In the United States, nearly every employee, with very few exceptions, contributes to FICA and Medicare through payroll taxes. These deductions are alongside federal and state income taxes, health insurance contributions, and other payroll deductions. Naturally, one frequently asked question emerges: "Can I, and how do I, recoup my FICA and Medicare contributions?"
To understand this better, let’s delve into various scenarios. For individuals in the U.S. on non-immigrant visas who have no plans to settle here, these payroll tax contributions might feel like a hefty financial burden. Certain non-immigrant visas, like the Student Visa (F-1), exempt employers from deducting FICA and Medicare taxes. However, for others on work visas such as H-1B or L-1, these payroll tax withholdings are mandatory.
People on non-immigrant work visas often wonder whether they will benefit from their contributions when they eventually retire. Additionally, U.S. citizens or Green Card holders who have moved abroad for retirement might also want to know if they can receive their Social Security (SS) benefits in their new country of residence. Generally, receiving benefits as a U.S. citizen or Green Card holder while living abroad poses no issues, unless you reside in a sanctioned country.
Moreover, there are situations where surviving or divorced spouses, minor dependents, or those with special circumstances who live outside the U.S. need to apply for SS benefits. Understanding the myriad rules and nuances in these cases can be daunting, even with a wealth of information available on the Social Security Administration (SSA) website. Therefore, let’s zero in on a specific situation: when a non-U.S. citizen or their dependent needs to apply for SS benefits while abroad.
SS Benefits Rules for a Non-U.S. Citizen Living Abroad
Here are the essential guidelines for non-U.S. citizens looking to receive Social Security benefits from outside the U.S.:
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Six-Month Rule: Generally speaking, a non-U.S. citizen cannot receive benefits after their sixth calendar month outside the U.S. To maintain eligibility, you may need to visit the U.S. for 30 days every six months. Should your benefits be halted by the SSA, you would need to return and lawfully stay in the U.S. for an entire calendar month to reinstate them.
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Exception Eligibility: Depending on your citizenship and the country you reside in, exceptions to the six-month rule may apply. The SSA provides an online tool to check if you qualify for such exceptions—refer to this helpful tool in the SSA resources.
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Tax Obligations: Be prepared to pay taxes on received benefits in your resident country. The U.S. has Totalization Agreements with around 30 countries to prevent dual taxation and provide seamless benefits coverage for workers commuting between the U.S. and their resident countries. You might still face taxation on your benefits if you reside in a country without such an agreement.
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Tax Treaty Coverage: Some countries have partial Tax Treaty coverage to mitigate double taxation. If there’s no treaty reduction, the SSA will withhold federal income tax at a rate of 30% from 85% of your benefits.
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Dependent or Survivor Benefits: The requirements for claiming SS benefits as a dependent or survivor vary based on whether the benefits are linked to a citizen or non-citizen’s earnings and also depend on the claimant’s country of residence and citizenship.
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Annual Questionnaire: The SSA will periodically send you a questionnaire (every 1 to 2 years) which must be completed and returned to continue receiving benefits. Failure to do so will result in a suspension of your benefits.
- Other Conditions: Several conditions might terminate your benefits. These include gaining employment, improvement in disability, marriage, a dependent child turning 18, death, and others. Additionally, the Windfall Elimination Provision (WEP) could reduce or eliminate your benefits.
For further inquiries, it’s advisable to contact the SSA directly. The SSA’s website provides contact information for the Federal Benefits Unit across various countries to assist you.
By understanding these rules and being proactive in managing your Social Security benefits while living abroad, you can ensure that your contributions serve you well in retirement.
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