Social security and Medicare taxes may apply to wages paid to an employee regardless of where the services are performed. taxmap/pubs/p54-007.htm#en_us_publink100047381
In general, U.S. social security and Medicare taxes do not apply to wages for services you perform as an employee outside of the United States unless one of the following exceptions applies.
- You perform the services on or in connection with an American vessel or aircraft (defined later) and either:
- You entered into your employment contract within the United States, or
- The vessel or aircraft touches at a U.S. port while you are employed on it.
- You are working in one of the countries with which the United States has entered into a bilateral social security agreement (discussed later).
- You are working for an American employer (defined later).
- You are working for a foreign affiliate (defined later) of an American employer under a voluntary agreement entered into between the American employer and the U.S. Treasury Department.
An American vessel is any vessel documented or numbered under the laws of the United States and any other vessel whose crew is employed solely by one or more U.S. citizens, residents, or corporations. An American aircraft is an aircraft registered under the laws of the United States. taxmap/pubs/p54-007.htm#en_us_publink100047383
An American employer includes any of the following.
- The U.S. Government or any of its instrumentalities.
- An individual who is a resident of the United States.
- A partnership of which at least two-thirds of the partners are U.S. residents.
- A trust of which all the trustees are U.S. residents.
- A corporation organized under the laws of the United States, any U.S. state, or the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, or American Samoa.
An American employer also includes any foreign person with an employee who is performing services in connection with a contract between the U.S. government (or any instrumentality thereof) and a member of a domestically controlled group of entities which includes such foreign person.taxmap/pubs/p54-007.htm#en_us_publink100047384
A foreign affiliate of an American employer is any foreign entity in which the American employer has at least a 10% interest, directly or through one or more entities. For a corporation, the 10% interest must be in its voting stock. For any other entity, the 10% interest must be in its profits.
Form 2032, Contract Coverage Under Title II of the Social Security Act, is used by American employers to extend social security coverage to U.S. citizens and resident aliens working abroad for foreign affiliates of American employers. Once you enter into an agreement, coverage cannot be terminated. taxmap/pubs/p54-007.htm#en_us_publink100047385
Social security tax does not apply to the value of meals and lodging provided to you for the convenience of your employer if it is reasonable to believe that you will be able to exclude the value from your income. taxmap/pubs/p54-007.htm#en_us_publink100047386
The United States has entered into agreements with some foreign countries to coordinate social security coverage and taxation of workers who are employed in those countries. These agreements are commonly referred to as totalization agreements and are in effect with the following countries.
|Finland|| (effective|| |
|France|| March 1,|| |
|Germany|| 2009)|| |
| || || |
Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. The agreements generally make sure that you pay social security taxes to only one country.
Generally, under these agreements, you will only be subject to social security taxes in the country where you are working. However, if you are temporarily sent to work in a foreign country and your pay would otherwise be subject to social security taxes in both the United States and that country, you generally can remain covered only by U.S. social security. You can get more information on any specific agreement by contacting: Social Security Administration
Office of International Programs
P.O. Box 17741
Baltimore, MD 21235-7741
If you have access to the Internet, you can get more information at: http://www.socialsecurity.gov/international
If your pay in a foreign country is subject only to U.S. social security tax and is exempt from foreign social security tax, your employer should get a certificate of coverage from the Office of International Programs.taxmap/pubs/p54-007.htm#en_us_publink100047388
If you are permanently working in a foreign country with which the United States has a social security agreement and, under the agreement, your pay is exempt from U.S. social security tax, you or your employer should get a statement from the authorized official or agency of the foreign country verifying that your pay is subject to social security coverage in that country.
If the authorities of the foreign country will not issue such a statement, either you or your employer should get a statement from the U.S. Social Security Administration, Office of International Programs, at the above address. The statement should indicate that your wages are not covered by the U.S. social security system.
This statement should be kept by your employer because it establishes that your pay is exempt from U.S. social security tax.
Only wages paid on or after the effective date of the totalization agreement can be exempt from U.S. social security tax.