Do US Expats Pay Social Security Tax?
Navigating US Social Security for expats: Understand your tax obligations, reporting rules, and how to secure your benefits abroad.
U.S. expatriates often wonder if they must pay Social Security tax. The U.S. tax system operates on citizenship-based taxation, meaning U.S. citizens and green card holders are generally subject to U.S. taxes on their worldwide income, regardless of where they reside. This principle extends to Social Security and Medicare taxes.
Social Security Tax Obligation for US Expats
U.S. citizens and green card holders are broadly subject to U.S. Social Security and Medicare taxes, commonly known as FICA (Federal Insurance Contributions Act) taxes, regardless of their country of residence. For 2025, the Social Security tax rate is 6.2% for both the employee and the employer, applied to wages up to an annual limit of $176,100. The Medicare tax rate is 1.45% for both the employee and employer, with no wage limit.
Self-employed individuals living abroad are responsible for paying Self-Employment Contributions Act (SECA) taxes, which cover both Social Security and Medicare. The SECA tax rate for 2025 is 15.3% on net earnings from self-employment, consisting of 12.4% for Social Security (up to the $176,100 wage base limit) and 2.9% for Medicare (on all net earnings). Self-employed individuals must pay SECA taxes if their net earnings from self-employment are $400 or more.
While the Foreign Earned Income Exclusion (FEIE) allows qualifying individuals to exclude foreign earned income from U.S. federal income tax, it generally does not apply to Social Security and Medicare taxes.
Relief through Totalization Agreements
Totalization Agreements are bilateral agreements between the United States and other countries designed to prevent double Social Security taxation. These agreements ensure that individuals are generally subject to the Social Security taxes of only one country on the same earnings, typically the country where the work is performed. They also help individuals qualify for benefits based on combined work histories.
A key component of these agreements is the “detached worker” rule, which provides an exception to the general rule of paying taxes in the country of work. Under this rule, a U.S. citizen or resident alien temporarily assigned abroad by a U.S. employer, typically for five years or less, can remain covered under the U.S. Social Security system. This exempts them from paying Social Security taxes in the host country.
To prove exemption from the host country’s Social Security taxes under a Totalization Agreement, a “Certificate of Coverage” is necessary. This official document is issued by the Social Security Administration (SSA) if the individual remains covered by the U.S. system. The certificate serves as proof that the employee and employer are exempt from paying Social Security taxes to the foreign country’s system. The U.S. currently has Totalization Agreements with many countries, including Australia, Canada, Germany, and the United Kingdom.
Reporting and Paying Social Security Taxes
For employed expats, U.S. FICA taxes are typically withheld by U.S. employers. If an expat works for a U.S. company abroad, they generally receive a Form W-2, which reports their wages and withheld FICA taxes. However, if an expat is employed by a foreign company that is not a U.S. entity, that employer generally does not withhold U.S. FICA taxes. In such cases, the expat might be considered self-employed for Social Security purposes unless a Totalization Agreement applies. When working for a foreign employer, expats will need to rely on foreign wage statements to report their income, as a W-2 is typically not issued.
Self-employed expats are responsible for calculating and reporting their self-employment (SECA) taxes on Schedule SE (Form 1040). This form figures the Social Security and Medicare taxes due on net earnings from self-employment. Self-employed expats with net earnings of $400 or more are required to file Schedule SE.
To cover their SECA obligations, self-employed expats are generally required to pay estimated taxes throughout the year. This involves estimating their income and tax liability and making quarterly payments to the IRS. Failure to pay estimated taxes can result in penalties.
Social Security Benefits for Expats
Social Security contributions made by expats translate into future benefits, with eligibility determined by accumulating “credits” or quarters of coverage. Individuals typically earn up to four credits per year based on their earnings. For 2025, one credit is earned for each $1,810 of earnings, up to a maximum of four credits annually. To qualify for retirement benefits, most individuals need 40 credits.
Totalization Agreements can significantly help expats meet these minimum credit requirements. If an individual has some U.S. coverage but not enough to qualify for benefits, the SSA can count periods of Social Security coverage earned in an agreement country. This combined or “totalized” coverage can enable individuals to meet eligibility thresholds for U.S. Social Security benefits. If benefits are paid based on combined credits, the amount of the U.S. benefit will be proportional only to the periods of coverage earned in the United States.
U.S. Social Security benefits can generally be paid to eligible expats living in most foreign countries. Social Security benefits for U.S. expats are considered taxable income by the U.S., similar to individuals residing domestically, with up to 85% of benefits potentially subject to federal income tax depending on overall income levels.