Australian Expats May No Longer Be Entitled to US Social Security
On February 24th, 2025, lawmakers introduced a new bill into the House of Representatives in the United States. This bill could mean that Australian expats will no longer be entitled to US Social Security. The bill, H.R. 1547, has two primary purposes:
- To direct the Secretary of Homeland Security to notify the Commissioner of Social Security when an individual’s citizenship status, immigration status, or work authorisation status changes after receiving a social security account number;
- And to require that an individual be a citizen or national of the United States to receive benefits under the Social Security Act.
This bill could be detrimental should it receive the votes to pass through to the Senate, gaining the momentum it needs to be legislation.
Why Would the US No Longer Entitle Australian Expats to Social Security?
Currently there are over 100,000 Australians living and working in America. Many Australians would be entitled to social security benefits when they reach 62.
This bill, however, takes that all away and only entitles US citizens and Nationals to the income benefit. This will no longer entitle Green Card holders, who are permanent residents, to the benefit, which is VERY punitive.
Those Australians on working visas like E3s, L1s, H1Bs, and so on, would no longer be able to access this retirement income supplement.
This proposed legislation is channeling the theme America First. They are also taking this measure to save, or at the very least, reduce the large social security expense on the US economy.
An important takeaway from this bill is that Australian expats working in America will still have to pay social security taxes. This is in despite no longer having any entitlement after their credits have accumulated.
A Recap on US Social Security for Australian Expats
In contrast, US Social Security is a crucial retirement income supplement, especially for those transitioning from Australia.
For US or Australian expats who have spent significant time working in the US, eligibility is based on accruing 40 credits—equivalent to 10 years of work.
Key Points to Consider
- Credit Accumulation: One credit is earned for each quarter worked. The benefits are calculated based on your highest 35 years of earnings.
- Retirement Age: You can typically access benefits as early as age 62. Full retirement age is ranging from 66 to 67, depending on your birth year.
Residency and Visa Status
A significant advantage of Social Security is that eligibility isn’t contingent on tax residency, citizenship, or permanent residency status. Even temporary visa holders, such as E3 visa holders, may qualify for benefits if they meet the credit requirements.
Comparing US Social Security and the Australian Age Pension
Unlike Australia’s means-tested age pension, which considers your assets, US Social Security benefits are based strictly on contributions to the system. This distinction can significantly impact your financial planning for retirement.
DTA Benefits for US Social Security
Fortunately, the AUS-US DTA provides some relief for Social Security benefits, ensuring they are only taxable in the US. The Australian Taxation Office (ATO) has established guidelines regarding this, offering additional clarity on tax implications.
Where to Next for Australian Expats in the US?
The proposed bill has a lot of hurdles to overcome before it receives the votes to move through the US parliament. Before it is debated and voted on in the House of Representatives, it will be referred for study first.
It is a punitive measure for working expats who commit a significant amount for their working life to the US, but no longer receive this terrific benefit. The only way to obtain it would be to go down the US citizenship pathway.
However, that in itself is very difficult. Given the IRS’s punitive tax measures on typical Australian assets, like superannuation and Passive Foreign Investment Companies (PFIC’s). This gives Australians in the US a tough decision to make when it comes to long-term retirement planning.
To learn more, check out Atlas Wealth Groups’ podcast: Expat Chat