After having exhausted my options in talking to the IRS, SSA and Medicare, I thought I would give the board here a try in hopes that membership might find one of us is an international tax expert. Here is my story:
I am a Canadian citizen who worked in the United States as an expat for a period of four years via a NAFTA TN work permit. The nature of this permit forced me to pay into both Social Security and Medicare; i.e. unlike student visas which permit exemption. Medicare is such that I will never be able to claim the benefit since I now live back in Canada and don’t have plans of working or retiring in the US. We have public medicare in Canada.
In total, I paid $3900 into Medicare. I also have an outstanding income tax balance with the IRS of approx. $3700 for which I have been making monthly installment payments to reconcile. I spoke to all three agencies as listed above and was directed by each one to one of the others… in other words, circle jerk. None of them would provide an answer re if/how I can get a refund of the money I paid into Medicare.
My questions:
If I tell the IRS that I will no longer make the installment payments and instruct them to apply the Medicare money I paid against the outstanding income tax balance (of course they will not be willing to do this), can they levy me up here in Canada (once again, I am a Canadian citizen) or proceed in any way against me in force; e.g. seizing assets, etc.?
With regard to SSA, given the four years I worked in the US and with regard to their requirements for “quarters” of worked time, will I be able to claim this benefit when I retire up here in Canada? I did some reading about this, but wouldn’t mind hearing from someone who knows about such things. I have received, at times, statements from SSA about my benefit which seem to imply that I have some benefit available.
Given that question 1 above is likely not an option, is there any way I can get my Medicare money back?
If none of us know about such things, does anyone have a suggestion re someone I might contact to get guidance… money is tight, so minimal expense is necessary, please.
Regarding question 1 above, can the IRS arrest/detain me if I travel into the States should I go the route of question 1.
I am not an expert, but while we wait for one: I am a dual US / Canadian living in Canada, and as far as I understand it I will collect Social Security here when I hit age 67 or whatever it is by then, but that is because I paid into the system for the requisite 10 years. For most occupations, fewer than 10 years means that you will not collect anything, regardless of citizenship and residency. My husband is in a similar situation to you: he paid in for several years, but it is a gift to the USA for the privilege of having been allowed to work there.
For Social Security you have an account, but I am curious as to why you think you would be able to get the Medicare money back. It’s an insurance system, and as a person employed in America you are paying in to cover those Americans who qualify. When my husband was in the US on an O Visa, he was required to pay into the state’s unemployment insurance, which by the terms of his visa he could never, ever collect since his presence in the country was conditional on being employed. In other words, you pay in to subsidize other people who need it, not to build your own account. Though the amounts are similar there is absolutely no way that the Medicare contributions will ever be applied to your tax bill or be given back to you. Mourn the loss, but say goodbye to that money.
I do not think the IRS can levy you in Canada, as they have no jurisdiction in this country. I would not be surprised if they could obtain information about your income here, but I don’t know. Tax evasion is a crime and yes, as I understand it, you could be arrested at the border (though not by the IRS agents directly). That’s pretty easy to avoid if you just agree on a payment plan.
The USA does not have jurisdiction in Canada concerning tax matters. Extraterritorial jurisdiction would not apply because the default was in the USA. Since the offence is not a war crime or a crime against humanity, universal jurisdiction would not apply. This means that the USA has no jurisdiction in Canada to execute against Dr. Drake, and can only collect to the degree that Canada might permit. Canada permits the USA to collect by way of Canada doing the enforcement in Canada out of the goodness of Canada’s heart, by way of the Convention between the USA and Canada by which each country collects on behalf of the other country.
I have to agree with Dr. Drake. I have a Nevada company that I own and I have to pay into Nevada unemployment insurance… even if I do not live in Nevada. While living in Dubai, Prague and elsewhere, I had to pay, but could never collect unless I moved back to Nevada. As long as I was in Nevada I could collect if I fired myself (yes, seriously), or the company closed.
It’s the same with the feds… I have paid US tax while living overseas and never set foot on US soil… still had to pay but received no benefits.
Just to confirm what Dr. Drake posted, you need 40 QCs to be “fully insured,” i.e., be eligible for “OASDI” (“Old Age, Supplemental Income, and Disability Insurance”). Everybody pays the FICA taxes (Federal Insurance Contribution Act), but you cannot collect retirement benefits or disability insurance benefits without being fully insured. Code of Federal Regulations § 404.110