I am an ECO Capt who has run boats overseas for quite awhile. ECO does not pay Social Security or Medicare for its overseas workers. This is obviously a frightening problem as I cruise through middle age and approach a time when I am looking at retirement. I am interested in hearing from guys/girls who work for other boa companies- do they likewise save a few pennies by not paying Social Security/Medicare?
Although I work for Eco as well, I read your post and I think you may be ok with social sec. If your married and your spouse works or has worked and are eligible for Social sec, you will also be eligible. If yours is less then half of theirs, you will get half the amount that your spouse gets. Further more you could start kicking off 5% of your check to a mutual fund for the rest of your career and probably come out further ahead of then if you had paid social sec. No idea about Medicare but chances are it will be screwed up thanks to our fearless brother Obama and his healthcare wond… Hope I could help capt.
SS is an unsustainable Ponzi scheme. If it still exists when I retire I will be happy if it’s enough to buy me beer.
[QUOTE=INTCAP;141328]I am an ECO Capt who has run boats overseas for quite awhile. ECO does not pay Social Security or Medicare for its overseas workers. This is obviously a frightening problem as I cruise through middle age and approach a time when I am looking at retirement. I am interested in hearing from guys/girls who work for other boa companies- do they likewise save a few pennies by not paying Social Security/Medicare?[/QUOTE]
Social security is based on working 10 years making at least 4k per year. If you did that you will get a check, however the amount you will get is based on your income for the last three years while paying in. So come back to the US three years before your planned retirement or voluntarily pay in the maximum during those years. 12.4% is what you would have to pay on your own up to an income of 114k for this year for example. Social security admin has a good website where you can see all this and check your current eligibility.
giving your money to a government today is just to fix yesterdays problems, you will never see it again, unfortunately if your American you have no choice…
I feel sorry for you guys.
[QUOTE=Flyer69;141362]SS is an unsustainable Ponzi scheme. If it still exists when I retire I will be happy if it’s enough to buy me beer.[/QUOTE]
I have been hearing that for 30+ years. The John Birch Society and its like was saying that 50 years ago. Actually SS is well funded and could be better funded easily by lifting the income cap from contributions. I quit paying a month or two ago because I had maxed out my contribution. I could continue paying without lowering my standard of living. Those who pay NOTHING into the system like the hedge fund guys could contribute too! SSI was never intended as a retirement program. It is an insurance program that has successfully kept millions of people out of poverty and provided for the children of those who don’t live to retirement. It is no more a Ponzi scheme than your homeowners or auto or life insurance. Go ask the grandmothers and grandfathers who have depended on social security to buy food and keep the lights on what they would have done without it. If you really don’t like paying SS you could move to a libertarian paradise where there is no income tax, no medicaid, no ss like say Haiti,Somalia etc which have none of these huge burdens you currently bear and have no faith in.
I have no problem paying SS, and fully support the notion of lifting the income cap from contributions.
The unfunded liability moving forward is the root of the problem with the system as it exists today.
you have to look at the ratio of who is paying in versus who is on the receiving end.
Thats why it worked in the past and why it wont in the future.
If you get interest on that money at the rate of inflation your money goes nowhere.( thats the key)
So how can you save for 30 years and then live for 30 years more on that money when you didnt save 50% of your salary so you cant expect to get back out even half of what you lived on before
( give or take what happens to inflation versus the compound interest rate)
Not unique to the USA, this problem is happening everywhere mainly due to aging populations in the west.
Australia has for all intents free medical, gov has just said in 20 years time basic rate of tax will be 75% to sustain that on projected figures, so clearly thats going as well
They are saying current taxation rates can be maintained but no pensions and no medical in the future, thats a reality check if I ever heard one, they have published the figures.
PS libertarian paradise where offshore workers pay no tax is some of the Caribbean, most of SE Asia, Monaco and Italy if you are a non EU national.
I’m sure there are more.
