The Tax Times: What Expatriating Americans Need to Know About Their Social Security Benefits?

Tuesday, November 25, 2014

What Expatriating Americans Need to Know About Their Social Security Benefits?

As we pointed out in our post entitled US Expatriation Continues to Increase At a Record Pace in 2014! Here we discussed that the number of Americans renouncing U.S. citizenship stayed near an all-time high in the first half of the year before rules that make it harder to hide assets from tax authorities came into force (FATCA - Effective Date July 1, 2014).

The number of Americans renouncing U.S. citizenship increased 39 percent in the three months through September after rules that make it harder to hide assets from tax authorities came into force.

People giving up their nationality at U.S. embassies increased to 777 in the third quarter, from 560 in the year-earlier period, according to Federal Register.

One of the things expatriating Americans need to consider is whether they are eligible for U.S. Social Security benefits and whether their non-U.S. citizens 6often wonder if their foreign spouses qualify for Social Security survivor benefits (generally the deceased U.S. worker's full benefit). In certain cases, the answer is yes.

Additionally, while the U.S. expat is still alive, their foreign spouse may also qualify to receive dependent or spousal Social Security benefits (generally half of the U.S. expat's benefit).

The rules governing foreign spousal and survivor benefits are complicated.

Peggy Creveling, CFA, & Chad Creveling, CFA have a Blog post entitled What Expat Americans with Foreign Spouses Need to Know About Social Security that answers some of these questions:

1. As an American citizen living outside the U.S., can I still receive Social Security benefits?

2. While I receive Social Security benefits, can my foreign (non-U.S. citizen, non-green-card holder) spouse also receive spousal Social Security benefits if we live outside the United States?

3. If I die, will my foreign spouse receive survivor benefits?

4. What if I have an ex-spouse who is already entitled to spousal or survivor benefits? Will my current foreign spouse still qualify for benefits?

As they also point out, there are many exceptions and qualifications to the rules, so be sure to check with the Social Security Administration for specifics on your situation.

So far, 2,353 Americans have renounced their citizenship

this year, close to the all-time high of 2,369

in the first nine months of 2013.

If this current trend continues, it would result in 3,154 people expatriating into 2014, which would be a 105% increase over the 2,999 people who expatriated in 2013. The 2013 amount of 2,999 represented a 221% increase over the 932 total in 2012 and “shatters” the previous record of 1,781 set in 2011.