International Implications of Social Security for Workers in the U.S.

Description

Determining social security benefits coverage in the case of a U.S. taxpayer working for a U.S. company is relatively straightforward. For individuals performing services in the U.S., citizenship or residency is generally immaterial if they earn wages arising from “covered employment.” Outside the U.S. both the employment relationship and the citizenship or residency of the employee will impact benefits coverage.

Individuals who work in multiple jurisdictions during their career may risk losing social security benefits. Most countries, including the U.S., have minimum periods of coverage requirements in order to receive benefits. Individuals working in multiple jurisdictions may not meet these requirements, and risk paying withholding tax for benefits they will never receive.

The U.S. and other countries have taken steps to address this problem by entering into “totalization agreements,” treaty-force agreements that eliminate double social security contributions and allow affected wage earners to “totalize” their social tax retirement benefits by crediting periods of coverage in one country in determining eligibility for benefits in another. Tax advisers must understand the relevant treaty rules and documentation requirements to assist their clients in claiming totalization agreement benefits.

Also critical are the Medicare rules as they relate to non-citizens working in the U.S. Unlike SSA benefits, Medicare draws a major distinction between citizen and non-citizen beneficiaries. U.S. totalization agreements do not address Medicare, so employee benefits professionals as well as tax advisers must be able to explain the complex rules relating to Medicare coverage.

Listen as our experienced panel provides employee benefits professionals and tax advisers with practical guidance on social security coverage, contributions and benefits issues faced by international employees working in the U.S.