Totalization Agreements Explained: Social Security Rules for US Expats

One of the most overlooked tax issues for US expats is double Social Security taxation.

Without proper planning, self-employed expats may pay into two systems at once.

That’s exactly what Totalization Agreements are designed to prevent.

What Is a Totalization Agreement?

A Totalization Agreement is a treaty between the US and another country that:

• Prevents double Social Security taxes

• Determines which country you contribute to

• Helps expats qualify for benefits

These agreements are especially important for self-employed expats.

👉 Related guide:
/self-employed-us-expat-tax-guide

Who Benefits Most?

You may benefit if you:

• Are self-employed abroad

• Temporarily work outside the US

• Run a foreign business

• Pay into a foreign social system

Not all countries have agreements with the US — eligibility depends on location.

How Totalization Agreements Work

In most cases:

• You pay Social Security taxes to one country only

• Coverage depends on residency and work location

• A certificate of coverage is required

Without this certificate, the IRS may still assess self-employment tax.

Totalization Agreements vs FEIE

These are completely different rules:

• FEIE affects income tax

• Totalization affects Social Security tax

Using FEIE alone does not remove self-employment tax liability.

Countries With Agreements

The US has agreements with many countries, including:

• Canada

• UK

• Australia

• Germany

• Japan

But rules vary — assumptions are dangerous.

Common Errors Expats Make

Mistakes include:

• Assuming foreign taxes replace US Social Security

• Not applying for coverage certificates

• Filing Schedule SE incorrectly

• Ignoring agreement rules entirely

These errors often surface during IRS reviews.

Fixing Past Mistakes

If self-employment tax was handled incorrectly in prior years, corrections may overlap with:
👉 Streamlined Filing Compliance Procedures
/streamlined-filing-compliance-procedures-expats

Planning Ahead

When structured correctly, Totalization Agreements can:

• Save thousands per year

• Prevent double taxation

• Preserve future benefits

Exemplary helps expats determine eligibility, apply agreements correctly, and align Social Security planning with long-term goals.