November 3, 2022
If you plan to retire or reside overseas, you may be worried about your ability to continue receiving Social Security retirement, disability, or survivor benefits. Typically, the answer is affirmative. However, there are exceptions, and the laws for non-U.S. citizens vary. In this article, we will discuss this and other related issues about social security.
United States citizens eligible for retirement, family, survivor, or social security disability benefits can claim from the Social Security Administration and can get those payments no matter where they live. However, United States citizens living in Cuba or North Korea will not get their Social Security benefits because of sanctions put in place by the Treasury Department.
They will be able to receive their money again once they leave those countries. US citizens living in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, or Uzbekistan must meet strict requirements, such as showing up regularly at United States embassies or consulates.
Depending on where they live and what state they are citizens of, non-U.S. citizens eligible for benefits based on their work history may be able to get them outside the United States (subject to the payment restrictions that have already been mentioned).
Non-citizens seeking family or survivor benefits may have to satisfy further requirements. The government will make your payments in US dollars regardless of where you live.
Suppose you are a United States citizen living abroad and want to receive Social Security benefits. In that case, you may find that the rules are different than if you were a foreign national living in the United States.
Let us look at these scenarios:
Non-US citizens may have to follow different rules than US residents, depending on where they live and what kind of Social Security benefits they want. "Totalization agreements" between the United States and more than twenty-five other countries set the rules for many of these situations.
The brochure titled "Your Benefits While You Are Outside the United States" discusses the additional residency requirements that may apply if you receive dependant or survivor benefits. If a social security recipient lives abroad for six months or longer, the government may terminate their benefits until they return.
The US Social Security Administration (SSA) considers you "outside the United States of America" if you have spent at least 30 consecutive days outside of either one of the 50 states, the District of Columbia, Puerto Rico, the United States Virgin Islands, Guam, and the Northern Mariana Islands, or American Samoa.
You can get retirement, disability, or survivor benefits even if you live outside the United States of America and you are a US citizen and meet the standard requirements. The Payments Abroad Screening Tool of the Social Security Administration can assist you in deciding if you are eligible to receive benefits outside the United States.
The US Social Security Number (SSN) is now more like a single national identity number that accompanies you throughout your administrative life in the United States rather than just the number of your retirement savings account. It's required for various official documents, including passport applications, tax returns, and financial accounts reports.
Under the Foreign Account Tax Compliance Act, banking institutions in other countries must request a copy of IRS Form W-9 (Request for Taxpayer Identification Number and Certification) from their American clients. This form includes the client's Social Security number. Many Americans and green card holders outside the United States may experience anxiety at the prospect of such demands.
Some may forget their Social Security number for a long time. Some people have never had one, while others have misplaced or forgotten theirs or are unaware they ever had one. So, one unexpected effect of FATCA (Foreign Account Tax Compliance) is that the Federal Benefits Units (FBUs) in American embassies and consulates abroad have more work to do. Also, FATCA and other new laws against fraud and terrorism have made it more important to check documents carefully before giving out a Social Security number.
The takeaway here, especially for expats, is that you should double-check your Social Security numbers (SSNs) and any United States citizens or green card holders you want to claim as dependents immediately. If not, go to work gathering the necessary paperwork and apply as soon as possible; getting a Social Security number takes time but not money.
Social Security agreements, also called "Totalization Agreements," keep people from paying Social Security taxes to two different countries. You will likely have to pay Social Security taxes in the United States and the nation where you work if the two countries do not have an ongoing Social Security agreement.
Self-employed people in the United States are expected to make contributions to Social Security. When filing as self-employed, you must pay federal and state income taxes, including Social Security contributions. 15.3 percent. If the United States and your host country haven't made a social security agreement, you may have to pay social security taxes in your host country as a self-employed expat.
About 12.4% goes to Social Security's Old Age, Survivors, and Disability Insurance (OASDI), while 2.9% goes to Medicare (hospital insurance). You can't get any tax relief from the IRS (Internal Revenue Service) if you send your Social Security taxes to a country other than the United States. You may be required to pay social security taxes in your host country.
But in some countries, like Mexico, people who live there can get a tax credit equal to their Social Security payment from abroad. People who work for themselves and pay taxes in countries with which the US has an active totalization agreement do not have to pay self-employment tax in America. You can show you've been enrolled in a foreign Social Security program by submitting proof of participation from the country you reside.
According to the Social Security Agreement with your host country, if you are self-employed and pay into a social security program, you must file Schedule SE with your United States expat tax return. You will also need to attach a statement explaining why you should be exempt from US expat taxes.
