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Monday, September 10, 2012
Dual Social Security Coverage USA Rules; EJ MONTANEZ Law firm in Marina del Rey
Protecting the immigrants:
Contact Law Offices of EJ MONTANEZ, in Marina del Rey; tel # 310 577 1966.
Romania and Hungary does not have a Totalization agreement with the United States.
EMPLOYERS IMMIGRATION GUIDE;This page is an immigration guide for employers, particularly for those who sponsor foreign-born workers for immigration benefits.
We discuss the process of obtaining temporary working visas and converting these to lawful permanent residence. Our law firm represents over 100 corporate clients in various states., ,
We guide employers in successfully processing visa petitions through the USCIS and in obtaining the approval of PERM applications through the U.S. Department of Labor. We assist both employers and employers in theimmigration green card process.
We also advise employers how to comply with the Employee Verification (“I-9″) System, how to respond to “mismatch” letters received from the Social Security Administration, and how to avoid liability under anti-discrimination and “document abuse” laws. We discuss the government’s “E-Verify” program in which our law firm and some of our corporate clients participate., ,
Our Employers Immigration Guide is divided into the following subtopics:
• Success Stories
• Obtaining Temporary Working Status for Employees
• Obtaining Permanent Residence for Employees
• How to Avoid Employer Sanctions (I-9′s)
• Social Security Numbers and “No-Match” Letters
• Anti-Discrimination and Document Abuse
• E-Verify Program
• Employer Information from the Government
• Can Your Company Survive an I-9 Audit? – Recruiting Trends
• Hiring Recent University Graduates
• Premium Processing Program
• Department of Labor Immigration Resources
• Bilateral Social Security Agreements
Let's read through the Social Security: DUAL COVERAGE Problematic
The Official Website of the U.S. Social Security Administration
• Business Services
• International Programs home /
• U.S. International Social Security Agreements
U.S. International Social Security Agreements
Since the late 1970's, the United States has established a network of bilateral Social Security agreements that coordinate the U.S. Social Security program with the comparable programs of other countries. This article gives a brief overview of the agreements and should be of particular interest to multinational companies and to people who work abroad during their careers.
International Social Security agreements, often called "Totalization agreements," have two main purposes. First, they eliminate dual Social Security taxation, the situation that occurs when a worker from one country works in another country and is required to pay Social Security taxes to both countries on the same earnings. Second, the agreements help fill gaps in benefit protection for workers who have divided their careers between the United States and another country.
Agreements to coordinate Social Security
protection across national boundaries have been common in Western Europe for decades. Following is a list of the agreements the United States has concluded and the date of the entry into force of each. Some of these agreements were subsequently revised; the date shown is the date the original agreement entered into force.
Countries with Social Security Agreements
Country Entry into Force
November 1, 1978
December 1, 1979
November 1, 1980
July 1, 1984
July 1, 1984
August 1, 1984
January 1, 1985
January 1, 1987
April 1, 1988
July 1, 1988
August 1, 1989
November 1, 1990
November 1, 1991
November 1, 1992
September 1, 1993
November 1, 1993
September 1, 1994
April 1, 2001
December 1, 2001
October 1, 2002
October 1, 2005
October 1, 2008
January 1, 2009
March 1, 2009
Without some means of coordinating Social Security coverage, people who work outside their country of origin may find themselves covered under the systems of two countries simultaneously for the same work. When this happens, both countries generally require the employer and employee or self-employed person to pay Social Security taxes.
Dual Social Security tax liability is a widespread problem for U.S. multinational companies and their employees because the U.S. Social Security program covers expatriate workers--those coming to the United States and those going abroad--to a greater extent than the programs of most other countries. U.S. Social Security extends to American citizens and U.S. resident aliens employed abroad by American employers without regard to the duration of an employee's foreign assignment, and even if the employee has been hired abroad. This extraterritorial U.S. coverage frequently results in dual tax liability for the employer and employee since most countries, as a rule, impose Social Security contributions on anyone working in their territory.
Dual tax liability can also affect U.S. citizens and residents working for foreign affiliates of American companies. This is likely to be the case when a U.S. firm has followed the common practice of entering into an agreement with the Department of the Treasury pursuant to section 3121(l) of the Internal Revenue Code to provide Social Security coverage for U.S. citizens and residents employed by the affiliate. In addition, U.S. citizens and residents who are self-employed outside the United States are often subject to dual Social Security tax liability since they remain covered under the U.S. program even if they maintain no business operations in the United States.
Other features of U.S. law increase the odds that foreign workers in the United States will also face dual coverage. U.S. law provides compulsory Social Security coverage for services performed in the United States as an employee, regardless of the citizenship or country of residence of the employee or employer, and irrespective of the length of time the employee stays in the United States. Unlike many other countries, the United States generally does not provide coverage exemptions for nonresident alien employees or for employees who have been sent to work within its borders for short periods. For this reason, most foreign workers in the United States are covered under the U.S. program.
Paying dual Social Security contributions is especially costly for companies that offer "tax equalization" arrangements for their expatriate employees. A firm that sends an employee to work in another country often guarantees that the assignment will not result in a reduction of the employee's after-tax income. Employers with tax equalization programs, therefore, typically agree to pay both the employer and employee share of host country Social Security taxes on behalf of their transferred employees.
Under the tax laws of many countries, however, an employer's payment of an employee's share of a Social Security contribution is considered to be taxable compensation to the employee, thus increasing the employee's income tax liability. The tax equalization arrangement generally provides that the employer will also pay this additional income tax, which in turn serves to increase the employee's taxable income and tax liability even further. The employer again pays the additional tax, etc., etc.
As one can readily see, the employee's foreign Social Security coverage results in a substantially greater tax burden for the employer than the nominal Social Security tax alone. Depending on the other country's tax rates, in some countries this "pyramid" effect has been known to increase an employer's foreign Social Security costs to as much as 65-70 percent of the employee's salary, as illustrated below.
Eliminating Dual Coverage
Italian Agreement — An Exception
Certificates of Coverage
Filing Totalization Benefit Claims
See also: • Español