Totalization Agreements are bilateral treaties between the United States and other countries designed to address Social Security tax and benefit coordination for workers who divide their careers between two nations. These agreements help prevent individuals from paying Social Security taxes in both countries on the same income and ensure that workers can qualify for Social Security benefits even if their work history in one country alone would be insufficient for eligibility.
International workers often face challenges due to differing national Social Security systems. Without totalization agreements, a person who splits their career across countries might either pay Social Security taxes twice or fail to qualify for benefits in either country because they do not meet the minimum work credits required.
Key Functions of Totalization Agreements:
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Avoiding Dual Social Security Taxes: When a U.S. citizen or resident works abroad, and foreign workers who work in the U.S., these agreements determine which country’s Social Security system covers the worker, so they don’t pay overlapping taxes on the same earnings.
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Combining Work Credits: Totalization agreements allow the worker to combine earnings credits from both countries to meet eligibility thresholds for benefits, such as retirement, disability, or survivors benefits.
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Benefit Coordination: They help coordinate the payment of Social Security benefits between countries, facilitating the total benefit amount a worker can receive based on their combined work history.
For example, a U.S. citizen who has worked in Germany and the U.S. can combine their earnings posted to both countries’ Social Security systems to qualify for benefits from either or both systems under the U.S.-Germany Totalization Agreement.
Currently, the U.S. has totalization agreements with over 30 countries, including Canada, Mexico, Germany, Japan, the United Kingdom, and Australia. These agreements are especially valuable for expatriates, cross-border commuters, and multinational employers.
For detailed information on whether a specific country has a Totalization Agreement with the U.S., and to understand how it applies to your work and benefits, visit the official Social Security Administration page on international agreements at https://www.ssa.gov/international/agreements_overview.html. This resource provides the latest list of countries, detailed agreement texts, and contact details for Social Security offices.
Understanding Totalization Agreements helps workers avoid unnecessary double taxation and ensures that their international employment history is credited appropriately toward Social Security benefits. This coordination supports eligible workers and their families in accessing the rightful benefits earned through their careers across borders.