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Mail Bag #2 – Social Security Tax Abroad / FEIE & ROTH IRA / Bringing Foreign Inheritance to the US

1. Dealing with SS / Medicaid tax abroad.

I am currently a US citizen living in Brazil and will start working for a Brazilian company in August. I know I have to pay SS / Medicaid tax abroad as well as income tax. How do i know how much I need to pay? When is it due? Can I pay my social security tax through the Social Security website or through the IRS?

Brazil does not currently have a Social Security totalization agreement with the US. If you were self-employed, you would be subject to SECA (Self Employment) tax in both countries.  The two countries signed an agreement in June 2015, but it has not yet been ratified. Until this is ratified, unfortunately in many scenarios US citizens residing in Brazil are subject to double taxation (paying into the social security system of both countries).

However, as an employee of a foreign company you are exempt from paying Social Security tax in the US. Although you are still required to pay income tax in the US, your final bill will be significantly reduced through the variety of tax saving mechanisms available to expats (i.e. foreign tax paid in Brazil will be applied as a credit towards the US tax due). Your full tax payment will be due  tax by April of next year. We can determine the amount you will pay during tax preparation, please get in contact in early January so that we can prepare your return with plenty of time to spare.  Any payments of tax due will be made to the IRS and not SSA.gov.

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