# Confused about applicability of social security liability



## mdb111 (Feb 18, 2020)

Hi,

I just received an offer for a US tech company based in Singapore. I would be employed by the local entity, which is an affiliate of the US parent. Do I have to pay social security tax, or how can I find out if I need to? I note on the IRS website it says you are liable if:

You are working for a foreign affiliate of an American employer under a voluntary agreement between the American employer and the U.S. Treasury Department. A foreign affiliate of an American employer is any foreign entity in which the American employer has at least a 10% interest, directly or through one or more entities. For a corporation, the 10% interest must be in its voting stock. For any other entity, the 10% interest must be in its profits. Form 2032, Contract Coverage Under Title II of the Social Security Act is used by American employers to extend social security coverage to U.S. citizens and residents working abroad for foreign affiliates of the American employers. Coverage under an agreement in effect on or after June 15, 1989, cannot be terminate.

Does this mean whether or not I am liable depends on whether they’ve made an election? If the company has not made such election and they are not withholding, do I still need to self payments?

And what can I ask HR to clarify this issue? I asked if they withhold social security for Americans but they said they aren’t familiar with tax and I should consult a tax advisor. If it depends on the company is there a more clear way I can ask for an answer?

Thanks!


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## Moulard (Feb 3, 2017)

As far as I can tell the form you refer to allows a US employer to extend social security coverage to an employee who is working overseas.
If you are being employed directly by the Singaporean company then I don't think it is relevant. ( I would guess it is a private limited company at least partly owned by a US corporation).

So long as you are not considered self-employed, then there should be no requirement for you to pay US social security taxes under the circumstances you describe.

Its worth noting that there does not appear a totalisation agreement in force between the US and Singapore.

On the social security front, this means that contributions to the Central Provident Fund (the national pension scheme) will not count towards US social security contribution requirements. Additional it means that if you ever to become self employed there, then you would have to pay into both CPF and US social security systems.

It is also worth noting that there is no tax treaty in force either. You will have to rely on domestic laws of both countries to address the double taxation that will result (assuming you are a US citizen or permanent resident who has not formally abandoned it)


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## Bevdeforges (Nov 16, 2007)

I agree with Moulard's analysis of the situation. Normally, you shouldn't be assessed US SS if you are living and working for a foreign entity even if it is a subsidiary of a US company. (Unless there is some voluntary agreement between the employer and the US.) 

The other thing to remember is that for US Social Security, the qualifying period is only 40 quarters (10 years). If you have already worked for that period of time in the US (including things like summer jobs when you were a kid) you may already have enough time in grade to claim US SS benefits on retirement even if you never contribute to FICA again.


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## mdb111 (Feb 18, 2020)

Thanks to both of you for the reply, that helps to clarify it for me. I wasn’t aware of the SS credit system before so was getting confused on how I could not pay SS while abroad (and why some companies may elect to withhold) but it makes sense that these years wouldn’t count towards me qualifying. Appreciate the thoughts.


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