Us Thailand Totalization Agreement

International social security agreements are beneficial both for those who are currently working and for those whose careers are over. For current workers, the agreements eliminate double contributions they might otherwise make to the social security systems of the United States and another country. For people who have worked in the U.S. and abroad, and are now retired, disabled, or deceased, agreements often result in the payment of benefits that the employee or his or her family members would not otherwise have been entitled to. The double tax liability may also affect U.S. citizens and residents who work for foreign subsidiaries of U.S. companies. This is likely to be the case if a U.S. company has followed the usual practice of entering into an agreement with the Treasury Department under Section 3121(l) of the Internal Revenue Code to provide social security coverage to U.S. citizens and residents employed by the subsidiary.

In addition, U.S. citizens and self-employed residents outside the U.S. are often subject to a double Social Security tax liability because they continue to be covered by the U.S. program even if they do not do business in the United States. Workers who are exempt from U.S. or foreign social security taxes under an agreement must document their exemption by obtaining a certificate of coverage from the country they continue to cover. For example, a US worker temporarily sent to the UK would need a cover certificate issued by SSA to prove their exemption from UK social security contributions. Conversely, a UK-based employee working temporarily in the US would need a certificate from UK authorities as proof of exemption from US Social Security tax. Transfer pricing – As part of the evolution of Thailand`s transfer pricing system, taxpayers are required to disclose in their annual corporate tax return whether transactions in income and expenses are based on market prices and whether tax authorities can adjust income.

Advance Pricing Agreements (APAs) can be obtained, and while transfer pricing documentation does not need to be formally kept up to date, it is assumed (based on filing requirements and instructions to tax officers) that documentation should be available on the filing date of the corporate income tax return. Taxpayers may make an adjustment (upward or downward) if there is sufficient documentation to support the adjustment. Thin capitalization – No Individuals generally do not need to take action on aggregation benefits under an agreement until they are ready to apply for pension, survivor or disability benefits. A person who wishes to claim benefits under a tabulation agreement can do so at any Social Security office in the United States or abroad. A common misconception about the U.S. agreements is that they allow dual-coverage workers or their employers to choose the system they will contribute to. This is not the case. In addition, the agreements do not change the basic coverage provisions of the social security laws of the participating countries – such as those that define income or work covered. They simply exempt workers from coverage by the system of one country or another if their work would otherwise fall under both regimes. Thailand and the United States do not have social security agreements with each other. This means that some American expats will have to contribute to both social security systems with Thai income.

The U.S. government has signed treaties called totalization agreements with other countries. If you move and work in a country that has signed a tabulation agreement with the United States, you are under that country`s social security system. When you retire, all the contributions you`ve made go to U.S. Social Security, but if you work in Thailand, Social Security systems work independently. You don`t contribute to U.S. Social Security while paying your taxes in Thailand. You still have to pay the Social Security tax.

The IRS exempts salaries paid on or after the effective date of the tabulation agreements. You can check the IRS website for a detailed explanation of the consequences of the Social Security tax abroad. Most U.S. treaties eliminate double coverage of self-employment by assigning coverage to the employee`s country of residence. For example, under the agreement between the United States and Sweden, a doubly insured independent U.S. citizen living in Sweden is only covered by the Swedish system and excluded from U.S. coverage. A list of countries with which the United States currently has tabulation agreements and copies of these agreements may be requested under the United States` international social security agreements. The United States has agreements with several countries called totalization agreements to avoid double taxation of income in terms of social security taxes. These agreements should be considered in determining whether a foreigner is subject to U.S.

Social Security/Medicare tax or whether a U.S. citizen or resident alien is subject to a foreign country`s social security taxes. Each agreement (with the exception of the one with Italy) contains an exception to the territoriality rule, which aims to minimise disruptions in the coverage career of employees whose employers temporarily post them abroad. Under this exemption for „exempt workers“, a person who is temporarily transferred to work for the same employer in another country is only covered by the country from which he or she was posted. For example, a U.S. citizen or resident who is temporarily transferred by a U.S. employer to work in a contracted country is still covered by the U.S. program and exempt from coverage by the host country`s system. The employee and employer only pay contributions to the U.S. program. The posted worker rule in U.S.

agreements generally applies to employees whose assignments in the host country are expected to last 5 years or less. The 5-year leave ceiling for redundant workers is much longer than the limit normally provided for in agreements in other countries. To qualify for U.S. Social Security benefits, an employee must have obtained sufficient work credits, called coverage quarters, to meet the „insured status requirements“ set out. For example, an employee who turns 62 in 1991 or later typically needs 40 calendar quarters to be insured for retirement benefits. If an employee has some U.S. coverage under a totalization agreement, but not enough to qualify for benefits, SSA counts the insurance periods that the employee earned under a contracted country`s Social Security program. Similarly, a country that is a party to an agreement with the United States will consider an employee`s coverage under the U.S. program if necessary to qualify for that country`s social security benefits. If the combined loans in both countries allow the employee to meet the eligibility criteria, a partial benefit may be paid based on the proportion of the employee`s total career completed in the paying country. As a cautionary note, it should be noted that the exception provision is invoked relatively rarely and only in mandatory cases. It is not intended to give employees or employers the freedom to systematically choose coverage that is contrary to normal contractual rules.

As stated in the IRS article Social Security Tax Consequences of Working Abroad: „Under a tabulation agreement, double coverage and double contributions (taxes) are eliminated for the same work. Agreements usually ensure that you pay social security taxes to a single country. „Although agreements aim to attribute social security protection to the country where the worker has the strongest ties, unusual situations sometimes occur in which strict application of the provisions of the Treaty would lead to abnormal or unfair results. For this reason, each agreement contains a provision that allows the authorities of both countries to grant exceptions to the normal rules if both parties agree. An exemption could be granted, for example, if a U.S. citizen`s overseas assignment was unexpectedly extended by a few months beyond the 5-year limit under the posted worker rule. In this case, the employee could be granted continuous U.S. coverage for the additional period. The problem with this regulation is that many foreign countries also require individuals to contribute to their social security systems to cover the benefits that individuals may receive during their stay. This means that many expats are taxed twice because they contribute to their host country`s social security program and U.S.

social security at the same time. To address this double taxation problem, the United States has entered into agreements with several countries to determine which social security system an expatriate participates in. Agreements to coordinate social security protection across national borders have been common in Western Europe for decades. Below is a list of agreements entered into by the United States and the effective date of each agreement. Some of these agreements were subsequently revised; The date displayed is the date on which the original agreement entered into force. The agreements allow SSA to add up U.S. and foreign coverage credits only if the employee has at least six-quarters of U.S. coverage. Similarly, a person may need minimum coverage under the foreign plan for U.S. coverage to be considered to meet foreign benefit eligibility requirements. If you have questions about international social security agreements, call the Social Security Administration`s Office of International Programs at 410-965-3322 or 410-965-7306.

However, please do not call these numbers if you wish to inquire about a claim for individual benefits. Workers who have shared their careers between the United States and a foreign country may not be eligible for retirement, survivor, or disability insurance (pensions) benefits from either or both countries because they have not worked long enough or recently enough to meet the minimum eligibility criteria. .