U.S. Social Security Totalization Agreements

Avoiding Double Taxation, Maximizing Government Retirement Benefits, and Documenting Exemption Claims

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, June 18, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers with a comprehensive guide to navigating the complex area of Social Security totalization agreements. The panel will detail how totalization transactions operate and what documentation is necessary to avoid dual social security contributions. The experts will also discuss the IRS initiative to require documentation from taxpayers claiming an exemption from Social Security coverage under a claim of a totalization agreement.

Description

An individual's liability for social security contributions is determined differently than the same person's income tax liability. Unlike U.S. income tax liability, which is based on citizenship or residence, social contributions are determined based on whether the individual's employment or self-employment is "covered" employment or self-employment. Likewise, as retirement benefits are determined based on an individual’s entire working career, lapses in coverage can impact retirement benefits.

In addition, most countries require a minimum period of coverage in order to be eligible for retirement benefits. Individuals working in multiple jurisdictions and contributing to the social security system of multiple countries have the potential for the loss of benefits from those social tax withholdings. The U.S. and most other countries require individuals to pay in for a specified length of time before they are eligible for benefits. This can lead to an individual having social tax withheld for benefits which will never be received.

The U.S. has taken steps to address this problem in the form of "totalization agreements." These are treaty-force agreements that eliminate dual contributions and allow affected workers to receive a "totalized" benefit where workers are subject to social contributions outside their home country. Tax advisers must understand the relevant treaty rules and documentation requirements to assist their clients in claiming totalization agreement benefits.

Listen as our experienced panel provides comprehensive and practical guidance, detailing what tax advisers need to know to help their clients navigate the area of totalization agreements to avoid double taxation and protect Social Security and other social tax benefits.

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Outline

  1. Overview of U.S. Social Security contribution system
  2. Structure of totalization agreements
  3. Claiming and documenting the exemption
  4. "Detached worker" exception
  5. Self-employed workers
  6. Traps for the unwary

Benefits

The panel will review these and other vital issues:

  • How do totalization agreements work?
  • With which countries does the U.S. have existing totalization agreements?
  • What documentation do the taxpayer and employer need to obtain, submit, and/or retain to support an exemption claim under totalization?
  • How do the "detached worker" exception and the "five-year" rule operate?
  • Calculating Social Security benefits under a totalization arrangement

Faculty

Kennedy-C. Edward
C. Edward Kennedy, Jr., CPA, JD

Managing Director
C Edward Kennedy Jr

Mr. Kennedy has more than 36 years of experience dealing with a variety of international tax matters, specializing in...  |  Read More

Klein, James
James P. Klein

Senior Counsel
Pillsbury Winthrop Shaw Pittman

Mr. Klein focuses his practice in the areas of executive compensation and benefits, and tax. He has broad experience...  |  Read More

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