If you’re an American citizen or green card holder working overseas you have to pay your social security contribution plus some percentage of your withholding tax liability if you earn more than a certain amount every year. If you earn less than the capped amount you still have to pay SS. You have to file taxes every year with the IRS regardless of where you work or how much you earn. If they catch up with you for not paying or even filing, they’ll freeze your American accounts until you do file and pay, plus you’ll have to pay penalties for not filing/paying.
Don’t let anyone tell you different.
While I understand that there are a number of you who feel the need to express your anti-government paranoia no matter what the question I would also like to get answers to the actual question I asked if anyone with knowledge can reply. The question is whether US companies other than ECO (or affiliates) pay SS and medicare contributions for their employees working overseas. For those of you who feel the need to discuss your worries about the financial stability of SS, the general qualifications of our President, or the likelihood that “they” are coming to take your guns away please start another post. Thanks.
The amount of social security you will receive is based upon the average wage during your highest 35 years of employment. Put another way, working one year at 100,000 does as much for your benefits level as working 10 years @ $10,000. You do have to pay in at some level for 40 quarters. If you have a lot of strong years of contributions, especially if you have more than 35 years of paying in, it won’t hurt you a bit to not be paying in now while working overseas.
The main benefit to working overseas seems to be avoiding income tax on the first $90-something thousand by staying out of the US for 11 months a year.
No the benifit from working overseas is the dollar for dollar credit you get on your US taxes for taxes the company pays to what ever country your boat is working out of on your behalf.
You can still work for a year straight and get some benifit in not paying income on the first 80k or something but your only allowed 14 days per year in the states instead of a month, but I only recomend this for single guys or ones looking to get divorced.
A few years ago the current administration passed a few changes. The first 80k is if you work on land in a foreign country for X amount of days. However, if you are on an American flagged vessel you are considered to be on American soil. This cost me quite a bit in returns a few years ago. Even though I was working foreign since I was on an American flagged vessel I was not exempt.
[QUOTE=Dsc;141796]A few years ago the current administration passed a few changes. The first 80k is if you work on land in a foreign country for X amount of days. However, if you are on an American flagged vessel you are considered to be on American soil. This cost me quite a bit in returns a few years ago. Even though I was working foreign since I was on an American flagged vessel I was not exempt.[/QUOTE]
If the company that pays you is not in the USA AND you are out of the USA for 330 days you owe no tax. You still have to file though.I did this for a number of years but be careful you need to be able to prove you were only in the USA 30 days or so during the year.
[QUOTE=Dsc;141796]A few years ago the current administration passed a few changes. The first 80k is if you work on land in a foreign country for X amount of days. However, if you are on an American flagged vessel you are considered to be on American soil. This cost me quite a bit in returns a few years ago. Even though I was working foreign since I was on an American flagged vessel I was not exempt.[/QUOTE]
It would be good to know when Congress passed the legislation authorizing that tax. I’ve variously worked and lived overseas for over 25 years and excepting a couple of years, it seemed there was always some reason that some US tax was due.
There are good IRS publications explaining when how and such, but the end result always seems the same. File & Pay. And yes the rules are seemingly more restrictive.
A little frustrating when various int’l shipmates have no tax liability for being out of home waters for 183 days a year, even on national flagged ships.
DSC… Please explain more! I work shoreside in a foreign country
[QUOTE=tengineer1;141799]If the company that pays you is not in the USA AND you are out of the USA for 330 days you owe no tax. You still have to file though.I did this for a number of years but be careful you need to be able to prove you were only in the USA 30 days or so during the year.[/QUOTE]
Almost true this one. The company can be in the US if you are working out of the US, including US territories (not exempt). I have been on this with an American (US) company whose only office in the US for 10 years, the first 5 years I met the standard as described above by not being state side for more than 35 days a year. I met a 2nd standard the last 5 years by having a domicile in the country I was working in, while also owning a home stateside (it was rented to a tenant) although employed on a yacht. This is called the:
[COLOR="#FF0000"]Foreign Earned Income Exclusion - Bona Fide Residence Test[/COLOR], I am unable to load the file/page however it is an irs.gov site that explains. Be aware that most local accountants are not aware of how this works, more of a specialty. On line 7 of the W-4 you fill out there is a spot to mark “exempt” from Federal Taxes, which to my knowledge does not include Social Security nor Medicare. In addition to checking this form each year with my company I also gave them typed paper asking to not withhold my federal taxes, only my social security and medicare payments.
