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Old 05-25-2015, 12:44 PM
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US taxation of social security income from another country

I'm eligible to get social security benefits (i.e. monthly social security wage) from my home country due to my several years of service there. Is this income subject to the federal tax in the US? Do I need to report it while filing my tax forms? (I'm a permanent resident and very close to getting my US citizenship). Thank you.



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Old 05-26-2015, 09:52 AM
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I'm eligible to get social security benefits (i.e. monthly social security wage) from my home country due to my several years of service there. Is this income subject to the federal tax in the US?======>>>I believe it depends; IN GENERAL UNDER THE TREATY BETWEEN us AND OTHER COUNTIRES, FOREING SOC SEC BENEISTA RE NOT TAXABLE; the tax treaty override the general rule and benefits are not taxable in the US(but may be taxable in your native country I am not sure of this). HOWEVER, (if no treaty then it’d be taxable in US)if you receive a foreign pension / annuity distribution , a payment from a pension plan or retirement annuity, from a source from overseas, for example from foreign employer; trust established by a foreign employer; foreign government or one of its agencies including a foreign social security pension; foreign insurance company; foreign trust or other foreign entity designated to pay the annuity, then part of it may be taxable; just as with domestic pensions or annuities, the taxable amount generally is the gross distribution minus the cost, i.e., investment in the contract. So, you need to know that your income received from foreign pensions / annuities may be fully or partly taxable, even if you do not receive a Form 1099R or other similar document reporting the amount of the income.however, as a general rule, the pension/annuity articles of most tax treaties allow the country of residence, US in your case, to tax the pension or annuity under its domestic laws. This is true unless a treaty provision specifically amends that treatment. Some treaties, for example, provide that the country of residence may not tax amounts that would not have been taxable by the other country if you were a resident of that country, in your case your native country. In some cases, government pensions/annuities or social security payments may be taxable by the government making the payments. There also may be special rules for lump-sum distributions. You need to look at each treaty carefully.Since you live in the USA and if you receive a pension/annuity paid by a payor from a foreign country, you must claim your desired treaty withholding exemption on the form, and in the manner specified by the foreign government. If the foreign government, and/or the foreign withholding agent, refuses to honor the treaty claim, make the treaty claim on your income tax return, or other prescribed form, filed with the foreign country. Additionally, you may be able to claim a Foreign Tax Credit on your 1040 for any foreign income tax withheld/paid from your foreign pension / annuity.Some treaties have special rules, e.g., the USA-Canada and the USA-UK treaties have special rules for taxpayers who have U.S. green cards. NOTE; most income tax treaties have special rules for social security payments. In many cases, foreign social security payments are taxable by the country making the payments. Unless specified otherwise in an income tax treaty, foreign social security pensions are generally taxed as if they were foreign pensions / foreign annuities. Unless a tax treaty allows it, they are not eligible for exclusion from taxable income the way a U.S. social security pension might be.

Do I need to report it while filing my tax forms? (I'm a permanent resident and very close to getting my US citizenship).=========>>It depends as said above ; if you receive foreign pension, I guess , this is not your case.



as far as your foreign Pension goes, unless it's covered by the USA/your native country tax treaty, it's taxable income on your return. Depending on the amount, it might make some of the SSA benefits taxable, depending on your MAGI( in US as single aslongas your MAGI is between$25K ~$34K, then you need to include 50% of your soc sec benefits on your return as part of your gross income;magi is agi plus 50% of soc sec benefits); once it is taxable then yes you need to report it on your 1040 ; so if you receive a foreign pension, you first need to determine whether the foreign pension is taxable by reviewing the IRS links to make this determination:;
United States Income Tax Treaties - A to Z; United States Income Tax Treaties - A to Z
IRS Publication 901 U.S. Tax Treaties;
Once you determine the amount of foreign pension that is taxable, there are two places you need to report the pension amount. In a few instances based on treaties the pension benefits can be entered as Social Security benefits. In US, if your only income for the year was Social Security benefits, those benefits will generally not be taxed. However, since very few people can survive on that amount of income, chances are you have other sources that may result in your Social Security benefits being partially taxed. Up to 85%; this means in some case 85% OF YOUR SCO SEC BENEFITS CAN BE INCLUDED INYOUR GROSS INCOME ON YOUR RETURN.



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