Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad

American employer. An American employer

Generally, under these agreements, you will

includes any of the following.

only be subject to social security taxes in the

country where you are working. However, if you

•

The U.S. Government or any of its instru-

are temporarily sent to work in a foreign country

mentalities.

and your pay would otherwise be subject to

•

An individual who is a resident of the

social security taxes in both the United States

Self-Employment

United States.

and that country, you generally can remain cov-

ered only by U.S. social security. You can get

•

A partnership of which at least two-thirds

Tax

more information on any specific agreement by

of the partners are U.S. residents.

contacting:

•

A trust of which all the trustees are U.S.

residents.

Social Security Administration

Topics

•

A corporation organized under the laws of

Office of International Programs

This chapter discusses:

the United States, any U.S. state, or the

P.O. Box 17741

District of Columbia, Puerto Rico, the U.S.

Baltimore, MD 21235-7741

•

Who must pay self-employment tax, and

Virgin Islands, Guam, or American Sa-

moa.

If you have access to the Internet, you can get

•

Who is exempt from self-employment tax.

more information at:

As of August 1, 2008, an American employer

Useful Items

also includes any foreign person with an em-

ployee who is performing services in connection

You may want to see:

Covered by U.S. only. If your pay in a foreign

with a contract between the U.S. government (or

any instrumentality thereof) and a member of a

country is subject only to U.S. social security tax

Publication

domestically controlled group of entities which

and is exempt from foreign social security tax,

334

Tax Guide for Small Business

includes such foreign person.

your employer should get a certificate of cover-

age from the Office of International Programs.

517

Social Security and Other

Foreign affiliate. A foreign affiliate of an

Information for Members of the

Covered by foreign country only. If you are

American employer is any foreign entity in which

Clergy and Religious Workers

permanently working in a foreign country with

the American employer has at least a 10% inter-

which the United States has a social security

est, directly or through one or more entities. For

Form (and Instructions)

agreement and, under the agreement, your pay

a corporation, the 10% interest must be in its

is exempt from U.S. social security tax, you or

voting stock. For any other entity, the 10% inter-

Form 1040-PR Planilla para la

your employer should get a statement from the

est must be in its profits.

Declaraci ´ on de la Contribuci ´ on

authorized official or agency of the foreign coun-

Form 2032, Contract Coverage Under Title II

Federal sobre el Trabajo por

try verifying that your pay is subject to social

of the Social Security Act, is used by American

Cuenta Propia

security coverage in that country.

employers to extend social security coverage to

If the authorities of the foreign country will not

Form 1040-SS U.S. Self-Employment

U.S. citizens and resident aliens working abroad

issue such a statement, either you or your em-

Tax Return

for foreign affiliates of American employers.

ployer should get a statement from the U.S.

Once you enter into an agreement, coverage

Form 4361 Application for Exemption

Social Security Administration, Office of Interna-

cannot be terminated.

From Self-Employment Tax for Use

tional Programs, at the above address. The

by Ministers, Members of Religious

Excludable meals and lodging. Social se-

statement should indicate that your wages are

Orders and Christian Science

curity tax does not apply to the value of meals

not covered by the U.S. social security system.

Practitioners

and lodging provided to you for the convenience

This statement should be kept by your em-

of your employer if it is reasonable to believe

ployer because it establishes that your pay is

Schedule SE (Form 1040)

that you will be able to exclude the value from

exempt from U.S. social security tax.

Self-Employment Tax

your income.

Only wages paid on or after the effective date

of the totalization agreement can be exempt

See chapter 7 for information about getting

Binational Social Security

from U.S. social security tax.

these publications and forms.

(Totalization) Agreements

The United States has entered into agreements

Who Must Pay

with several foreign countries to coordinate so-

cial security coverage and taxation of workers

Self-Employment Tax?

who are employed in those countries. These

agreements are commonly referred to as totali-

If you are a self-employed U.S. citizen or resi-

zation agreements and are in effect with the

dent, the rules for paying self-employment tax

following countries.

are generally the same whether you are living in

Australia

Greece

Republic of

the United States or abroad.

Austria

Ireland

Korea (South

The self-employment tax is a social security

Belgium

Italy

Korea)

and Medicare tax on net earnings from self-

Canada

Japan

Spain

employment. You must pay self-employment tax

Chile

Luxembourg

Sweden

if your net earnings from self-employment are at

Denmark

Netherlands

Switzerland

least $400.

Finland

Norway

United

For 2008, the maximum amount of net earn-

France

Portugal

Kingdom

ings from self-employment that is subject to the

Germany

social security portion of the tax is $102,000. All

net earnings are subject to the Medicare portion

of the tax.

Under these agreements, dual coverage and

Employed by a U.S. Church

dual contributions (taxes) for the same work are

eliminated. The agreements generally make

sure that you pay social security taxes to only

If you were employed by a U.S. church or a

one country.

qualified church-controlled organization that

Chapter 3 Self-Employment Tax

Page 10

Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 10

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