Working in New York?
New York: Taxation and Social Security
Taxation: Surprisingly Low, but Bear in Mind the State Tax
Resident New Yorkers pay federal income tax to the US Internal Revenue Service (IRS) and state income tax to the New York State Department of Taxation and Finance. In general, the United States pursues a low taxation policy. The amount of federal income tax you have to pay as a foreign worker depends on your residency status and income.
Resident aliens are usually taxed like US citizens, while non-resident aliens only need to declare their income from US sources. On the IRS website, you can find more information on taxpayer regulations, including the method to determine your residency status. People who continue to pay tax in their country of origin can be exempted from paying federal income tax if their country has a double taxation agreement with the US.
However, such agreements only prevent double taxation on a federal level and don’t affect state income tax. New York State tax tables and rates, including the New York City Resident Tax, are available on the website of the Department of Taxation and Finance.
You can also learn more about US taxes for non-resident aliens from our USA Extended Guide. We cover tax credits, tax deductions, and international tax issues.
Plan Ahead: Social Security and Pensions
Social security in the US covers old age, survivors, and disability insurance. Employer and employee each contribute 6.2% of the personal income to social security (12.4% in total), as well as 1.45% each to Medicare (2.9% in total). At the age of 67, anyone who has earned 40 social security credits over the years is eligible for retirement benefits. A maximum of four credits can be earned per year of work.
However, the state pension typically amounts to only a small share of an employee’s past income. Usually, it is therefore not sufficient to keep up one’s previous standard of living. Consequently, most people either pay into a company pension fund or make additional Individual Retirement Arrangements.
If you are planning to retire in New York or other parts of the country, it’s a good idea to consult an accountant to learn about such additional arrangements.
All You Need to Know about Social Security for Expats
Expats who will be working in New York for only a limited period of time should check the pay-out or transfer options of the funds mentioned before signing up. Under certain circumstances, it is also possible for temporary residents to be exempt from social security contributions altogether.
Similar to Income Tax Treaties, the United States maintains so-called Social Security Agreements with a number of countries. Citizens of these should refer to their country’s individual social security agreement for more information. These agreements regulate which social security contributions you have to make during your time in New York.
Additionally, all New York residents need a social security number for taxation, social security, and other government purposes. Expats on an immigrant visa can request theirs as they are applying for their visa. Nonimmigrants, meanwhile, should use the online application service of the US Social Security Agency ten days after they arrive in the USA.
Are you looking for more information about social security agreements, benefits, contributions, and more? Read our article on US social security to learn more.
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