For individuals who have worked in both the United States and Japan, understanding how eligibility and benefit amounts are calculated is a critical concern. This section provides a detailed explanation of how contributions to Japan’s Employees’ Pension Insurance or National Pension may impact the amount of Social Security benefits you can receive in the United States.
What is the U.S.-Japan Social Security Agreement?
The U.S.-Japan Social Security Agreement is a system that enables individuals who have worked in both countries to combine their periods of coverage under each country’s respective pension systems. Through this agreement, periods of pension contributions in Japan can be counted as Social Security credits in the United States, and vice versa. This allows individuals to shorten the time required to meet eligibility requirements for receiving benefits in both countries.
Qualifying for Social Security Benefits
Social Security Credits in the United States:
- In the U.S., 40 credits (approximately 10 years) of Social Security tax payments are required to qualify for benefits. In 2025, the earnings required to earn one credit will be $1,810. Therefore, an annual income of $7,240 is needed to earn the maximum of 4 credits per year.
- If you utilize the U.S.-Japan Social Security Agreement, you must earn at least 6 credits (1.5 years) in the U.S. and combine these with credits from Japan to meet the 40-credit requirement. This allows individuals with shorter work periods in the U.S. to qualify for Social Security benefits.
Japan’s Employees’ Pension Insurance and National Pension:
- Periods of coverage under Japan’s Employees’ Pension Insurance and National Pension can also be counted as Social Security credits in the U.S. through the U.S.-Japan Social Security Agreement. For example, if you contributed to the Japanese pension system for 30 years and then worked in the U.S. for 3 years, you could still meet the eligibility requirements for benefits in both countries. This makes it easier for individuals who have worked in both countries over an extended period to qualify for benefits.
Impact on Social Security Benefit Amounts
Receiving Social Security Benefits in the U.S.:
Even if periods of pension contributions in Japan are recognized as credits under the U.S.-Japan Social Security Agreement, the actual amount of Social Security benefits you receive in the U.S. will be calculated based on your work history and earnings in the U.S. In other words, while Japanese pension contributions may affect your eligibility, they do not directly influence the benefit amount. For example, higher earnings in the U.S. will result in higher Social Security benefits, but earnings in Japan are not factored into this calculation.
Receiving Pension Benefits in Japan:
Similarly, the amount of pension benefits you receive in Japan is determined under Japan’s pension system. While your work period in the U.S. may impact your eligibility for benefits in Japan, it does not directly affect the amount. For example, higher earnings in Japan will result in higher pension benefits, but earnings in the U.S. are not included in the calculation.
Avoiding Double Taxation
The U.S.-Japan Social Security Agreement also aims to prevent double taxation. For example, if you are paying Social Security taxes in the United States, you may be exempt from paying pension insurance premiums in Japan. Conversely, if you are paying pension insurance premiums in Japan, you may be exempt from paying Social Security taxes in the U.S. This reduces the tax burden in both countries.
Income Tax on Social Security Benefits
Social Security benefits in the United States may be subject to income tax. Depending on the recipient’s “combined income,” a portion of the benefits could be taxable. Combined income is calculated using the following formula:
Combined Income = Adjusted Gross Income (AGI) + Non-Taxable Interest + 50% of Social Security Benefits
The specific tax thresholds are as follows:
For Single Filers:
- Combined income below $25,000: Non-taxable
- Combined income between $25,000 and $34,000: Up to 50% of benefits may be taxable
- Combined income above $34,000: Up to 85% of benefits may be taxable
For Joint Filers (Married Filing Jointly):
- Combined income below $32,000: Non-taxable
- Combined income between $32,000 and $44,000: Up to 50% of benefits may be taxable
- Combined income above $44,000: Up to 85% of benefits may be taxable
These thresholds have remained unchanged for many years and are expected to apply in 2025 as well. However, it is recommended to verify the latest information through the official IRS website or by consulting a tax professional to confirm there have been no changes to the tax laws.
Receiving Social Security Benefits While Working
If you work while receiving Social Security benefits, your benefit amount may be reduced. In 2025, the following rules apply:
- For individuals under 67 years old: If your annual earnings exceed $23,400, $1 will be deducted from your benefits for every $2 earned above this threshold.
- For the year you turn 67: The earnings limit increases to $62,160, and $1 will be deducted for every $3 earned above this amount.
- For individuals 67 years and older: There is no limit on earnings, and your Social Security benefits will not be reduced regardless of how much you earn.
Managing Social Security Information Online
To check your Social Security benefits, it is important to create an online account. By opening a my Social Security account on the Social Security Administration’s official website, you can access your personal Social Security Statement. This statement is extremely useful for individuals of all ages who want to understand their future Social Security benefits or review their earnings history. Notifications are automatically sent to individuals three months before their birthday.
Conclusion
The U.S.-Japan Social Security Agreement is a vital system for individuals who have worked in both countries. This agreement allows the combination of coverage periods under each country’s pension systems, making it easier to qualify for Social Security benefits. However, the actual benefit amounts are calculated based on the respective country’s system. Therefore, understanding the differences between the Japanese and U.S. Social Security systems and planning accordingly is essential.
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