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Any advice on working for us company here in Budapest?

Me and my husband are dual citizens, us and hungarian. He lived 38 years in los angeles, i lived 20 years over there. He wanted to move back for his retirement. I am on the othet hand too young to retire, i am only 42. Although i have worked and payed my taxes in the us and i have enough credits to qualify for social security when i retire, i still would like to contribute more working years to my us retirement, even if i am no longer living there. Is it true if i find a us company here in budapest i can still keep on paying towards my social security?

If you are employed in Hungary, even by a US company, you have to pay Hungarian Social taxes. There is a recent US-Hungarian Social Security agreement about this:

https://www.ssa.gov/international/Agree … ngary.html

This agreement allows you to "avoid" paying US Social security, but it does not seem to be a Totalization agreement. Under a Totalization agreement, payments you make in one country can count in another country. What that means is if you move to Hungary, you are not required to pay into US Social Security, but if you did not work enough in either country to get benefits, then you get no benefits from your contributions in either country. Kinda awful, but that is how seems, to me, to be under the current agreement.

You can voluntarily pay into your US Social Security while working in Hungary, so you can increase your US benefits upon retirement, but you still are paying into the Hungarian system as well, you can not "choose" one or the other if you actually work here (so it will be a self imposed double tax).

One small way around is to get a US Company to "post" you here for 5 years. Then you only pay US Social Security for those 5 years. But that is just a 5 years delay of the inevitable.

Dear klsallie, thank you so much for your answer. I greatly appreciate your time and effort trying to shed some light for someone who is so green in this field.
I have absolutely no problem paying into both systems. Of course under no circumstance i would jeopardize losing my future us social security, because i already worked and paid taxes for 18 years.  If i have the legal and lawful opportunity to pay into the us system i will gladly do that. My follow up question is, if i pay into both country's tax system will i receive social security, pension from both countries?
Thank you so much for your help!

Lilla

The US Social Security minimum contribution time to get benefits I believe is 40 quarters (10 years). So if you have paid into SS for 18 years in the US you should get some benefits at retirement even if you stop working now (but benefits increase the more you work and contribute).

I do not know the Hungarian minimum contribution time to get benefits (I have only "heard" it is 20 years, so that may not be true -- I simply don't know). This I am sure is somewhere stated at the appropriate Hungarian government web site for NAV (i.e. the Hungarian IRS).

If you qualify to get payments from both systems, you can of course get payments from both systems. I think the Hungarian/US agreement clarifies that a bit more. But your US SS may be reduced if your Hungarian payments exceed some specific amount unless it is otherwise stated in the agreement (I have not read it fully -- it is complicated). If your US SS amount would be reduced, I don't know that amount either -- but I am sure it is stated somewhere at the US Social Security web site: https://www.ssa.gov

You can also invest your money into a personal retirement account of some type (tax deferred in the US). If well invested, that may pay out better than either US SS or Hungarian retirement payments.

I just started collecting my early SS from the US last Feb.( They make you wait a couple months after your BD to send out the first payment)
Took the lower pay to collect yearly.
I never worked long in the US( got lucky I'd say) so had a ton of big old Zero's on my yearly totals of payment into the system.
Still worked enough and we paid in both our names when my husband had his own businesses.
That saved me from getting barely nothing, without filling under a joint payment , I'd be messed up now since I only worked a very few years overall.
For every zero of non payment into the US SS system, you reduce the amount you would of collected at full retirement age of around 66, maybe it's 67 for your birth year, not sure.
So let's say the years 1982 through 1989 I  did not file, only my husband did at a job, not self employed at that time. The years I made good money as a casino dealer averaged out in the end due to so many zeros every year.
I only got tax credits the years I did not work but we filed jointly because of owning a business.
At age 42 you might collect when you are of retirement age but don't count on collecting what your last tax statement said because if you do not work and pay into the US system for the next 20 or so years your average will fall and you will not be collecting what you now think you will be.
My son is facing the same sort of thing, he might move to Japan, at this point in time if he collected SS today he would be fine but at age 43 to not work in the US for the next 25 years or so, he will be collecting hardly anything if he doesn't keep up with his taxes in the US by paying
annually into the tax base.
Confusing, I am happy my husband put my name down on his business or I'd be living on pennies right now.
In Hungary to collect in the future from the HU SS system, you must have put in at least 15 years of work into the Hungarian system.They may of changed the years needed since we last looked into this.
We have gone into the HU SS office a few times to find out about my HU husbands old work credits, he is short on a couple of years and collects nothing from Hungary.
Also the years we  claimed a business loss didn't help at all with current payments.
They more you pay into the system the more years you keep working, the larger your SS benefit will be in the end.
Just like the years I was working and making really good money and tips that were taxed from a casino job showed on paper a large amount in payments due me when I retired. The years I didn't work worked against that larger amount.
Ok so long story short, I am collecting allot less then it stated on paper for the years I actually was working, it averages out in the end.
Just a few things to think about.
PS, you can pay into the HU  tax system for any years you are short of working but it's a roll of the dice.
The min. amount in HU with SS is so low that it's not really worth it to pay for the years you are short.
The min. in HU last time we checked a couple years back was around equal to $150. a month in US dollars.
Not going too far with that amount.

