American Expat Social Security Tax and Benefits

Expat social security tax benefits may be one of the last things an American abroad considers when it comes to their US taxes. Plus, it could be something people working overseas overlook. From this, we’ll share the top points you need to become aware of regarding your social security as a US expat.

US Expat Taxes and Social Security

The Social Security Administration founded the US Social Security federal program. This administration brings benefits for individuals in the United States who are unemployed, disabled, or pensioned. Once you move abroad, US Social Security tax duties still follow you, on top of managing foreign social security too. 

Therefore, a percentage of your salary goes into Social Security for an American living and working in the US.

However, as an American expat or Green Card Holder living abroad, if you are working for an American company overseas, your employer may still want to withhold income taxes and take deductions to contribute to your Social Security account, similar to your colleagues based in the US.

Additionally, if you’re your own boss – being self-employed – the IRS will normally add a Self-Employment tax on your net income as well.

Dual Taxation

The problem comes when foreign countries also need you to pay for their social insurance systems that support you with benefits like health insurance. In some situations, American expats could face paying taxes twice (dual taxation) by having to pay into the US Social Security program and the foreign country’s social program.

A solution to this unfortunate situation is the totalization agreement, which includes several countries worldwide. It’s a resolution to the issue of the social insurance system that Americans abroad must involve themselves in.

Worldwide Agreements about Social Security for US Expats

The good news regarding expat social security taxes is that the US and IRS came together to place measures towards removing dual taxation for Americans abroad. They call it the “Totalization Agreements.”

Essentially, the US and 26 other countries have all agreed to reduce or completely eliminate dual taxation for Americans working abroad. It goes both ways, too. The US cannot double tax foreigners in its own country if it can claim that the other country has taxing rights per the Totalization Agreement.

A US citizen abroad who resides in one of the following countries like Australia, Belgium, Germany, and France can avoid dual coverage. They can also claim which country they prefer to pay Social Security into.

The Totalization Agreements factor in where your employment is sourced: where you were hired, and how long you were planning to stay abroad. Therefore, these agreements can help individuals avoid foreign social security costs if sent overseas on a short-term contract and/or if they do not plan to stay overseas for more than 5 years.

For US citizens who do not plan to return to the US – especially after 5 years – they can pay normally into the social insurance of the foreign country they are living in. After all, you want your health and retirement covered, no matter where you live.

Social Security Tax Benefits as a Retired American Abroad

If you are or know someone who is planning to retire overseas, it’s good to know how you are still eligible to receive Social Security benefits. Much of it will depend on your residency status, citizenship, and the agreement between the US and the foreign country you reside in.

Naturally, all Americans are able to receive retirement benefits as long as they have paid into Social Security over time. To be eligible for Social Security retirement benefits, the IRS needs 40 credits (of coverage in your account) or ten years of work that paid into Social Security.

To receive one credit of work, an individual needs to make at least $1,730 in income in 2024, earning a maximum of four credits per year.

8 Things to Know About Social Security

If, for some reason, your eligibility to receive benefits falls through, Social Security payments will stop after you have been living outside the US for six months. Otherwise, if the foreign country you are living in is on the Totalization Agreement list, you can still receive Social Security benefits as a retiring American abroad. Then, the duration of time you have been spending outside of the US won’t matter.

Additional Considerations About Social Security Benefits for Retirees

If you are an American expat living in one of the restricted countries (thus, not on the Totalization list, such as Ukraine), your Social Security payments will be withheld until you return to the US or move to a country on the approved list.

If you are an American expat retiree who is a survivor (widow) or dependent you may need to meet additional requirements such as:

You must be:

• Living in a country on the Totalization Agreement list
• Authorized to receive benefits from an individual who died working in the US military
• A resident for (at least) 5 years

File Any Changes to the Social Security Administration

Do you plan to move abroad as a US retiree? If yes, you need to file a report. This report should include the following changes to the Social Security Administration: change of address, divorce or annulment, inability to manage funds, and more. To see the full list, please see page 11 here.

NOTE: Failure to report a change may result in an overpayment. We will recover any payments not due you. Also, if you fail to report changes in a timely way or you intentionally make a false statement, we may stop your benefits.

Social Security Administration

We at MyExpatTaxes also suggest signing up to receive Social Security payments and benefits online instead of by mail. This is to prevent your checks from unlucky situations such as theft. Your US Consultant may be able to provide you more information or they could point you to the relevant Federal Benefits Unit office closest to your location.

Taxable Social Security Retirement Benefits

Did you know that any/all Social Security retirement benefits you receive may be taxable income on your US taxes? Yes, this means that no matter where you live in the world or if you are a US citizen or Green Card Holder, your benefits are subject to taxes. We suggest you plan wisely.

Social Security benefits can be 85% taxable on your US expat taxes. It can also bring on a tax liability within your foreign country, especially if there is no clause in the Tax Treaty between your host country and the US to provide source country taxation rights on social security payments.

Additionally, the money you receive via your Social Security checks will not be eligible for the FEIE. This is because your Social Security money is factually not foreign earnings.

Need Help with Your Expat Social Security Tax?

We understand there is a lot of information to absorb and take in here. If you have any questions regarding Social Security benefits, retiring overseas, and more, you are welcome to check out our Tax Guides section. Otherwise, feel free to contact us through our website with your questions.

Our goal is to make every customer satisfied and feel stress-free about expat taxes. We gladly support US and Foreign Social Security benefits in our app. It applies to the most relevant treaties available to ensure you never face double taxation!

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