US Social Security

In making the transition to the US , you may be wondering if you are eligible for any US Social Security benefits.  The answer is initially "no" unless you establish the necessary "quarters of coverage" to make you eligible.  Since you are splitting your earning years between Canada and the US , you will not qualify for the maximum Social Security benefits.  However, similar to CPP/QPP, if you pay into US Social Security, you will receive some benefits.  For the taxation of US Social Security, see the income tax planning section.  

You are eligible to collect full Social Security benefits at age 65 but you can collect reduced benefits as early as age 62.  However, to qualify for Social Security retirement benefits, you must have established at least 40 quarters of eligibility in the US .  To establish four quarters of eligibility, you must have earned income of approximately $3,900 in the US for 2007.  Even if you earn the $3,900 in January of the year, you still establish the four quarters.  If you earn the approximate $3,900 for at least 10 years, you will have established the 40 quarters of eligibility and can begin collecting US Social Security.  The question then becomes "What if I can't establish the 40 quarters?"  This is where the Canada/US Totalization Agreement qualifies you for benefits.  For each year you lived in Canada , it counts as one year towards US Social Security.  Your benefits are still based on the amount you paid into the US Social Security system, which will typically be nominal given your short earning history in the US .  There are two factors at play here: First, are you eligible for any benefits at all and second, what is your benefit amount?

A totalization agreement is an executive agreement entered into by the US with Canada on August 1, 1984 and is different from the Canada/US Treaty because they do not require the formal approval of Congress.  The purpose of the Social Security Totalization Agreement with Canada is to provide employers and employees with relief from double payroll taxes and to "totalize" the payroll taxes you paid in both Canada and the US in order to receive partial benefits in both countries that you may not otherwise qualify for.  The US currently has totalization agreements with 17 other countries.