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Claim an exemption from U.S. Social Security taxes and Medicare taxes because of a Totalization Agreement

Any alien who wishes to claim an exemption from U.S. Social Security taxes and Medicare taxes because of a Totalization Agreement must secure a Certificate of Coverage from the social security agency of his home country and present such Certificate of Coverage to his employer in the United States, according to the procedures set forth in Revenue Procedures 80-56, 84-54, and Revenue Ruling 92-9.  An alternate procedure is provided in these revenue procedures for an alien who is unable to secure a Certificate of Coverage from his/her home country.

 

Self employment income is income that arises from the performance of personal services, but which cannot be classified as wages because an employer-employee relationship does not exist between the payer and the payee. The Internal Revenue Code imposes the self employment tax on the self employment income of any U.S. citizen or resident alien who has such self employment income.

 

The Internal Revenue Code does not impose the self employment tax on the self employment income of a nonresident alien, unless the self employment tax liability is imposed under the terms of a Totalization Agreement. However, once an alien individual becomes a resident alien under the residency rules of the Code, he/she then becomes liable for self employment taxes under the same conditions as a U.S. citizen or resident alien.

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