For many Americans, relinquishing U.S. citizenship or green-card status offers an exit from U.S. tax and filing obligations. Many individuals who are contemplating giving up their U.S. citizenship or relinquishing a green card focus on the possibility of having to pay the U.S. exit tax. Too many fail to fully understand the possible impacts on Social Security retirement, survivors, or disability benefits.
As discussed in my earlier article, when an individual gives up U.S. citizenship or U.S. residency and becomes a nonresident alien for U.S. income tax purposes, harsher tax treatment is imposed on U.S. Social Security benefits. Generally, the U.S. imposes a flat 30% withholding tax on 85% of the Social Security benefits paid to NRAs, resulting in an effective tax rate of 25.5%. Unlike a U.S. person, NRAs cannot offset this withholding by claiming deductions or lower marginal tax rates. While some tax treaties may eliminate or reduce the U.S. tax on Social Security benefits, many countries lack favorable treaty benefits.
Collecting Social Security From Overseas
Many people assume that once they have qualified for Social Security based on their U.S. work history, their monthly benefits will follow them anywhere in the world. Unfortunately, that is not always true.
While U.S. citizens can generally receive Social Security payments abroad without interruption, the rules are very different for non-U.S. citizens, including former citizens and former green-card holders. For these individuals unless an exception applies, Social Security payments may stop after the individual has been outside the United States for six consecutive months.
This article is Part I of a three-part series explaining the SSA’s foreign-citizen rules, beginning with the List 1 countries that receive the most favorable treatment.
Countries Not On Any List? Risk Losing Social Security
If an NRA is a citizen of a country that is not listed in one of the exception SSA Country Lists, then Social Security benefits are at risk after six months abroad. For example, citizens of Gulf countries, some African nations, many former Soviet and Central Asian countries or other non-listed countries would be subject to the six-month rule, explained below. This would require return visits to the U.S. just to keep their Social Security flowing.
The Six-Month Rule: The Default for Non-U.S. Citizens
Before turning to the exception for Country List 1, it is important to understand the default rule.
A non-U.S. citizen who remains outside the United States for six full calendar months will have their Social Security payments suspended beginning in the seventh month. To restart benefits, the individual must return to the U.S. and remain lawfully present for one entire calendar month.
The Country List 1 Exception: Social Security Payments Abroad With No Return Requirement
Please note that the country lists can change and one should always check the SSA website for updated information. As of this article’s publication date, the list is current.
The most important and generous exception is the category known as SSA Country List 1. If an NRA is a citizen of a List 1 country and is otherwise entitled to Social Security benefits, the SSA will continue making payments abroad indefinitely. The six-month return-to-the-U.S. rule simply does not apply. There is no requirement that the person live in the List 1 country. They may reside in a non-listed country (such as the UAE, Thailand, or many African or Asian countries) and still continue to receive their U.S. Social Security benefits abroad without interruption. The only relevant factor is their List 1 citizenship.
Which Countries Are On SSA Country List 1?
As of publication, citizens of the following countries may receive uninterrupted Social Security payments abroad, regardless of residence:
Austria, Belgium, Brazil, Canada, Chile, Czech Republic, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (South), Luxembourg, Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom, and Uruguay.
This group includes much of Western and Central Europe, several key treaty partners, and major economies like Japan, Korea, Canada, and Brazil. For individuals holding citizenship from these countries, U.S. Social Security payments are generally stable and portable worldwide.
Social Security From Abroad, Citizenship And Not Residency Is What Matters
One of the most common (and dangerous) misunderstandings is the belief that living in a listed country, for example, as a long-term resident of Spain or Portugal, solves the six-month rule problem. It does not. The SSA rules are explicit and only citizenship counts. For example, a Canadian citizen living in Dubai may receive U.S. Social Security abroad with no interruptions. An Estonian citizen living in Switzerland, however, may still be subject to the six-month rule because Estonia is not a List 1 country.
List 1 countries are generally those with whom the United States has strong governmental coordination or social-insurance compatibility. In many cases, these countries also have well-developed civil registries and established international agreements with the U.S., making payments more secure and verifiable.
Critically, List 1 is not the same as the U.S. “totalization agreement” list. For example Australia has signed a totalization agreement with the U.S., but Australia is not on the Country 1 List. Although most totalization partners are on List 1, the two lists serve different purposes. Totalization agreements coordinate work credits and avoid dual Social Security taxation; List 1 determines whether the SSA will pay benefits abroad long-term. A totalization agreement does not automatically guarantee the right to receive Social Security abroad. However, List 1 citizenship does.
Social Security Practical Considerations Before Expatriation or Giving Up A Green Card
List 1 has major consequences for anyone giving up U.S. citizenship or permanent residency. A person who becomes a citizen of a List 1 country, regardless of where they actually live, completely avoids the six-month suspension rule. This also means that retiring in a non-listed country such as the UAE, Thailand, Bali, the Philippines, or many parts of Latin America does not jeopardize benefits, as long as the person holds List 1 citizenship. It is also notable that some highly developed jurisdictions, including New Zealand, Singapore, and Monaco, are not List 1 countries. Because of this, some individuals with European or treaty-country ties may strategically maintain or acquire List 1 citizenship to protect future Social Security income. Advance planning can prevent costly surprises.
Conclusion
The rules governing Social Security payments abroad for non-U.S. citizens are more restrictive and complex than many people realize. The most favorable category is citizenship of a country on SSA Country List 1 which allows eligible individuals to receive uninterrupted payments outside the United States, regardless of where they live. This relief applies only based on the individual’ citizenship, not residence.
Understanding List 1 is essential for planning, especially for individuals contemplating giving up U.S. citizenship or green-card status. Decisions made without this knowledge can lead to unexpected benefit suspensions, costly travel requirements, and avoidable disruptions to retirement income.
Reach me at vljeker@us-taxes.org
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