If you are a U.S. citizen or resident working outside the U.S., you may continue to be subject to U.S. social security tax, or you may be subject to the social security tax in the country where you are working.

Generally, if you are working as an employee outside the United States for a foreign employer, U.S. social security and Medicare taxes do not apply, and you would be subject to the social security tax in the country where you work.  If you are self-employed, you are generally subject to the U.S. self-employment tax, regardless of where you work.

Cases in which U.S. Social Security and Medicare Taxes Apply

U.S. social security and Medicare taxes apply on compensation for personal services performed outside the United States in the following cases:

1. You work on or in connection with a U.S. vessel or aircraft.
2. You work in one of the countries that has a bi-national social security agreement with the United States.
3.  You are working overseas for a U.S. employer.
4. You are working for a foreign affiliate of a U.S. employer under an agreement entered into between the U.S. employer and the U.S. Treasury Department.

U.S. Vessel or Aircraft

If the vessel or aircraft is documented and registered under U.S. law,  and the crew is employed by a U.S. citizen, resident, or corporation, your compensation is subject to social security and Medicare taxes if either:

• You were hired within the United States, or
• The vessel or aircraft touches at a U.S. port while you are employed.

Bi-National Social Security Agreements

The United States has agreements (referred to as “totalization” agreements) with several countries to eliminate double social security taxation on the same work.  Under these agreements you are generally only subject to social security in the country in which you are working.  But if you are employed in the U.S. and are sent to work temporarily in another country, you can generally continue to be covered by social security in the U.S.

You can find information on tax treaties in IRS Publication 901, U.S. Tax Treaties.

If you work in a country in which your pay is subject only to U.S. social security tax and is exempt from social security in that country, your employer should get a certificate of compliance from the Social Security Administration, Office of International Operations.

If you are working in a country that has a social security agreement with the U.S., and your pay is exempt from U.S. social security but you are paying social security tax in that country, you or your employer should get a statement from the authorized official in that country, stating that your pay is subject to social security tax in that country.

Working Overseas for a U.S. Employer

For social security purposes, the U.S. Government and any of its instrumentalities or agencies are considered U.S. employers.  A U.S. employer could also be:

• An individual resident of the U.S.
• A partnership in 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 individual state, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, or American Samoa.

Your employer should be able to tell you whether it is a U.S. employer for social security purposes.

Foreign Affiliate of a U.S. Employer

A foreign affiliate of a U.S. employer is any foreign company in which a U.S. employer has at least a 10% interest, either directly or indirectly.