Go Party? Go Skafa! Go Skafa! Go Party!

U.S. totalization agreements with other countries generally have some key elements. Overall, totalization agreements eliminate the dual social security of workers in the United States and the other country where they are from or in which they work. In doing so, one worker is excluded either from the other country`s taxation and social benefits program. There are many rules governing a worker`s social security system. One rule, the territorial rule, stipulates that a worker is subject to the laws of the country in which he works. This rule is active in all U.S. agreements. Under this rule, a German citizen working and residing in the United States would pay FICA taxes and would ultimately be entitled to Social Security and Medicare benefits from the United States.

[9] 10 Although most agreements remove payment restrictions for all residents of both countries, agreements with Austria, Belgium, Denmark, Germany, Sweden and Switzerland remove payment restrictions only for nationals of both countries or stateless persons and refugees residing in both countries. The United States determines the totalization benefits a foreigner may receive, based on the length of the foreigner in the country and the length of his or her work in his or her country of origin. The United States has a threshold for the time it takes to work, to obtain comprehensive social security benefits and Medicare. With the countries with which it has a totalization agreement, the United States will rely on the threshold of the foreign period. If the combined amount exceeds the threshold, the United States then makes partial payments to the beneficiaries. [9] The provisions to remove dual coverage for workers are similar in all U.S. agreements. Each of them establishes a basic rule regarding the location of the employment of a workforce. Under this basic „territorial rule,“ a worker who would otherwise be covered by both the United States and a foreign regime is subject exclusively to the coverage laws of the country in which he or she works.

Totalization agreements are popular with U.S. companies because they exempt employers from paying a dual social security tax.

Comments are closed.