T, an American citizen, worked as a consulting engineer for the International Bank for Reconstruction and Development from March 1st, 1961 to June 12th. 1961. He earned $6,120 during that time period. Part of his work was performed inside of the United States and part of it was done overseas in Kuwait.

The Social Security Act provided that earnings from work for an international organization entitled to privileges and immunities under the International Organizations Immunity Act were excluded from coverage for social security purposes.

However, another section of the Act furnished an exception to this exclusion for services performed by a U.S. citizen inside of the United States. Such services were considered to be the carrying on of a trade or business, and the net earnings therefrom were creditable for social security purposes.

T’s total time on the payroll of the international bank was 104 days. During this time period, he was inside of the United States for a total of 59 days. But it was impossible to tell how much of his income was earned outside of the U.S. and how much of it was earned inside the U.S.

Therefore, the best method Social Security could devise to determine T’s creditable wages from his employment for the bank was to multiply the percentage of time he was physically present inside the United States by his total wages during the time of his employment; i.e.: 59/104 x $6,120 = $3,471.92.

Because all of T’s expenses were paid by his employer, this figure also represented his net earnings from self-employment, and was thus creditable to him for social security purposes.

See Social Security Ruling (SSR) 64-62.

This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.