Social Question

JLeslie's avatar

US jellies who have worked as expats can you answer a tax question?

Asked by JLeslie (65418points) January 4th, 2022 from iPhone

I know if you live in another country, meeting requirements for days outside of the US, and/or if you are a resident in the other country, your first $100k (approximately) of income is excluded from US federal tax. Does that include you are excluded from paying Social Security and Medicare?

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10 Answers

LuckyGuy's avatar

I was overseas for 9 years working for a large corporation. My taxes were done by Delloite and KPMG so you can figure they knew what they were doing. During those years I did not contribute to Social Security and those years are not figured into my SS benefits. When I get my annual statement it shows 0 income for those years.
Of course I was more than compensated for that small negative.

JLeslie's avatar

@LuckyGuy That’s how I remember it too. I wonder if it is different for self-employed people residing abroad? I tried to research it, but it is confusing.

LuckyGuy's avatar

And the laws have probably changed over the years, too.

Any numbers on the negative side of the assignment equation were more than balanced out by the positives!
Wherever you go make sure safety is your priority.

JLeslie's avatar

I wonder if your company was still paying their side of the Social Security tax.

LuckyGuy's avatar

There is no way for me to tell. They covered everything in the host country, even putting money in my account so I could pay the taxes owed.

Zaku's avatar

Self-employed people don’t generally contribute to social security or medicare even when they are in the USA, do they?

JLeslie's avatar

@Zaku Yes, living in the US self employed people pay “double” social security. Usually, the employer pays half and the employee pays half, but when you are self employed you pay both parts and the Medicare.

Zaku's avatar

@JLeslie When I say self-employed, I’m thinking of working as a contractor, or on one’s own business. We pay self-employment tax, but we don’t do any withholding other than estimated tax payments, or any Social Security or Medicare calculations.

From https://www.upcounsel.com/1099-contractor :
“Contractors do not have taxes taken out of their paychecks to cover Social Security and Medicare.”

Zaku's avatar

Oh I see, thanks! Right, so we pay it under the term Self-Employment Tax – we just don’t have to do any specific accounting for the components. (I think I knew that once, and forgot.)

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