A bilateral social security agreement between the United States and another country can have significant implications for individuals who work or live in both countries. Such agreements provide a framework for coordination between the social security systems of the two countries, enabling workers to receive benefits based on their combined work histories.
The United States has signed bilateral social security agreements with over 30 countries, including some of its closest allies such as Canada, Japan, and the United Kingdom. These agreements are designed to eliminate dual social security taxation and ensure that workers are not penalized for working in multiple countries.
Under a bilateral social security agreement, eligible individuals can receive benefits from both countries based on their totalization of work credits. This means that if a worker has contributed to both the US and the other country’s social security system, they will receive benefits based on their combined work history.
For example, if an American citizen worked in Canada and contributed to both the US and Canadian social security systems, they could receive benefits from both countries based on their combined work credits. This can be particularly beneficial for individuals who have spent significant amounts of time working abroad, as it ensures that their contributions to the social security systems of other countries are recognized.
The bilateral social security agreement also provides some protection for workers in the event that they are required to pay social security taxes in both countries. Under the agreement, workers can apply for a certificate of coverage, which exempts them from paying social security taxes in the country in which they are not a resident.
For example, if an American citizen is working in Canada for a temporary period, they can apply for a certificate of coverage from the US Social Security Administration. This certificate will exempt them from paying Canadian social security taxes, as they will continue to pay US social security taxes on their earnings.
In conclusion, the bilateral social security agreement between the United States and other countries is an important aspect of international cooperation and coordination. It helps eliminate dual taxation and ensures that workers who contribute to multiple social security systems are not penalized. If you work or live in multiple countries, it is important to be aware of the available benefits and protections provided by bilateral social security agreements.