Updated on February 20, 2024
Reviewed by a Greenback Expat Tax Accountant
Many aspects of US expat taxes get overlooked by individuals living overseas. Filing requirements, deadlines, and valuable deductions and exclusions are commonly known, but what about other obligations?
Expats often forget about the Social Security payments required for US citizens working overseas and are unaware that their Social Security benefits may be received in a foreign country. Below, we’ll explain what you need to know about Social Security and your US expat taxes, including what treaties are involved, where Social Security is paid, and what to expect tax-wise.
Key Takeaways
- Most expats are able to receive US Social Security payments while living abroad (if otherwise eligible).
- Social Security payments are considered taxable income and must be reported on a US income tax return.
- Totalization Agreements can help expats avoid double taxation and reduce their US tax burden.
Do Expats Receive Social Security?
All US citizens can receive Social Security benefits if they have paid into Social Security. Expats may be able to receive Social Security payments while living abroad. But, it depends on your citizenship, residency status, and the agreements between the US and the country in which you reside.
Eligibility for Social Security retirement benefits requires 40 quarters of coverage (credits), or 10 years of work and paying into US Social Security.
Every expat should know these 25 things about US expat taxes. Find out for yourself.
Suppose you are not a US citizen eligible for benefits. In that case, payments stop after you have been outside the US for six full calendar months unless you meet certain conditions or live in a country with a Totalization Agreement. Benefit payments may be reinstated for non-US citizens who have been out of the country if they return to the US for an entire calendar month.
If you reside incountry List 3(countries with which the US has Totalization Agreements),you will be able to receive Social Security payments no matter the duration of time spent outside of the US.
Due to sanctions, the Social Security Administration will not send payments to North Korea or Cuba. Social Security benefit payments are also usually held for persons in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan, but exceptions can be granted. If you are a US citizen in Cuba, North Korea, or one of the restricted countries, you can receive any withheld payments once you arrive in a country where the SSA will send payments.
Those who reside in country List 2 will receive the same payments as you would in the US unless you receive payments as a dependent or a survivor. If you are a dependent or survivor, you have to meet additional requirements, including a residency in the US for at least five years, being entitled to benefits due to a worker who died while in the US military, or being a citizen of a country with which the US has a Totalization Agreement.
See the Social Security “Payments Outside the United States” tool for more info.
Other Considerations About US Expat Taxes
The Social Security Administration requires that specific changes are reported to them, including:
- Change of address
- Return to work or improvement in disability
- Any work overseas
- Divorce
- Adoption of a child
- Dependents leaving your care
- Inability to manage funds
- Changes in parental circ*mstances
- Eligibility for a pension from work not covered by Social Security
- Death of an individual receiving Social Security payments
Being overseas also increases the chance that your Social Security check may be lost or stolen. In that event, expats should contact the nearest US Embassy or the Social Security Administration directly. The SSA will then replace your check as soon as possible. A great way to eliminate the chance of a check being lost or stolen is to sign up for electronic payments.
But That’s Not All…
Social Security retirement benefits received will be considered taxable income on your US expat taxes regardless of location, residency, or citizenship status. Benefits are 85% taxable on your US expat taxes and often bring a tax liability in foreign countries if the tax treaty between the two countries cannot be applied. These payments are not eligible for the Foreign Earned Income Exclusion (FEIE) because they are not foreign-earned.
While you may face dual coverage and, therefore, double taxation from Social Security or other social insurance programs offered worldwide, remember that you are entitled to your Social Security benefits as a US citizen regardless of where you live. It is entirely possible that you can receive benefits from more than one country in retirement years if you meet each country’s eligibility requirements.
Confused about when you need to file? We can help.
When you live in the US, tax day is simple: April 15th! When you move abroad, it’s not so straightforward! Learn about all the expat deadlines and extensions you need to know to file.
Do Americans abroad pay Social Security Taxes?
US citizens and Green Card holders are often required to pay into Social Security regardless of where they live or work. If an individual works for an American company, the employer and employee must make Social Security contributions. Also, self-employed entrepreneurs must pay self-employment tax on net income earned, paying into US Social Security.
However, the issue with this regulation is that many foreign countries also require individuals to pay into their social insurance systems to cover the benefits individuals may receive while living there. Many expats are taxed twice because they simultaneously pay into their host country’s social insurance program and US Social Security.
To resolve this double taxation issue, the US has entered into agreements with several countries to determine which social insurance system an expat participates in.
Can you Retire Abroad and Receive Social Security?
The answer is yes for those who have paid into Social Security for the required years, but there are a few things to keep in mind.
Social Security is a federal program that provides financial security for retired workers, their families, and others. However, there are many reasons why expats should not expect to receive their Social Security benefits if they retire abroad.
To qualify for US Social Security benefits, you must have worked in the United States for at least 10 years (40 quarters) and earned at least $2,000 each of those years.
If you have worked less than 10 years, you can still qualify for benefits, but only if you are eligible for Supplemental Security Income (SSI).
Suppose you have lived outside of the United States for more than six months in any one year. In that case, your work history may not be counted towards your eligibility for Social Security benefits.
Expat Social Security Agreements
The IRS and other US authorities do have measures in place to eliminate dual taxation for US citizens living overseas. Expat Social Security Agreementsexemplify how the US government attempts to reduce double taxation on US expat taxes.
As stated by the IRS, Under a Totalization Agreement, dual coverage and dual contributions (taxes) for the same work are eliminated. The agreements generally ensure you pay social security taxes to only one country.
Countries Where Expats Can Avoid Double Taxation on Social Security
The US has Totalization Agreements with 30 countries, with Iceland and Slovenia being the most recent additions. These agreements are in place to reduce dual coverage and taxation for individuals working overseas and to close gaps in benefits coverage for those who may reside in the United States and another country.
While the agreements relieve double taxation for expats residing in those specific countries, many still end up paying into both systems while only receiving one benefit. Agreements are in place with the following countries:
- Australia
- Austria
- Belgium
- Brazil
- Canada
- Chile
- Czech Republic
- Denmark
- Finland
- France
- Germany
- Greece
- Hungary
- Iceland
- Ireland
- Italy
- Japan
- Luxembourg
- Netherlands
- Norway
- Poland
- Portugal
- Slovak Republic
- Slovenia
- South Korea
- Spain
- Sweden
- Switzerland
- United Kingdom
- Uruguay
How Totalization Agreements Work
The Totalization Agreements are based on the territory rule, determining where the individual’s employment is sourced. The agreements also consider other factors, including where an expat was hired and their intended length of stay in a foreign country.
Generally speaking, the agreements indicate that an individual will pay into the social insurance of their home country if they are sent abroad on a contract or do not intend on staying overseas for more than three to five years. For longer-term contracts or those with no immediate plans to return, an individual will pay into the social insurance program of their host country. However, there are exceptions to these rules, so expats should check the specifics of the Totalization Agreement with their host country.
Questions About Your Social Security? We Are Here to Help!
If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.
Start your taxes today with the guidance and support of one of our expert accountants.
Filing expat taxes doesn’t have to be a hassle. Start your filing process with Greenback today.
Get Started Today
