U.S. Social Security, Medicare, and Self-Employment Taxes

Social Security and Medicare are always a big question when it comes to taxes…when do you pay them and when are you exempt?It is really pretty simple, if you are an offshore employee for an American Corporation, then your employer will usually withhold Social Security and Medicare taxes on your W-2 wages.If you are in one of the 20 plus countries that the U.S. has the Social Security Totalization Treaty, working for a U.S. based employer, you are able to participate in that country’s social insurance system and you will not be required to pay social security and medicare taxes to the US.

Are you a bonafide employee of a foreign employer? If yes, you are not required to pay U.S. Social Security Tax, you will pay the foreign country’s social security tax based upon foreign laws.

As an independent contractor you are obligated to pay, with your income tax, a U.S. Self-Employment tax that is both the employer and employee share of Social Security and Medicare taxes.

If you would like Start Now. At Expatriate Tax Returns we are efficient and reliable and can handle all the work for you. Don’t be confused by any of the process. We will help you navigate it safely.

Is surrendering your citizenship an answer to avoiding filing US taxes?

Is surrendering your citizenship an answer to avoiding filing US taxes?

With the United States being the only country in the world that taxes income based upon citizenship (rather than residency), “expatriation” is fast becoming a consideration for those who have never lived or worked here. And, for many, it makes sense.

For years, all the rules and regulations regarding off shore filing requirements were pretty much swept under the rug, especially for those who are dual citizens or really had no attachment to the United States. Now that the “FBAR hype” is receiving a tremendous publicity people all over the world are asking: “Should I file or just stay under the radar screen?”

Expatriation requires a formal application process with the United States Department of State and filing past tax returns from 6-10 years depending upon whether or not you owe tax. The process itself will require you to disclose all of your financial and tax information for past years and may involve significant tax, penalty and interest assessments, depending upon your situation.

So, if owe no tax, you have not accumulated more than $10,000 in foreign financial institutions, and you have no interest in having a relationship with Uncle Sam…you can “expatriate” without much risk. If, however, you may owe tax and/or fall under the FBAR filing requirements, think it through before you apply. The expatriation process can be very risky.

If you have any Expatriate Tax questions please contact us.