This is quite a trick test to meet in my situation, absolutely needing (in order to meet the test) to be out of the country for an entire year my first year between Jan 1 and Dec 31 with only 35 (max) days back in the US. Once accepted it goes without challenge until you change it.
On the other hand, I am not aware if in Brazil you are having to pay taxes to Brazil for working in their country? If you are, and if there is an agreement between Brazil and the US (forget the name, look up the list) then you are exempt from US federal taxes, again, I do not believe you are exempt from Social Security and Medicare. I would suggest a specialist (accountant that deals with this which is not as typical as you may believe).
There were two good suggestions above,
#1: Pay into these (Social Security & Medicare) yourself at years end or however you wish throughout the year.
#2: Open a Roth IRA and contribute the max you can $5,000.00/year (if 50 or over), this is post tax income and you will not be taxed on it on withdrawal (they have add a double tax on dividends to it in the last 2-3 years) you can draw all or a part out at age 59 1/2 w/o penalty, unlike your 401. Also much better investment opportunities than a 401.
As another poster suggested you had best make sure you have a professional to help you not us other experts. It can jump on you fast if the irs gives you a $30k tax bill!
[QUOTE=INTCAP;141328]I am an ECO Capt who has run boats overseas for quite awhile. ECO does not pay Social Security or Medicare for its overseas workers. This is obviously a frightening problem as I cruise through middle age and approach a time when I am looking at retirement. I am interested in hearing from guys/girls who work for other boa companies- do they likewise save a few pennies by not paying Social Security/Medicare?[/QUOTE]
If you are counting on social security you have bigger problems to deal with. I would prefer to invest it myself. I think I would be better off putting it in a jar in the back yard.
[QUOTE=JW-Oceans;141802]DSC… Please explain more! I work shoreside in a foreign country[/QUOTE]
If you work shoreside and have a residence visa and live there +183 days a year, you pay the local tax and file in USA getting a credit for tax paid and the exemption on first part of overseas income. Used to do that when wife came overseas with.
If you work rotations and return on off time to USA and family lives in USA, you likely will have to pay US tax and will not qualify for the exemption even if you have residence visa and are out more than 183 days. that’s me now …, and us tax is 30% less in money terms, so I just bite the bullet.
There are lots of situations but you need to go thru the irs pubs to get a first sense if you qualify. Takes abt 15 mins to figger out the basics. If you have a more complicated situation, see accountant.
[QUOTE=Capt. Lee;141823]If you are counting on social security you have bigger problems to deal with. I would prefer to invest it myself. I think I would be better off putting it in a jar in the back yard.[/QUOTE]
Social Security has never missed a payment and always paid what they promised. If one thinks there may be a problem with proper funding for social security in the future I would suggest writing their congressmen. I have many friends with 401k plans that lost 50% of their value exactly when they retired in 2009. The much maligned social security and their pensions kept right on paying. The dislike and BS propaganda regarding the social security program originates from the corporations since they are required to match your contribution. These guys do not like to contribute any money they cannot control or use as collateral for a loan which is why they also hate pensions. I am old enough to remember when having a pension was normal. Now one is very fortunate to have any money left to save for retirement. Those of us who work in the maritime industry are EXTREMELY lucky that we make a very good wage and can save. It’s not like we are all that smart or highly educated, we are in a niche industry at the right time is all and it could all disappear tomorrow. I was around in the 80’s when it did. You could buy a really nice home or vehicle very cheap from plenty of former mariners.