Social Security Totalization Agreement Countries
The dual objectives of totalization agreements are fulfilled in different ways in different agreements and make it essential to understand the concept and specifications of each host covenant at home. Many tabling agreements follow the same general contribution and time model. Below is a description of the types of agreements concluded by certain countries. In order to eliminate the double taxation of Social Security and Medicare taxes, the United States has entered into international agreements (known as the „taben-up agreement“) with 25 countries. Aggregation agreements exempt salaries from Federal Insurance Contributions Act (FICA) taxes, including Social Security taxes and Medicare taxes, when a person`s income is subject to taxes or contributions for similar purposes under a foreign country`s social security system. A similar exemption is underway for taxes under the Self-Employment Contributions Act (SECA). Since the 1970s, the United States negotiators have entered into bilateral agreements with 28 major trading partners to coordinate social security coverage and benefit rules for people who live and work in more than one country during their working lives. They are known as „totalization“ agreements and resemble operating and structural contracts and are legally classified as agreements between Congress and the executive branch in accordance with the law. The agreements have three main objectives: to enable the elimination of double taxation of income, the protection of benefits for workers who have shared their careers between the United States and another country, and the full payment of benefits to residents of both countries. This article briefly describes the totalization agreements, tells their story, and examines the proposals for modernization and improvement. To qualify for benefits in the United States Social Security Program, a worker must have earned enough work credits, known as coverage quarters, to meet certain „insured status requirements.“ For example, a worker who reaches age 62 in 1991 or later typically needs 40 calendar quarters to be insured for old-age benefits.
If a worker has some U.S. coverage but is not sufficient to qualify for benefits, the SSA counts, under a tabling agreement, the periods of insurance that the worker has earned under a contracting country`s social security program. Similarly, a country that is a party to an agreement with the United States will consider a worker`s coverage under the U.S. program when necessary to qualify for that country`s social security benefits. If the combined credits in the two countries allow the worker to meet the eligibility conditions, then a partial benefit may be paid according to the share of the worker`s total career completed in the paying country. . . .