Whether you are currently working in France or are living here in retirement, you will want to understand how an expat status affects your participation in the U.S. social security program—
and your taxes on social security income. The first thing to know is that France and the U.S. have signed a Totalization Agreement that prevents employers or workers from paying into both country’s mandatory retirement systems at the same time. A related measure allows workers in some circ*mstances to add credits earned in one system to those earned in the other for the purposes of receiving their social security or pension benefits when they do retire.
Below are a few key points noting depending on your situation.
1. You earned social security benefits in the U.S. and are already retired. In this case, you will get your social security benefits just as you would have in the U.S. As a French resident, you will pay French taxes on most income, but there is an exemption for certain retirement and pension programs that includes your social security income. So, you will be reporting social security income to both governments, but it is taxable in the U.S. (See Article 18 of the Tax Treaty here).
It is also worth noting that while social security benefits follow you outside of the U.S., Medicare program benefits generally do not. Any expat who is considering a return to the U.S. should file to declare their eligibility, thereby reserving your premium rate. But your health care in France should be accessed through programs available here. For more information on Medicare benefits, check the offical website.
2. Your U.S. employer has sent you to France for 5 years or less or you work for the U.S. government. In either of these cases, you remain a U.S. worker for social security purposes. Your employer will forward the payroll taxes deducted from your paycheck to the U.S. Social Security Administration (or Federal employee program) and all of those taxes will be credited to your benefit earnings record in the U.S.
3. You were hired in France or have a non-U.S. employer. In this case, you are a French worker for benefit purposes. Your paycheck will be deducted for French cotisations and credited to your record in France.
4. You are self-employed and working in France for 2 years or less. In this case, assuming you “normally” work in the U.S., you will continue to be treated as a U.S. worker for the purposes of both social security taxes and benefits.
5. You worked in the U.S., continued to work as an expat, and plan to retire in France. This is where things get really exciting. While the French pension system is not designed to make you wealthy, it can be a better deal than the U.S. social security system. Under current rules, if you work at least one year in the French system, your U.S. credits can later be credited to your French “account.” When you do retire in France, the French governement will calculate your benefit level based on French credits alone, compare that number to a prorated benefit based on U.S. and French credits, and pay you the larger amount. See page 7 of the Social Security Administrations explanation for more details: https://www.ssa.gov/international/Agreement_Pamphlets/france.html. Note that the Totalization Agreement pamphlet provided by the U.S. government (link above) includes some details on how you or your employer can get a certificate to show that you are already paying taxes in France and do not need to pay social security taxes.
As I write, France is debating reforms to its pension system. But the Totalization Agreement is not part of the discussion. Which means that upcoming strikes and protests could be responsible for improving your retirement in France.
