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

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.

1. General Social Security Concepts
2. Statutory Liability for U.S. Social Security Contributions
3. Totalization Agreements
4. Old Age Benefits
   1. Calculation of benefit in general
   2. Calculation of totalized benefit
   3. International Considerations
      1. Payments outside the U.S.
      2. Withholding on payments outside the U.S.
      3. Windfall Elimination Provisions
5. Medicare Benefits
   1. General requirements for coverage
   2. Special requirements for non-citizens

The panel will discuss these and other important topics:

• What constitutes “wages” and “employment” for purposes of Social Security withholding on nonresident employees of U.S. employers?
• What issues are present when a nonresident employee earns deferred compensation from a U.S. employer connected with services provided in the U.S.?
• What documentation does the taxpayer 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

Learning Objectives

After completing this course, you will be able to:

• Apply the test for determining Social Security retirement benefit eligibility for nonresident workers
• Identify the situations in which totalization agreements apply and how the agreements operate as a means of claiming exemption from dual social tax liabilities
• Determine the mechanics of “totalizing” social benefits when taxpayers have paid into two different countries’ social tax regimes
• Recognize scenarios where a nonresident employee may be exempt from Social Security withholding

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and withholding schedules for U.S. resident and nonresident employees; supervisory authority over other preparers/accountants. Specific knowledge and understanding of Social Security withholding and reporting requirements; familiarity with IRS foreign informational filings

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).