What Is a Totalization Agreement?

A totalization agreement is a bilateral treaty between the United States and another country designed to eliminate dual Social Security taxation for workers who would otherwise be subject to the payroll tax laws of both countries simultaneously. Without such an agreement, an American employee working abroad might owe Social Security taxes to both the U.S. and the host country on the same wages. Under a totalization agreement, you generally pay Social Security taxes to only one country — typically based on where you physically work, though there are provisions for temporary assignments. The U.S. currently has totalization agreements with over 30 countries, including most of Western Europe, Canada, Australia, Japan, and South Korea. Totalization agreements also allow workers to combine earnings credits from both countries to qualify for Social Security benefits, which is particularly important for workers who split their career between two countries and might not qualify for benefits in either country without combining the records.