5 Things Non-U.S. Citizens Need To Know About Social Security Retirement Benefits

If you are a permanent resident and not planning to become a U.S. citizen in the future, you may wonder if you are still eligible for Social Security benefits and if so how much you will get and whether you can still collect the payment if you decide to go back to your home county. Don’t worry and I'm with you.

There are a couple of different types of Social Security benefits. Here I will mainly focus on the most common one - retirement benefit. If you are not familiar with the Social Security retirement benefits, please read this publication from Social Security Administration (SSA) to get some basic understandings of how it works in general before we get into some specific issues related to Non-U.S. citizens.

1. You don't need to be a U.S. citizen to qualify for Social Security retirement benefit.

It doesn't matter whether you are a U.S. citizen or not. Anyone who earns 40 work credits is eligible to receive Social Security retirement benefit. You get one credit for every $1,320 you earn in 2018 up to a maximum of 4 credits in any given year.  The dollar amount is indexed for inflation. And due to the annual four credits limitation, the 40-credits generally equal to 10 years of work.

2. You may qualify for Social Security retirement benefit even if you don't earn enough work credits in the U.S.

As of today, U.S. government has established bilateral Social Security agreements with 26 counties (China is not included) in the world. These agreements, often called "Totalization agreements", are intended to avoid double Social Security taxation on the same earnings and make it easier for people working in different countries to qualify for Social Security benefits. It allows you to combine your work credits earned in the U.S. with the credits earned from one of the 26 countries together to qualify for Social Security benefits in either country.  You need to have at least 6 U.S. credits to use this method to get a partial benefit in the U.S.

You could find all the details about these international Social Security agreements including a list of 26 countries here

3. It's possible that you can still collect the U.S. Social Security payments even after you retire in a different country.

Unless you live in Cuba or North Korea which are prohibited by the U.S. Treasury Department or another nine countries due to some payment restrictions, you should be able to receive your Social Security benefits while living outside the U.S.

In general, if you are not a U.S. citizen, you have to go back and stay in the U.S. for a full calendar month every six months to keep getting your payments. However, you may be qualified for certain exceptions depending on which specific country you are a citizen of, which country you live in, and whether you are receiving benefits based on your own earnings or, as a dependent or a survivor. For example, if you are a citizen of China and living in China, SSA will continue to pay your benefits after 6 months as long as "a) you are receiving benefits based on your own earnings, and you earned at least 40 credits under the U.S. Social Security system or lived at least 10 years in the U.S. , or b) you are receiving benefits as a dependent or a survivor of a worker who earned at least 40 credits under the U.S. Social Security system or lived in the United States for at least 10 years" , and meet some additional requirements as well including having lived in the U.S. for at least 5 years.

Due to the complexity of these rules and exceptions, SSA creates a very simple "Payment Abroad Screening Tool" to help you figure out if you can continue receiving your Social Security payments while you are living outside the U.S. or planning to move to a foreign country. You could learn the ins and outs of the rules from the official publication here.

4. Your Social Security retirement benefit may be reduced if you have a foreign pension.

This falls under the Windfall Elimination Provision (WEP). In general, a pension based on earnings not covered by Social Security like a foreign pension may affect your Social Security benefit. SSA has another simple online screening tool to help you figure out whether you will be affected. You could also learn more about the WEP in general from SSA's website here.

You probably have heard of something called the Government Pension Offset (GPO) before. It may affect your spousal and survivors benefits if you have a government pension based on earnings but you didn't pay Social Security taxes. But that generally doesn't apply to a foreign pension. If you are interested, you could learn more about it from SSA's website here.

5. You may need to pay taxes from your Social Security retirement benefit.

When it comes to tax, non-U.S. citizens will be separated into two categories from the IRS perspective: resident aliens and nonresident aliens. You may have been informed that you need to pay taxes on up to 85% of your Social Security benefits based on your income and tax filing status. It is true for people living in the U.S. including resident aliens. However, for nonresident aliens, unless you are exempt or subject to a lower tax rate by treaty, you are generally subject to a flat 30% of tax withholding on 85% of your Social Security retirement benefits which is the equivalent of 25.5% of your monthly benefit amount. Unfortunately, based on the tax treaty table from IRS, China is not included in a treaty benefit on this. Not surprisingly, SSA has another "Nonresident Alien Tax Withholding Screening Tool" to help you find out whether they should withhold taxes from your Social Security benefits. You could also find some additional resources on SSA's website here.                                                                   

Social Security is a very complex topic. It becomes even more complicated when Non-U.S. citizens are related. Mostly, it is very country specific. You may find tons of great resources on SSA's website. For example, you will find a variety of calculators that can help you figure out how much you will get in the future. You are strongly recommended to contact SSA directly if you have any questions based on your particular situation.


Enjoy reading my blog? Sign up at the bottom to effortlessly stay on top of my blog posts and news for free!

Need help? Email us or Schedule a call today!