When you are self-employed, you are probably very familiar with self-employment taxes and procedures. However, as an independent individual how are you sure that you have to undergo self-employment taxes? There are some exemptions which may not require you to pay social security and Medicare taxes through self-employment taxes. It is important to become familiar with these various procedures and regulations so that you can make sure that you are paying or not paying the correct amount. You may not even be required to pay these self-employment taxes. Click here to read or watch more IRS Help resources.
In the United States, according to the Internal Revenue Services, they can reach an agreement with foreign countries to eliminate dual coverage and dual contributions such as taxes to social security systems for the same work. In most cases, self employed individual who is subject to double taxation procedures will only remain covered by the social security system of the country where the person is currently residing. You may also be exempt from pay self-employment taxes in both countries. If this occurs, then you will only be subject to paying social security and Medicare taxes to the country in which you are currently residing. To do this, you will have to apply for a certificate of coverage which is available to individuals through the United States Social Security Administration in the Office of Internal Programs. Obtaining this special certificate of coverage, you will be establishing your exemption of having to pay social security and Medicare taxes to both countries, especially the country that you are no longer residing in.
To make this request, you should contact the United States Social Security Administration’s Office of Internal Programs. It is important to obtain this type of certificate of coverage so that you do not have to pay social security and Medicare taxes in both countries. You will probably only want to make payments to these funds in the country that you are currently residing in or the country that you plan to be a permanent resident of or the country that you plan to live in most often where you will benefit from paying into these funds. If you are unsure whether or not you are exempt from these procedures, you will want to contact the Social Security Administration for further in-depth details regarding how the situation pertains to you and your particular self-employment situation.
The United States may be able to make an agreement with your other country that will provide you with the option of becoming exempt from paying into both countries. This is why it is imperative to consult one of these professionals so that they can help you determine whether or not you are required to pay into both countries’ funds or if you have the option of becoming exempt and only paying into one country.