Job Discussion Forums

srs3829 · Joined: 09 Sep 2014 Posts: 30

Hi all,

Still contemplating a move to Mexico to teach English. Can any U.S. citizens working there are teachers tell me how social security applies to their situation?

Specifically, are you paying into both the Mexican and U.S. social security systems? Or only one? Are you somehow still able to accrue U.S. social security points? Are expats eligible for Mexican social security?

I'm not near retirement age, but am curious to know anyway.

Thank you!

MotherF

Tretyakovskii · Joined: 14 Aug 2009 Posts: 462 Location: Cancun, Mexico

U.S. citizens are subject to U.S. laws relating to taxation everywhere in the world, Mexico is no exception.

The exemption for earned income is huge under U.S. Law (nearly $100,000 USD) so few end of paying U.S. income tax on their foreign earned income; also, wages earned abroad are exempt from U.S. social security taxes. Earnings from self employment are not, however, and social security taxes at the rate of 15.3 % of net earnings after expenses is due each year in the U.S. and reported on Form SE accompanying the individual Form 1040.

If you have self employment earnings and pay the social security taxes on it you can accumulate credit towards eligibility for a retirement check after participating in the system a total of ten years. At that point it is vested. Going online at the official Social Security Administration website allows you to check eligibility, and just how much you would be paid at age 62, or at full retirement age. You could also have a look to see what the minimum guaranteed amount of social security is, once you've met the ten years of contributions rule.

It is an erroneous impression that paying social security taxes on self employment income earned abroad "...waives your foreign income exemption so you have to pay US tax on your income." You were right, MotherF, to have some doubts about it. For a number of years I was both paying into social security on self employment earnings abroad while, at the same time, claiming the foreign earned income exemption and therefore paying no income taxes in the U.S.