Social Security Taxes: The Bane of the Existence of Self-employed U.S. Citizens Who Work Abroad – continued –
i. Existence of a Totalization Agreement
Consider the same facts as discussed above, except that the hotel that John has been contracted to design is located in Germany, not China. Unlike China, Germany has its own social insurance program. That program is similar to the U.S. social security program. In addition, a totalization agreement exists between the United States and Germany. That agreement governs every aspect of social security taxation for U.S. citizens working abroad in Germany.
Under the U.S.-Germany totalization agreement, a self-employed individual is excused from paying self-employment taxes to the United States as long as he is paying social insurance taxes to the German government. How does that change the result? Assuming John pays into the German social insurance program, he would be exempt from paying U.S. self-employment taxes.
In accordance with Circular 230 Disclosure
As a former public defender, Michael has defended the poor, the forgotten, and the damned against a gov. that has seemingly unlimited resources to investigate and prosecute crimes. He has spent the last six years cutting his teeth on some of the most serious felony cases, obtaining favorable results for his clients. He knows what it’s like to go toe to toe with the government. In an adversarial environment that is akin to trench warfare, Michael has developed a reputation as a fearless litigator.
Michael graduated from the Thomas M. Cooley Law School. He then earned his LLM in International Tax. Michael’s unique background in tax law puts him into an elite category of criminal defense attorneys who specialize in criminal tax defense. His extensive trial experience and solid grounding in all major areas of taxation make him uniquely qualified to handle any white-collar case.
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