American citizens who live overseas and start missing the good old USA can always count on one thing to keep them in touch with their homeland: the taxes they owe to Uncle Sam — including Social Security taxes.
If you’re a U.S. citizen or Green Card holder, you will need to pay into Social Security whether or not you live in the United States, according to the Greenback Expat Tax Services website. If you work for a U.S. company, you and your employer are both responsible for making Social Security tax contributions.
This might mean you’ll be hit with double taxation — the taxes you have to pay to the U.S., and the taxes you have to pay to your host country. Most foreign countries also require individuals to pay into their own social insurance systems to cover benefits received while living there.
Whether you are double taxed depends on where you live. As a way of preventing double taxation, the U.S. has entered into Social Security agreements, also known as Totalization agreements, with more than two dozen countries. The agreements are based on territory rule, which determines where an individual’s employment is sourced. The agreements also take into consideration factors such as where the person was hired and their intended length of stay in the foreign country.
According to the Social Security Administration, the countries with Social Security agreements are Italy, Germany, Switzerland, Belgium, Norway, Canada, the U.K., Sweden, Spain, France, Portugal, the Netherland, Austria, Finland, Ireland, Luxembourg, Greece, South Korea, Chile, Australia, Japan, Denmark, Czech Republic, Poland, Slovak Republic, Hungary, Brazil, Uruguay, Slovenia and Iceland.
If you don’t live in one of those countries, you’ll probably face double taxation.
If you decide to retire overseas, you should be able to still receive your Social Security benefits, though part of that depends on your citizenship and residency status in addition to agreements between the U.S. and your host country.
If you’re a U.S. citizen, you’re eligible for benefits if you paid into Social Security. If you’re not a U.S. citizen, your payments will be eliminated after you’ve been away from the U.S. for six calendar months – unless you live in a country that shares a Totalization Agreement.
To learn more, visit the SSA’s International Programs and Resources page.
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