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.

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