Questions Expats Ask About Social Security
These are the questions expats usually ask regarding Social Security. Read through and discover the answers to these questions.
For those who worked abroad or retired abroad, what are the important Social Security considerations?
Check first if the country where you work or retire has a Social Security Totalization Agreement with the US. If so, the credits you earned in that country can be combined with your US credits. Together, these can be used to meet the social security requirements. You can use these combined credits in your resident country, in the US, or in both.
The following are the countries that have a Social Security Totalization Agreement with the United States at present:
Can I count towards my earnings history my income earned abroad as a US citizen?
You can’t. The income you earned abroad will not count towards your US earning history. It also does not increase the amount of your future benefits.
The income you earned abroad will be helpful to meet the minimum required threshold of 10 years. The equivalent 40 quarter credits are important so you can receive the benefits when you reach the retirement age. You can make your foreign credits count for you if you have earned at least six credits. These are equal to one and one-half years of work. Then you can “fill the gap” by the combined credits earned in other countries.
What credits count? The “employment credits” from your work abroad can qualify as credits that could complement lacking credits. If you had 25 credits in the US, your 15 credits in another country can now give you 40 credits.
Also, if you work in Australia, your employment credit can be a credit towards the Old Age pension. But, the amount of your benefit will not increase even by a single $1. This is regardless of the amount of income you earned abroad.
Here’s another example. You worked in the US until you were 25 and you earned 6 Social Security credits. Then you worked in the UK for the next 30 years. You can then combine the credits so that you can receive Social Security payments. If you move to another country which does not have the agreement, the credit that would count are those paid into the US system.
As an expat, can I get Social Security?
Yes, although you are residing abroad, you can receive Social Security payments. You will not be able to receive one if you live in these countries: Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. You may be able to get some exceptions, but that can be challenging.
Will my dual citizenship or change in citizenship forfeit my earned benefits?
Once eligible for Social Security payments, you can continue to receive your earned benefits. That is whether you are a non-citizen or as a dual.
Do these considerations change among different foreign nations?
As a US citizen, your dual citizenship will not forfeit nor reduce your US benefits. If you are a non-resident alien 85% of your Social Security benefits will have 30% tax holding. There is still a chance that this rate will decrease if your country of residence has a Tax Treaty with the US. These countries include Canada, Egypt, Germany, UK, Israel, Italy, Ireland, and Romania. Social Security received by residents of these countries are exempt from US tax.
What are the effects to other governments’ Social Security systems?
Through the “Windfall Elimination Provision” (WEP), reduction of the amount of the US Social Security benefits is possible. Such reduction is applicable only to some categories of retirees and depends on when the pension was earned. For instance, you have to determine whether the Social Security taxes were paid on the same earning in both countries. You can use the calculator available on the Social Security website to check whether reduction of your benefits is possible.
Can I, as a retiree, avoid double taxation?
If you pay tax for your Social Security benefits in both the US and your country of residence, you can eliminate double taxation. The tax on Social Security benefits that you pay in the foreign country will be applied as a foreign tax credit against the tax paid or withheld in the US.
Do US immigrants get lower benefits because they have not paid US payroll taxes?
This question is applicable to a situation such as this. A person was born in a foreign country with a totalization agreement. He then moved to the US at, let’s say, 40 years of age. The question will arise along with, “Will he receive credit for those years worked?”. Another question would be, “Is he essentially starting from ‘scratch’ in the US Social Security system?”
The answer is – he will start from scratch in the US. But those credits he earned in his country of birth will still be helpful. Let’s say he has earned 25 credits in the UK, then earned another 15 credits in the US while he was between 40 and 50 years old, and then he stopped working. When he reaches retirement age, he will be able to get US Social Security. In short, US immigrants will have the opportunity to earn the same benefits as those born in the US.
Will the Social Security Totalization Agreement extend to Medicare?
Another related question would be – Is it possible to add credits earned outside of the US to satisfy the 40 quarter credits (10 years) threshold for Medicare?
The answer is “No”. You need 10 full years of work in the US to be eligible for Medicare.