the agreement may allow you to qualify for partial US or foreign social security benefits based on your combined social security benefits from both countries.
Currently the following countries have entered into Totalization Agreements with the United States. Click on the links to see copies of the Totalization Agreements on the Social Security Administration’s website.
What if I am an alien working in the US for a foreign employer?
The agreements also apply to you. Any alien who wishes to claim an exemption from U.S. Social Security taxes and Medicare taxes because of a Totalization Agreement must secure a Certificate of Coverage from the social security agency of his home country and present such Certificate of Coverage to his employer in the United States, according to the procedures set forth in Revenue Procedures 80-56, 84-54, and Revenue Ruling 92-9. An alternate procedure is provided in these revenue procedures for an alien who is unable to secure a Certificate of Coverage from his home country.
How do I contact the Social Security Administration if I am outside of the United States or am planning to leave the United States?
Click here to visit the Social Security Administration's Office of International Operations website.
By Stephen Stambaugh
Last updated October 8, 2013