Through totalization agreements, employees who have chosen to split their time between working in the United States and abroad can also get a lot of protection for their benefits. Such pacts often protect both independent contractors and workers at overseas businesses. Depending on how much you have paid into the US and foreign Social Security, you may get a proportional share of the US or international benefit.
The number of credits you earned while making Social Security payments to a foreign nation will be considered by the SSA (Social Security Administration) if you have some but not all of the credits necessary to collect Social Security benefits. Your Social Security payments in the country where you live now will be adjusted based on how many credits you earned in the United States.
You will get a prorated amount of your Social Security payment based on the years you have worked and paid into the system in the United States and your host country.
If you have at least six quarters of US credits, the SSA can add them to the credits you've earned for international coverage under the Social Security Agreements Act. There may be no difference in the minimum coverage requirements for Social Security benefits in the country where you live.
While living outside the United States, the Social Security Administration will send you a questionnaire on which you will provide new information regularly. The SSA will look at what you say to decide if you are eligible for benefits.
To keep from losing your benefits, you must send the questionnaire back to the office where you got it as soon as possible. It would help if you also told the SSA about any changes that could affect how much money you get from Social Security.
If you don't report new information or if you report false information on purpose, you could get a fine or go to jail. You could also lose some of your Social Security benefits.
Suppose you are a citizen of one of the thirty nations with whom the United States has a current totalization agreement. In that case, you will continue to receive Social Security payments as long as you remain eligible. You may also get payments if you are a citizen of one of the countries listed on SSA as eligible.
To get benefits as a citizen of one of the countries listed, you must live outside of the United States and not get Social Security as a dependent or survivor. If you are not a citizen of one of the nations listed above or if you are not a US citizen, the Social Security Administration will stop sending you benefits after six calendar months of living outside the United States.
This is true unless one of the following exceptions applies:
Once your Social Security benefits have been stopped, the SSA won't start them again until you've been back in the US for an entire month. To qualify as being in the United States for a complete calendar month, you must be present in the United States from the first minute of the month to the final minute of the last day of the month.
The Social Security Administration could also ask for proof that you were allowed to be in the US for a month. Therefore, you must keep thorough records of your time spent in the United States.
You start accumulating credits toward your Social Security benefits when you start paying into the system. The required number of credits to qualify for retirement benefits varies by birth year. A total of 40 credits is needed for people with the birth year of 1929 or later. That's the same as having a job for ten years.
Suppose you quit working or move out of the country before you've accrued enough Social Security credits to obtain benefits in retirement. In that case, the recognition you've already earned will remain on your record.
Even if you have paid into the Social Security systems of the United States and another nation, you may still not be eligible for benefits because you have not worked long enough or recently enough.
If you have United States citizenship or residency, you may be subject to federal taxation on up to 85% of your benefits. The amount of tax is determined by the entire amount of your Social Security benefits. The SSA may also evaluate your other sources of income (if you have any). The more you earn, the more you will be taxed.
If you earn more than $25,000 annually, 50% of your Social Security benefits will be subject to federal income tax. They may impose a total tax rate of 85% if you are in either of the following conditions: When you add up half of your Social Security benefit and any other money you make, the total is more than $34,000 ($44K for married couples who file jointly).
You are a married couple filing a separate return who resided with your spouse at any time throughout the year. Remember that many foreign countries tax the United States Social Security benefits, so it is recommended that you research your host country's tax rules to avoid being surprised with higher taxes than expected.
If you have ever lived outside the United States of America for at least 30 days, you may be considered abroad and be able to get Social Security payments in another country. Do US expats' foreign-born spouses have access to Social Security benefits?
American spouses who work or live abroad may be able to get Social Security benefits in the United States. If a spouse who is not a US citizen or does not have a green card spends more than six months of the tax year outside of the United States of America, that spouse's Social Security benefits will end.
To be sure, there are always outliers. For instance, a foreign-born spouse of a US citizen who has been in the relationship for at least five years is eligible for Social Security payments.
The spouse can get Social Security survivor payments in the event of the death of their American partner. Talk to a trustworthy expat tax expert who can explain your spouse's situation and tell you if they are eligible for United States Social Security.
In this article, we discussed all you need to know about claiming your social security while living abroad. You can always claim your social security even if you move to another country, provided you meet all the criteria stipulated in this article.
If you are confused about claiming your social security as a US citizen living abroad, it is best to talk to an expert for advice. Such experts can be found at any reputable mailing forwarding company or service.
These experts are also trained and experienced in the handling of mail of a more sensitive nature, for example, social security benefit documentation. As such, it is best to contact mailing experts who can assist you with all your mailing needs, whether it is in a document or digital format.