Social security payments in US and Switzerland

Finance, Taxes, Banking, Insurance and Retirement
1
Hello,

I am from the US originally and moved to Switzerland in June of 2020. All of my income however is earned in the US - I run a private psychiatric practice online that is based in NY from here in Switzerland (moved here for my partner). I pay income taxes and social security in the US. Given I have a practice there, I do go back periodically throughout the year to see patients in person and have an apartment that I go back to that I rent out on Airbnb while I am in Switzerland.

The Swiss government has still been trying to figure out what to do with my situation. Based on the circumstances, if I am contributing to social security in the US, how does that impact in Switzerland? Do I have to pay double indefinitely? Will Switzerland expect a percentage of my income pre-taxation and pre-deduction of social security from the US?

Thank you apologies if this is confusing.

Jenny

2
If you are resident here you will have to reckon with paying your main taxes here, same as everyone else then paying tax as a US person abroad. It doesn't matter where the seat of your business is, it counts where you are.

People on here will likely be along with more concise and detailed info than I can provide (although I'm surprised that you say the Swiss authorities you have spoken to "can't figure out your situation").

Look at it from the perspective of a person living in a country and using public services and facilities which are tax-payer funded. If you're using them you need to pay for them.

3
Thank you. Yes of course, I am not trying to avoid paying for the services I use here. I am just trying to understand what to expect in terms of how much of my income, whether there would be any adjustments.

4
Usually, the way this works is you pay Swiss taxes on your worldwide income including the US.

Then you pay US taxes as a US resident abroad but most of your Swiss tax payments can be offset against your US tax payments.

You also must have Swiss health insurance (Krankenkasse).

Hopefully, some US person here can give you more accurate information.

5
Yes, this surprises me, too. After all, you're unlikely to be the first person doing this.

Although the onus is on the taxpayer to find out how it works, and to declare worldwide income and pay tax, in general, the tax offices have a good reputation for being forthcoming with the information and generally helpful in explaining the situation. OP, have you asked your local tax office, specifically, about your tax situation?

A non-EU friend recently had a similar-but-different situation while between two countries. There were a few phonecalls with both the tax office and the SVA/AHV (social security), and a few mails to clarify various aspects, some forms to fill in, whereafter the tax office and the SVA each provided an explanation of how things would be calculated, and their respective bills.

By the way, please be aware that in Switzerland the tax system (like many, many aspects of daily life) is different from Canton to Canton and municipality to municipality. Also: the Swiss tax system distinguishes between married and unmarried couples.

6
Unless your practice is operated by an US based company, it is physically impossible for you to personally conduct a business anywhere but from Switzerland. That means according to the double tax agreement the two authorities will have to sort it out between them, with both claiming 100% as the starting point. In my experience this can become complex and long drawn out.

My advice would be to spend some money on a tax consultant with a view to organising your affair in a way that minimises this hassle.

7

There is a mutual agreement between the 2 countries. This may help: https://www.ssa.gov/international/Ag…/switzrld.html

8
This!

Since you are resident in Switzerland, you should be paying Swiss taxes first (income, AHV, social insurances, depending on how your business is structured), then jump through the flaming hoops that Uncle Sam sets up for US persons resident abroad. The subject is complicated, the devil is in the details, and doing it wrong can be expensive - so it really is worth your while to invest in a tax pro with competency in both systems.

The link provided by RobBob gives you a good overview.

9
I agree that your personal income from your psychiatric practice is primarily taxed in Switzerland and you should get a tax advisor.

However, real estate is primarily taxed in its location. I.e. your Airbnb income will be taxed in the US, not in Switzerland. You do have to declare it in Switzerland as well, though, and it does affect the tax rate of both income and wealth taxes (the rental income and property value will be "satzbestimmend" but not "steuerbar").

10
Thank you everyone for your input.

The reason why I didn't do it right away first in Switzerland is because when I came during the pandemic I did not know I would be staying as long as I did and actually relocating here. It kind of happened slowly. I think that is also part of the confusion with the government, is figuring out what my status was as a resident and whether I'd be remaining here permanently.

I am in the process of hiring a tax adviser but do appreciate hearing the feedback.

11
Since you're EU , you can automatically stay as long as you like as far as you can prove that you can support yourself.

Since you seem to be living in Switzerland , speak directly to

- the AHV (social security office) about your obligatory contributions,

- your local tax office (to understand the Swiss sytem)

and once you can show that you have a permit to stay here,

- get yourself the obligatory medical insurance for all residents.

Since you're American , good advice earlier in the thread to get a tax advisor.

Good luck as you get it all sorted out.

12
Jennytaliyah, have you already paid US rather than Swiss taxes?

If so, while you still owe Switzerland for the full whack since you are resident and performing work here, you can likely file an amended US return, taking advantage of the various overseas taxpayer provisions that might apply to you. (Professsional help filing an amendment might be of benefit.)

13
Yes, I have filed in the US already and am trying to find out if the person that prepared my taxes has any understanding of these overseas taxpayer provisions.

14

Jennytaliah, as far as your personal income goes, you should use a US tax preparer who is based in Switzerland, not someone based in the US unless it’s one of the big names with an international presence.

Local US-based tax preparers often have little to no knowledge of international issues. (In fact, that your US tax preparer didn’t see your overseas address as a flag would raise questions for me.)

There are a few US preparers based in Switzerland mentioned on the forum, a bit of browsing might bring up some names.

A tax consultant who does both US and Swiss taxes - preparation and planning - likely means that person will be more expensive, but it’s important that your business and personal taxes are set up correctly in Switzerland and the US, so worth the investment.

Swiss personal taxes are fairly simply once set up correctly, so down the road once you are confident you have a better understanding you might consider using the first few year(s) done with a pro as a template, and then file your Swiss taxes on your own to save money. That’s what we do.

(Our US taxes remain quite complicated, so we still use a pro for that side even after all this time.)

For a start, this might be an interesting read:

https://www.irs.gov/individuals/international-taxpayers

And just to check, were you resident in Switzerland in 2021? If so, did you file your FBAR?

I am not au fait with how business taxes are impacted when the sole proprietor is resident overseas, so again, a pro should be able to advise you there.

15

Hi jennytaliyah,

I’m quite a bit late coming into this thread. If you have not found a solution to your issues, I would like to recommend that you contact https://www.taxesforexpats.com .

As previously suggested, always consult professionals when in doubt.

Best of luck,

16
direct deposit problems Having retired at a social securiy office early this year in the u.s. seemed fairly straight forward, but had previously locked out of my online account , I tried sending a email to s.s. and was told to log into my account ??? phone lines are useless money wasters , please hold ...... I finally had a family member go to a office in the states with all my information , so the main thing is in the states s.s. does not know what a iban number is and will not work with the routing number forms as used in the u.s. so the agent tried and still no deposit .... I found a form online ssa 1199-sz for a direct deposit to swiss banks that I give info ,then bank verifies and I send it to u.s. embassy in paris which I will do next

..so my question is am I missing something else ,some other paper work that i need to search for.

hopefully I have what they need now ,but if someone on here has had these problems and can give some advice I would really like to hear it ...thanks

17
Welcome to the Forum. It sounds like your problem is not one of taxation, but of receiving income.

AFAIK, you're not able to directly have SS deposited here because of the routing number (USA) vs IBAN (Switzerland) issue. The two systems simply can't communicate.

I don't know whether one of the services like Revolut would work? Anyone know?

I think you might need to have a US-based account to receive the SS payments, just as you need one to get any tax refund.