Totalization Agreements List

In 1973, the Minister of Health, Education and Welfare, Caspar Weinberger, and his Italian counterpart signed the first U.S. totalization agreement. Although the Italian government quickly ratified the agreement as a treaty, Congress had not yet adopted an approval status; That is why the United States has not been able to implement the agreement. After much deliberation, Congress passed amendments to the Social Security Act in 1977, which contained an authorization status allowing the agreement with Italy to enter into force.12 Totalization conventions are international tax treaties aimed at eliminating double taxation on social security and Medicare taxes in the United States. These agreements are made to house foreign workers who pay FICA taxes but do not receive social security or Medicare benefits after the age of 65. The agreements are between the United States and other individual countries and international taxpayers who earn money in the United States. The goal of the totalization agreements is to eliminate the double taxation of a foreigner`s income in the United States and to provide social security benefits commensurate with the same foreign workers. Whether a worker is covered either by Social Security and Medicare in the United States or by the social security system in a foreign country is where the worker resides and whether the employment in a foreign country is short-term or long-term. As of August 2017, the United States has 26 active totalization agreements. One of the general beliefs about the U.S.

agreements is that they allow dual-coverage workers or their employers to choose the system to which they will contribute. That is not the case. The agreements also do not change the basic rules for covering the social security legislation of the participating countries, such as those that define covered income or work. They simply free workers from coverage under the system of either country if, if not, their work falls into both regimes. Totalization agreements only apply to self-employed workers and people who are deployed by their employers to work in another country. So if you are a U.S. citizen working for a U.S. employer in a foreign country, you are. If you work for a foreign subsidiary of the U.S.

company, you pay social security tax abroad, but the credits that are earned there would be charged on benefits in both countries. The totalization agreement specifies what happens in a case like this.