Wow, my son is your age on second thought, 42.
I would be guessing your husband is now full retirement age so that's why the move back to Hungary.
We moved here years back and only lived on my husband SS over here as it was enough for us both.
Much nicer now though since I am also on SS.
Not sure if you are already back in Hungary now but the clock on collecting in Hungary on any future job is 15 years of paying into it.
Age doesn't matter just need the years put in.
My son has a few things lined up in Japan to make income but he knows he will not be making what he does right now as a casino manager in Vegas.
Have to change your lifestyle allot to make up for reduced income.
Dang we used to make more in one week of working then we do now with a months SS for the two of us.
One week of my husband working alone that is...
Ouch!

It does seem you would be able or required to pay US taxes if you work in HU for a US based co. but that's something you should double check when hired.
Basic collect Xally say for example, right now on your payroll sub it might say you will collect X amount at full retirement age. If you do not keep contributing into the tax base for the next 20 to 25 years until you are of retirement age they reduce that amount you may of collected year by year for not paying into the system.
Might look like today's retirement could be say $2,500.If you stop paying into it for the next 25 odd years you will be collecting a much lower amount. Say your $2,500 turns out to be $500. a month at full retirement age.
The SS given out for working at a  job inside of Hungary is far less generous then the US system is.

"Is it true if i find a U.S. company here in Budapest i can still keep on paying towards my Social Security?"

There are three ways to keep paying Social Security tax while overseas:

1. Work for a U.S. company under an arrangement in which your employer is the actual U.S. company itself. Note that most U.S. companies operate overseas through foreign subsidiaries, and your actual employer will usually be the foreign subsidiary, not the actual U.S. company itself.

2. Work for a foreign subsidiary of a U.S. company which has made a special election under U.S. tax law. If the election has been made, U.S. citizens and permanent residents employed by the subsidiary will be subject to Social Security tax. A company doesn't have to make the election, so you have to ask whether it has.

3. Work not as an employee but as a self-employed independent contractor. You'll pay Social Security tax if you work as an independent contractor whether you're working for a U.S. company or a non-U.S. company (or completely independently with a lemonade stand). Note that Social Security tax rates are higher if you're self-employed.

Remember, there's nothing optional about these alternatives. You must pay Social Security tax if working anywhere in the world for a U.S. company, for a subsidiary of a U.S. company which has made the special election, or as self-employed.

These are the general rules. I'm not familiar with the relevant U.S.-Hungarian agreement, which might conceivably change them.

zif :

Remember, there's nothing optional about these alternatives. You must pay Social Security tax if working anywhere in the world for a U.S. company, for a subsidiary of a U.S. company which has made the special election, or as self-employed.

Yes and no.

Most countries have a Social Security (i.e. retirement fund) tax. But some countries have agreements with the US to avoid double taxation. That is, if you work and live in that country for a sufficient time, and pay into that country's system, you do not have to pay US SS tax. I lived in Switzerland for many years. Started and ran a business there. Because of the details in the US-Swiss agreement, I only paid into the Swiss system. I had to make a declaration each year about this to the US however, and as required, to avoid double taxation. So it varies.

And why is it important to fully read and understand the agreements that the US has for a country. But the US does not have agreements for most countries, in which case, yes, you are right, one must still pay into US Social Security, no matter what.

zif :

These are the general rules. I'm not familiar with the relevant U.S.-Hungarian agreement, which might conceivably change them.

From my terse reading, it does. But IANAL. ;)

As the US is one of few countries (one of 2 or 3, I think) that taxes global earnings, you can indeed pay into the US tax system while living anywhere in the world. But there are reciprocal amounts where you don't have to pay into both the local and US systems below a certain salary amount.  Unless very successful, you'd be hard pressed to find many people earning the 2m Fts/month or so it would take to start owing US taxes while working in Hungary.  Klsallee being a business owner may hit that mark, but certainly most Hungarians don't!  :-)

Other savings types that include deferred taxation such as an IRA are usually not available as they include only earned income, not income from savings and investments.

But as IANAL (I am not a lawyer) nor a tax adviser, I would consult with something like the following link:  https://thunfinancial.com/social-securi … nt-abroad/
Good luck!

PS - If I live long enough, I plan to retire in Hungary or at least in Europe and will need the same information!

Vicces1 :

there are reciprocal amounts where you don't have to pay into both the local and US systems below a certain salary amount.

Yes, this is correct for income tax. This is covered in the US-Hungarian tax treaty. But, social taxes are different, and require a separate treaty. As I already stated, I don't know of the US-Hungarian social tax treaty is similarly reciprocal. They are not all such.

Vicces1 :

Unless very successful, you'd be hard pressed to find many people earning the 2m Fts/month or so it would take to start owing US taxes while working in Hungary.  Klsallee being a business owner may hit that mark, but certainly most Hungarians don't!  :-)

If one has US sourced income (its source "nexus" is in the US such as income from property, stocks, intellectual property, etc) , then all that, without any lower limit (outside of appropriate accountable deductions), can be and is normally taxed in the US, not in Hungary. This is defined in the US-Hungarian tax treaty. If one has to pay US or Hungarian SS tax on that depends on the type of income.

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