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. ejmontanezlegal@gmail.com 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 Related Pages: • 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 • International Programs home / • U.S. International Social Security Agreements U.S. International Social Security Agreements Introduction 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 Italy November 1, 1978 Germany December 1, 1979 Switzerland November 1, 1980 Belgium July 1, 1984 Norway July 1, 1984 Canada August 1, 1984 United Kingdom January 1, 1985 Sweden January 1, 1987 Spain April 1, 1988 France July 1, 1988 Portugal August 1, 1989 Netherlands November 1, 1990 Austria November 1, 1991 Finland November 1, 1992 Ireland September 1, 1993 Luxembourg November 1, 1993 Greece September 1, 1994 South Korea April 1, 2001 Chile December 1, 2001 Australia October 1, 2002 Japan October 1, 2005 Denmark October 1, 2008 Czech Republic January 1, 2009 Poland March 1, 2009 Dual Coverage 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. SELF-EMPLOYMENT RULES. Pyramid Effect Eliminating Dual Coverage Territoriality Rule Detached-worker Rule Italian Agreement — An Exception Self-Employment Rules Special Exceptions Certificates of Coverage Totalization Benefits Filing Totalization Benefit Claims Conclusion Link: http://www.socialsecurity.gov/international/agreements_overview.html#a0=0 See also: • EspaƱol • Home • Retirement • Disability • Survivors • SSI • Medicare
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